GALAXY FUND /DE/, 485APOS, 1998-12-30

GALAXY FUND /DE/
485APOS, 1998-12-30

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<PAGE>

As filed with the Securities and Exchange Commission on December 30, 1998

Securities Act File No. 33-4806
Investment Company Act File No. 811-4636

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
/X/
PRE-EFFECTIVE AMENDMENT NO.

POST-EFFECTIVE AMENDMENT NO. 36
and /X/
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

/X/

Amendment No. 37

/X/

The Galaxy Fund
(Exact Name of Registrant as Specified in Charter)
4400 Computer Drive
Westboro, Massachusetts 01581-5108
(Address of Principal Executive Officers)
Registrant's Telephone Number:
(800) 628-0414

W. Bruce McConnel, III
DRINKER BIDDLE & REATH LLP
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107
(Name and Address of Agent for Service)

Copy to:
Jylanne Dunne, Vice President
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581-5108

It is proposed that this filing will become effective (check appropriate box):

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[x] 60 days after filing pursuant to paragraph (a)(i)
[ ] on (date) pursuant to paragraph (a)(i)
[ ] 75 days after filing pursuant to paragraph (a)(ii)
[ ] on (date) pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Title of Securities Being Registered: Shares of Beneficial Interest.

<PAGE>

THIS POST-EFFECTIVE AMENDMENT RELATES SOLELY TO (i) TRUST SHARES, RETAIL A
SHARES AND/OR RETAIL B SHARES OF REGISTRANT'S MONEY MARKET, GOVERNMENT, U.S.
TREASURY, TAX-EXEMPT, SHORT-TERM BOND, INTERMEDIATE GOVERNMENT INCOME, HIGH
QUALITY BOND, CORPORATE BOND, TAX-EXEMPT BOND, NEW JERSEY MUNICIPAL BOND, NEW
YORK MUNICIPAL BOND, CONNECTICUT MUNICIPAL BOND, MASSACHUSETTS MUNICIPAL
BOND, RHODE ISLAND MUNICIPAL BOND, ASSET ALLOCATION, EQUITY INCOME, GROWTH
AND INCOME, STRATEGIC EQUITY, EQUITY VALUE, EQUITY GROWTH, INTERNATIONAL
EQUITY, SMALL CAP VALUE AND SMALL COMPANY EQUITY FUNDS AND (ii) SHARES OF
REGISTRANT'S INSTITUTIONAL GOVERNMENT MONEY MARKET, CONNECTICUT MUNICIPAL
MONEY MARKET AND MASSACHUSETTS MUNICIPAL MONEY MARKET FUNDS. ACCORDINGLY, THE
PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION FOR (i) REGISTRANT'S
PRIME RESERVES, GOVERNMENT RESERVES, TAX-EXEMPT RESERVES AND MID CAP EQUITY
FUND AND (ii) A PRIME SHARES AND B PRIME SHARES OF REGISTRANT'S SHORT-TERM
BOND, INTERMEDIATE GOVERNMENT INCOME, HIGH QUALITY BOND, TAX-EXEMPT BOND,
ASSET ALLOCATION, EQUITY INCOME, GROWTH AND INCOME, STRATEGIC EQUITY, EQUITY
VALUE, EQUITY GROWTH, INTERNATIONAL EQUITY, SMALL CAP VALUE AND SMALL COMPANY
EQUITY FUNDS ARE NOT INCLUDED IN THIS FILING.

<PAGE>

[Front cover page]

The Galaxy Fund

Prospectus
February 28, 1999

Galaxy Asset Allocation Fund
Galaxy Equity Income Fund
Galaxy Growth and Income Fund
Galaxy Strategic Equity Fund
Galaxy Equity Value Fund
Galaxy Equity Growth Fund
Galaxy International Equity Fund
Galaxy Small Cap Value Fund
Galaxy Small Company Equity Fund

Retail A Shares and Retail B Shares

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved any shares of these Funds as an investment or determined
if this prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.

<PAGE>

Contents

Information about the Funds. . . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Asset Allocation Fund . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Equity Income Fund. . . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Growth and Income Fund. . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Strategic Equity Fund . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Equity Value Fund . . . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Equity Growth Fund. . . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy International Equity Fund . . . . . . . . . . . . . . . . . . . . . .
Galaxy Small Cap Value Fund. . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Small Company Equity Fund . . . . . . . . . . . . . . . . . . . . . .
Additional information about risk. . . . . . . . . . . . . . . . . . . . . .

Fund management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to invest in the Funds . . . . . . . . . . . . . . . . . . . . . . . . . .
How sales charges work . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buying, selling and exchanging shares. . . . . . . . . . . . . . . . . . . .
How to buy shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How to sell shares . . . . . . . . . . . . . . . . . . . . . . . . . . . .
How to exchange shares . . . . . . . . . . . . . . . . . . . . . . . . . .
Other transaction policies . . . . . . . . . . . . . . . . . . . . . . . .

Dividends, distributions and taxes . . . . . . . . . . . . . . . . . . . . . .

Galaxy investor programs . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to reach Galaxy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

<PAGE>

INFORMATION ABOUT THE FUNDS

This prospectus describes the Galaxy Equity Funds. Each Fund invests primarily
or to a significant degree in equity securities, such as common stock, preferred
stock and securities that are convertible into common stock.

Beginning on the next page, you'll find the following important information
about each Fund:

- - The Fund's investment objective (sometimes called the Fund's goal) and the
main investment strategies used by the Fund's investment adviser in trying
to achieve that objective
- - The main risks associated with an investment in the Fund
- - The Fund's past performance measured on both a year-by-year and long-term
basis
- - The fees and expenses that you will pay as an investor in the Fund

WHICH FUND IS RIGHT FOR YOU?

Not all mutual funds are for everyone. Your investment goals and tolerance for
risk will determine which fund is right for you.

Equity funds are generally best suited to investors seeking growth of their
investment over time and who are prepared to accept the risks associated with
equity securities. Equity funds have the potential for higher returns than other
funds, such as bond funds or money market funds, but also carry more risk.

Different equity funds have different levels of risk. They have varying
objectives and investment styles, and some are considered more aggressive than
others. Generally, a fund's objective and the types of investments it makes can
help you gauge its level of risk.

The following table gives you a general overview of the risk spectrum for the
Galaxy Equity Funds. This is a guide only. It shows the investment adviser's
current assessment of the potential risk of the Funds relative to one another,
but this can change over time. It should not be used to compare the Funds with
other mutual funds or other types of investments. Consult your financial
professional to help you decide which Fund is right for you.

<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Risk spectrum Fund Primary investments
- --------------------------------------------------------------------------------
<S> <C> <C>
Asset Allocation Common stocks and fixed income
securities of domestic companies
-------------------------------------------------------
Conservative Equity Income Common stocks of domestic
companies selected primarily for
their income potential
-------------------------------------------------------
Growth & Income Common stocks of companies
selected for their growth and
income potential
-------------------------------------------------------
Strategic Equity Equity securities of large and
medium sized companies believed
to be undervalued
-------------------------------------------------------
Moderate Equity Value Equity securities of all size
companies believed to be
undervalued
-------------------------------------------------------
Equity Growth Equity securities of growth-
oriented companies
-------------------------------------------------------
International Equity Equity securities of foreign
companies
-------------------------------------------------------
Aggressive Small Cap Value Equity securities of smaller
companies believed to be
undervalued
-------------------------------------------------------
Small Company Equity Equity securities of smaller
growth-oriented companies
- --------------------------------------------------------------------------------
</TABLE>

THE FUNDS' INVESTMENT ADVISER

Fleet Investment Advisors Inc., which is referred to in this prospectus as THE
ADVISER, is the investment adviser for all of these Funds. The Adviser was
established in 1984 and has its main office at 75 State Street, Boston,
Massachusetts 02109. The Adviser also provides investment management and
advisory services to individual and institutional clients and manages the other
Galaxy investment portfolios.

[Sidenote:]
An investment in the Funds isn't a Fleet Bank deposit and it isn't insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

-2-
<PAGE>

Galaxy Asset Allocation Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks 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.

[Sidenote:]
CURRENT INCOME
Current income includes both dividends from stocks and interest income from
fixed income securities, less Fund expenses.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund aims to provide income that is higher than that provided by the Dow
Jones Industrial Average of 30 major companies and the Standard & Poor's 500
Composite Stock Price Index (commonly referred to as the S&P 500). Due to the
Fund's expenses, however, net income paid to you may be less than that. The Fund
also seeks long-term growth in the value of its assets. The Adviser attempts to
achieve these goals and reduce risk by allocating the Fund's assets among
short-term debt securities, common stocks, preferred stocks and bonds.

The Fund seeks a mix of stocks and bonds that will produce both income and
long-term capital growth. This mix will change from time to time as a result of
economic and market conditions. However, the Fund keeps at least 25% of its
assets in fixed income investments, including debt securities and preferred
stocks, at all times.

In selecting portfolio securities for the Fund, the Adviser's investment policy
committee develops an economic outlook and sets guidelines for the industries
and sectors in which the Fund should invest. It also forecasts the direction and
degree of change in long-term interest rates to help in the selection of fixed
income securities.

THE MAIN RISKS OF INVESTING IN THE FUND

Changes in the U.S. or foreign economies can cause the value of stocks and other
investments held by the Fund to fall. Stock prices may decline over short or
extended periods. Stock markets tend to move in cycles, with periods of rising
prices and periods of falling prices.

-3-
<PAGE>

The value of your investment in the Fund will go up and down with the value of
the investments which the Fund holds. You could lose money on your investment
in the Fund, or the Fund's investments may not perform as well as other
investments, even in times of rising markets.

In addition, the Fund also carries the following risks:

- - INTEREST RATE RISK: The value of fixed income investments such as bonds are
affected by movements in interest rates. Bond prices tend to fall when
interest rates rise and to rise when interest rates fall.
- - CREDIT RISK: The value of fixed income investments also depends on the
ability of an issuer to make principal and interest payments. If an issuer
can't meet its payment obligations or if its credit rating is lowered, the
value of its securities will decline.
- - PREPAYMENT RISK: Changes in interest rates may cause certain fixed income
investments held by the Fund to be paid off much sooner or later than
expected, which could adversely affect the Fund's value.
- - PORTFOLIO COMPOSITION: The level of risk could increase if a larger
percentage of the Fund is invested in one particular asset class, such as
stocks or bonds. However, asset allocation funds are generally less
volatile than portfolios that contain only stocks.

HOW THE FUND HAS PERFORMED

The bar chart and table below show how the Fund has performed in the past. Both
assume that all dividends and distributions are reinvested in the Fund. How the
Fund has performed in the past doesn't necessarily show how it will perform in
the future.

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares has varied from year
to year, thereby giving some indication of the risk of investing in the Fund.
The returns for Retail B Shares were different than the figures shown because
each class of shares has different expenses. The figures don't include any sales
charges that investors pay when buying or selling shares of the Fund. If sales
charges were included, the returns would be lower.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-4-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (12/30/91)
- --------------------------------------------------------------------------------
Retail B Shares --% --% --% (3/4/96)
- --------------------------------------------------------------------------------
S&P 500 --% --% --% (since 12/30/91)
--% (since 3/4/96)
- --------------------------------------------------------------------------------
</TABLE>

[Sidenote:]
The S&P 500 is an unmanaged index that tracks the performance of 500 widely
held common stocks listed on the New York Stock Exchange, the American Stock
Exchange and NASDAQ. The S&P 500 is heavily weighted with the stocks of large
companies.

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

Shareholder fees (fees you pay directly)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Maximum sales charge (load) Maximum deferred sales
on purchases shown as a % of charge (load) shown as a %
the offering price of the offering price or
sale price, whichever is
less
- --------------------------------------------------------------------------------
<S> <C> <C>
Retail A Shares 3.75%(1) None(2)
- --------------------------------------------------------------------------------
Retail B Shares None 5.00%(3)
- --------------------------------------------------------------------------------
</TABLE>

(1) Reduced sales charges may be available. See "How to invest in the Funds -
How sales charges work."
(2) Except for investments of $500,000 or more. See "How to invest in the Funds
- - How sales charges work."
(3) This amount applies if you sell your shares in the first year after purchase
and gradually declines to 1% in the sixth year after purchase. After six years,
your Retail B Shares will automatically convert to Retail A Shares. See "How to
invest in the Funds - How sales charges work."

-5-
<PAGE>

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution and operating
Management service (12b-1) Other expenses
fees fees expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% None --% --%
- --------------------------------------------------------------------------------
Retail B Shares --% --% --% --%
- --------------------------------------------------------------------------------
</TABLE>

EXAMPLE

This example helps you compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The example assumes:
- - you invest $10,000 for the periods shown
- - you reinvest all dividends and distributions in the Fund
- - you sell all your shares at the end of the periods shown
- - your investment has a 5% return each year
- - the Fund's operating expenses remain the same.

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares $-- $-- $-- $--
- --------------------------------------------------------------------------------
Retail B Shares $-- $-- $-- $--
- --------------------------------------------------------------------------------
If you hold Retail B Shares, you would pay the following expenses if you
didn't sell your shares:
- --------------------------------------------------------------------------------
Retail B Shares $-- $-- $-- $--
- --------------------------------------------------------------------------------
</TABLE>

-6-
<PAGE>

[Sidenote:]
PORTFOLIO MANAGERS

The Fund's portfolio managers are Donald Jones, a Vice President of the Adviser,
and David Lindsay, a Senior Vice President of the Adviser. They are primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. Jones has managed the equity portion of the Fund's portfolio, including
determining the allocation of the Fund's assets between equities and fixed
income investments, since May of 1995. He has been with the Adviser and its
predecessors since 1977. Mr. Lindsay has managed the fixed income portion of the
Fund since January of 1997. He has been with the Adviser and its predecessors
since 1986.

-7-
<PAGE>

Galaxy Equity Income Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks current income and capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests primarily in a diversified portfolio of common stocks which
offer income potential. The Adviser looks for investments that offer dividends,
prospects for dividend growth and capital appreciation. However, the Fund's
portfolio may include securities that offer only growth potential or only income
potential.

THE MAIN RISKS OF INVESTING IN THE FUND

-8-
<PAGE>

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares has varied from year
to year, thereby giving some indication of the risk of investing in the Fund.
The returns for Retail B Shares would have been different than the figures shown
because each class of shares has different expenses. The figures don't include
any sales charges that investors pay when buying or selling shares of the Fund.
If sales charges were included, the returns would be lower.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (12/14/90)
- --------------------------------------------------------------------------------
Retail B Shares(1) -- -- --
- --------------------------------------------------------------------------------
S&P 500 --% --% --% (since 12/14/90)
- --------------------------------------------------------------------------------
</TABLE>

(1) Retail B Shares were first offered on November 1, 1998.

-9-
<PAGE>

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution and operating
Management service (12b-1) Other expenses
fees fees expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% None --% --%
- --------------------------------------------------------------------------------
Retail B Shares --% --%* --% --%*
- --------------------------------------------------------------------------------
</TABLE>

* Affiliates of the Adviser are waiving a portion of the Distribution and
service (12b-1) fees for Retail B Shares so that such fees are expected to
be ___%. Total Fund operating expenses for Retail B Shares after these fee
waivers are expected to be __%. These fee waivers may be revised or
discontinued at any time.

-10-
<PAGE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
PORTFOLIO MANAGER

The Fund's portfolio manager is J. Edward Klisiewicz, a Senior Vice President of
the Adviser. He's primarily responsible for the day-to-day management of the
Fund's investment portfolio. Mr. Klisiewicz has been the Fund's portfolio
manager since it began operations. He has been with the Adviser and its
predecessors since 1970.

-11-
<PAGE>

Galaxy Growth and Income Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks to provide a relatively high total return through long-term
capital appreciation and current income.

[Sidenote:]
CURRENT INCOME
Current income includes both dividends from stocks and interest income from
fixed income securities, less Fund expenses.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests primarily in the common stocks of U.S. companies with large
market capitalizations that have prospects for above-average growth and
dividends. The Adviser focuses on growth stocks which are believed to be
attractively priced relative to expectations for the future performance of the
issuing company. The Adviser also seeks a current yield greater than that of the
S&P 500, although not all Fund investments will pay dividends.

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

[Sidenote:]
GROWTH STOCKS
Growth stocks offer strong revenue and earnings potential, and accompanying
capital growth, with less dividend income than value stocks.

THE MAIN RISKS OF INVESTING IN THE FUND

The value of your investment in the Fund will go up and down with the value of
the investments which the Fund holds. You could lose money on your investment
in the

-12-
<PAGE>

Fund, or the Fund's investments may not perform as well as other investments,
even in times of rising markets.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The Fund began operations on December 14, 1992 as a separate portfolio (the
Predecessor Fund) of The Shawmut Funds. 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 classes of shares, Investment Shares
and Trust Shares, that were similar to the Fund's Retail A Shares and Trust
Shares. In connection with the reorganization, shareholders of the Predecessor
Fund exchanged their Investment Shares and Trust Shares for Retail A Shares and
Trust Shares of the Fund. The returns for periods prior to December 4, 1995 are
for Investment Shares of the Predecessor Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-13-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (2/12/93)
- --------------------------------------------------------------------------------
Retail B Shares --% --% --% (3/4/96)
- --------------------------------------------------------------------------------
S&P 500 --% --% --% (since 2/12/93)
--% (since 3/4/96)
- --------------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

(1) Reduced sales charges may be available. See "How to invest in the Fund -
How sales charges work."
(2) Except for investments of $500,000 or more. See "How to invest in the Funds
- - How sales charges work."
(3) This amount applies if you sell your shares in the first year after purchase
and gradually declines to 1% in the sixth year after purchase. After six years,
your Retail B Shares will automatically convert to Retail A Shares. See "How to
invest in the Funds - How sales charges work."

-14-
<PAGE>

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution and operating
Management service (12b-1) Other expenses
fees fees expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% None --%* --%*
- --------------------------------------------------------------------------------
Retail B Shares --% --% --% --%
- --------------------------------------------------------------------------------
</TABLE>

* Affiliates of the Adviser are waiving a portion of the shareholder
servicing fees for Retail A Shares so that Other expenses for Retail A
Shares are expected to be ___%. Total Fund operating expenses for Retail A
Shares after these fee waivers are expected to be ___%. These fee waivers
may be revised or discontinued at any time.

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
PORTFOLIO MANAGER

The Fund's portfolio manager is Gregory M. Miller, a Vice President of the
Adviser. He's primarily responsible for the day-to-day management of the Fund's
investment portfolio. After seven years assisting in the Fund's management, Mr.
Miller became the Fund's portfolio manager in July of 1998. He joined the
Adviser in 1985.

-15-
<PAGE>

Galaxy Strategic Equity Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests predominately in U.S. equity securities, including common stock
and securities that can be converted into common stock. The Fund's "Value Driven
Growth" investment process emphasizes securities believed to have the potential
for the best one- to two-year returns. These securities are generally selected
from a universe of large and medium size companies representative of the S&P
500, although the Fund may invest up to 20% of its total assets in foreign
equity securities. In selecting individual stocks, the Adviser looks at the
current price, projected earnings growth, and historical valuations. The Fund
may give emphasis to growth stocks, value stocks or particular industries.

[Sidenote:]
VALUE STOCKS AND GROWTH STOCKS
Value stocks are ones that appear to be underpriced based on measures such as
lower price-to-earnings and price-to-book value ratios. Growth stocks offer
strong revenue and earnings potential, and accompanying capital growth, with
less dividend income than value stocks.

THE MAIN RISKS OF INVESTING IN THE FUND

-16-
<PAGE>

In addition, the Fund also carries the following risks:

- - CONVERTIBLE SECURITIES: Securities that can be converted into common stock,
such as certain debt securities and preferred stock, are subject to the
usual risks associated with fixed income investments, such as interest rate
risk and credit risk. In addition, because they react to changes in the
value of the equity securities into which they will convert, convertible
securities are also subject to stock market risk.
- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
stocks may be more volatile and less liquid than U.S. stocks.
- - HEDGING: The Fund may invest in derivatives, such as options, futures and
foreign currencies, to hedge against market risk or the currency risk of
its foreign investments. There's no guarantee hedging will always work. It
can also prevent the Fund from making a gain if markets move in the
opposite direction to the hedge.

[Sidenote:]
DERIVATIVES
A derivative is an investment whose value is based on or DERIVED from the
performance of other securities or interest or currency exchange rates or
indices. Derivatives are considered to carry a higher degree of risk than other
types of securities.

HOW THE FUND HAS PERFORMED

The Fund doesn't have a long-term performance record since it has been in
operation for less than one calendar year.

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

-17-
<PAGE>

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution and operating
Management service (12b-1) Other expenses
fees fees expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%* None --% --%*
- --------------------------------------------------------------------------------
Retail B Shares --%* --% --% --%*
- --------------------------------------------------------------------------------
</TABLE>

* The Adviser is waiving a portion of the Management fees so that such fees
are expected to be ___%. Total Fund operating expenses after this waiver
are expected to be ___% for Retail A Shares and ___% for Retail B Shares.
This fee waiver may be revised or discontinued at any time.

EXAMPLE

-18-
<PAGE>

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
PORTFOLIO MANAGER

The Fund's portfolio manager is Peter B. Hathaway, CFA, a Vice President of the
Adviser. He's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Hathaway has been the Fund's portfolio manager since
it began operations in March 1998. He has been in the investment management
business with the Adviser and its predecessors since 1965.

-19-
<PAGE>

Galaxy Equity Value Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term capital appreciation. Income is secondary to the
objective of capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests mainly in common stocks that the Adviser believes are
undervalued. The Fund invests most of its assets in companies that have a market
capitalization of more than $500 million.

The Adviser uses proprietary computer models to compare share price and company
value, both compared to the market and over time. This helps the Adviser to
identify out-of-favor, undervalued securities (often called value stocks) which
may subsequently increase in value. These models focus on fundamental aspects
such as earnings and dividend growth, reinvestment of returns and the ability of
companies to finance their own growth. The models also take into account factors
such as how easily the stocks may be traded. The Adviser then reviews the
results and looks for risks that may account for a stock's low price. It
evaluates factors the computer models can't measure, such as the quality of a
company's management and the impact of technological change. Stocks which pass
all tests are eligible to be included in the Fund's portfolio. Fund holdings are
frequently reviewed and are sold automatically when the computer models show
they are overvalued.

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

[Sidenote:]
VALUE STOCKS
Value stocks are ones that appear to be underpriced based on measures such as
lower price-to-earnings and price-to-book value ratios.

-20-
<PAGE>

THE MAIN RISKS OF INVESTING IN THE FUND

In addition, the Fund also carries the following risk:

- - HEDGING: The Fund may invest in derivatives, such as certain types of
options, to hedge against market risk. There's no guarantee hedging will
always work. It can also prevent the Fund from making a gain if markets
move in the opposite direction to the hedge.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

-21-
<PAGE>

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years 10 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% --% --% --% (9/1/88)
- --------------------------------------------------------------------------------
Retail B Shares --% -- -- --% (3/4/96)
- --------------------------------------------------------------------------------
S&P 500 --% --% --% --% (since 9/1/88)
--% (since 3/4/96)
- --------------------------------------------------------------------------------
Lipper Growth and --% --% --% --% (since 9/1/88)
Income Funds --% (since 3/4/96)
Average
- --------------------------------------------------------------------------------
</TABLE>

[Sidenote:]
The Lipper Growth and Income Funds Average is an unmanaged index that measures
the performance of a select group of mutual funds with investment objectives
similar to that of the Fund.

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

-22-
<PAGE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-23-
<PAGE>

[Sidenote:]
PORTFOLIO MANAGER

The Fund's portfolio manager is G. Jay Evans, a Senior Vice President of the
Adviser. He's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Evans has been the Fund's portfolio manager since
1993. He has been with the Adviser and its predecessors since 1978.

-24-
<PAGE>

Galaxy Equity Growth Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests primarily in a broadly diversified portfolio of equity
securities, including common stocks and securities that can be converted into
common stocks. The Fund invests mainly in the securities of U.S. issuers, but
may invest up to 20% of its assets in foreign securities.

The Fund invests mainly in companies which the Adviser believes will have faster
earnings growth than the economy in general. The Adviser looks for high quality,
large-capitalization companies in growing industries, focusing on technological
advances, good product development, strong management and other factors which
support future growth. The Adviser seeks out companies that have a history of
strong earnings growth and are projected to continue a similar pattern of growth
over the next three to five years.

[Sidenote:]
GROWTH STOCKS
Growth stocks offer strong revenue and earnings potential, and accompanying
capital growth, with less dividend income than value stocks.

THE MAIN RISKS OF INVESTING IN THE FUND

-25-
<PAGE>

In addition, the Fund also carries the following risks:

- - CONVERTIBLE SECURITIES: Securities that can be converted into common stock,
such as certain debt securities and preferred stock, are subject to the
usual risks associated with fixed income investments, such as interest rate
risk and credit risk. In addition, because they react to changes in the
value of the equity securities into which they will convert, convertible
securities are also subject to stock market risk.
- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
stocks may be more volatile and less liquid than U.S. stocks.
- - HEDGING: The Fund may invest in derivatives, such as certain types of
options and foreign currencies, to hedge against market risk or the
currency risk of its foreign investments. There's no guarantee hedging will
always work. It can also prevent the Fund from making a gain if markets
move in the opposite direction to the hedge.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-26-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (12/14/90)
- --------------------------------------------------------------------------------
Retail B Shares --% --% --% (3/4/96)
- --------------------------------------------------------------------------------
S&P 500 --% --% --% (since 2/14/90)
--% (since 3/4/96)
- --------------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

(1) Reduced sales charges may be available. See "How to invest in the Funds -
How sales charges work.
(2) Except for investments of $500,000 or more. See "How to invest in the Funds
- - How sales charges work."
(3) This amount applies if you sell your shares in the first year after purchase
and gradually declines to 1% in the sixth year after purchase. After six years,
your Retail B Shares will automatically convert to Retail A Shares. See "How to
invest in the Funds - How sales charges work."

-27-
<PAGE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
PORTFOLIO MANAGER

The Fund's portfolio manager is Robert G. Armknecht, CFA, an Executive Vice
President of the Adviser. He's primarily responsible for the day-to-day
management of the Fund's investment portfolio. Mr. Armknecht has been with the
Adviser and its predecessors since 1988 and has been the Fund's portfolio
manager since it began operations.

-28-
<PAGE>

Galaxy International Equity Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests substantially all of its assets in the equity securities of
foreign issuers. At all times, the Fund's assets will be invested in companies
located in at least three different foreign countries. Normally, no more than
20% of the Fund's assets will be invested in companies located in countries with
emerging economies or emerging securities markets. The Fund emphasizes larger
established companies, although it may invest in companies of any size.

The Sub-Adviser determines how much to invest in each country and region by
looking at factors such as prospects for economic growth, expected inflation
levels, government policies and the range of investment opportunities available.
Decisions as to particular investments are made with the guidance of the
Sub-Adviser's Investment Strategy Committee under the supervision of the
Adviser. The Sub-Adviser looks at the potential return of each investment over a
one to two-year period.

[Sidenote:]
SUB-ADVISER
The Adviser has appointed Oechsle International Advisors, LLC as Sub-Adviser to
assist it in the day-to-day management of the Fund's investment portfolio.

THE MAIN RISKS OF INVESTING IN THE FUND

Changes in the U.S. or foreign economies can cause the value of stocks and other
investments held by the Fund to fall. Stock prices may decline over short or
extended periods. U.S. and foreign stock markets tend to move in cycles, with
periods of rising prices and periods of falling prices.

-29-
<PAGE>

In addition, the Fund also carries the following risks:

- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
stocks may be more volatile and less liquid than U.S. stocks.
- - EMERGING MARKETS: The risks associated with foreign investments are
heightened when investing in emerging markets. The governments and
economies of emerging market countries feature greater instability than
those of more developed countries. Such investments tend to fluctuate in
price more widely and to be less liquid than other foreign investments.
- - CONCENTRATION: The Fund may invest 25% or more of its assets in the
securities of companies located in one country. When the Fund invests a
high percentage of its assets in a particular country, the Fund will be
especially susceptible to factors affecting that country.
- - CURRENCY EXCHANGE: Although the Fund usually makes investments that are
sold in foreign currencies, it values its holdings in U.S. dollars. If the
U.S. dollar rises compared to a foreign currency, the Fund loses on the
currency exchange.
- - HEDGING: The Fund may invest in derivatives, such as options, futures and
foreign currencies, to hedge against market risk or the currency risk of
its foreign investments. There's no guarantee hedging will always work. It
can also prevent the Fund from making a gain if markets move in the
opposite direction to the hedge.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares has varied from year
to year, thereby giving some indication of the risk of investing in the Fund.
The returns for

-30-
<PAGE>

Retail B Shares would have been different than the figures shown because each
class of shares has different expenses. The figures don't include any sales
charges that investors pay when buying or selling shares of the Fund. If sales
charges were included, the returns would be lower.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (12/30/91)
- --------------------------------------------------------------------------------
Retail B Shares(1) -- -- --
- --------------------------------------------------------------------------------
MSCI EAFE Index --% --% --% (since 12/30/91)
- --------------------------------------------------------------------------------
</TABLE>

(1) Retail B Shares were first offered on November 1, 1998.

[Sidenote:]
The Morgan Stanley Capital International Europe, Asia and Far East (MSCI EAFE)
Index is an unmanaged index which tracks the performance of selected equity
securities in Europe, Asia and the Far East.

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

-31-
<PAGE>

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Distribution and Total Fund
Management service (12b-1) Other operating
fees fees expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%* None --% --%*
- --------------------------------------------------------------------------------
Retail B Shares --%* --% --% --%*
- --------------------------------------------------------------------------------
</TABLE>

* The Adviser is waiving a portion of the Management fees so that such fees
are expected to be ___%. Total Fund operating expenses after this waiver
is expected to be ___% for Retail A Shares and ___% for Retail B Shares.
This fee waiver may be revised or discontinued at any time.

EXAMPLE

-32-
<PAGE>

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
PORTFOLIO MANAGERS

The Fund's portfolio managers are Singleton Dewey Keesler, Jr. and Kathleen
Harris. They are primarily responsible for the day-to-day management of the
Fund's investment portfolio. Mr. Keesler is Chief Investment Officer and
portfolio manager/research analyst with the Sub-Adviser. He has been associated
with the Sub-Adviser and its predecessor since 1985. Ms. Harris has been a
portfolio manager at the Sub-Adviser and its predecessor since January 1995. She
was previously portfolio manager and investment director for the State of
Wisconsin Investment Board. Mr. Keesler and Ms. Harris have co-managed the Fund
since August 1996.

-33-
<PAGE>

Galaxy Small Cap Value Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks to provide long-term capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests mainly in the common stocks of small companies that the Adviser
believes are undervalued. Under normal market conditions, the Fund invests at
least 65% of its assets in the common stocks of companies that have market
capitalizations of $1.5 billion or less. The Fund invests primarily in the
common stock of U.S. issuers, but may invest up to 20% of its assets in foreign
equity securities.

In selecting portfolio securities for the Fund, the Adviser looks at the
underlying strength of companies, their products, their competitive positions
and the quality of their management. It also does research to attempt to
identify companies likely to benefit from emerging industry trends and potential
market recoveries.

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

[Sidenote:]
VALUE STOCKS
Value stocks are ones that appear to be underpriced based on measures such as
lower price-to-earnings and price-to-book value ratios.

-34-
<PAGE>

THE MAIN RISKS OF INVESTING IN THE FUND

In addition, the Fund also carries the following risks:

- - SMALL COMPANIES RISK: Smaller companies tend to have limited resources,
product lines and market share. As a result, their share prices tend to
fluctuate more than those of larger companies. Their shares may also trade
less frequently and in limited volume, making them potentially less liquid.
The price of small company stocks might fall regardless of trends in the
broader market.
- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency foreign government restrictions, exchange rates,
incomplete financial information about the issuers of securities, and
political or economic instability. Foreign stocks may be more volatile and
less liquid than U.S. stocks.
- - HEDGING: The Fund may invest in derivatives, such as options, futures and
foreign currencies, to hedge against market risk or the currency risk of
its foreign investments. There's no guarantee hedging will always work. It
can also prevent the Fund from making a gain if markets move in the
opposite direction to the hedge.

HOW THE FUND HAS PERFORMED

-35-
<PAGE>

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares has varied from year
to year, thereby giving some indication of the risk of investing in the Fund.
The returns for Retail B Shares would have been different than the figures shown
because each class of shares has different expenses. The figures don't include
any sales charges that investors pay when buying or selling shares of the Fund.
If sales charges were included, the returns would be lower.

The Fund began operations on December 14, 1992 as a separate portfolio (the
Predecessor Fund) of The Shawmut Funds. 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 classes of shares, Investment Shares
and Trust Shares, that were similar to the Fund's Retail A Shares and Trust
Shares. In connection with the reorganization, shareholders of the Predecessor
Fund exchanged their Investment Shares and Trust Shares for Retail A Shares and
Trust Shares of the Fund. The returns for the periods prior to December 4, 1995
are for Investment Shares of the Predecessor Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (2/12/93)
- --------------------------------------------------------------------------------
Retail B Shares(1) -- -- --
- --------------------------------------------------------------------------------
Russell 2000 Index --% --% --% (since 2/12/93)
- --------------------------------------------------------------------------------
S&P 600 --% --% --% (since 2/12/93)
- --------------------------------------------------------------------------------
</TABLE>

(1) Retail B Shares were first offered on November 1, 1998

[Sidenote:]
The Russell 2000 Index is an unmanaged index that tracks the performance of the
2,000 smallest of the 3,000 largest U.S. companies, based on market
capitalization.

-36-
<PAGE>

[Sidenote:]
The Standard & Poor's SmallCap 600 Composite Index (S&P 600) is an unmanaged
index that tracks the performance of 600 domestic companies traded on the New
York Stock Exchange, the American Stock Exchange and NASDAQ. The S&P 600 is
heavily weighted with the stocks of small companies.

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution and operating
Management service (12b-1) Other expenses
fees fees expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% None --% --%
- --------------------------------------------------------------------------------
Retail B Shares --% --%* --% --%*
- --------------------------------------------------------------------------------
</TABLE>

* Affiliates of the Adviser are waiving a portion of the Distribution and
service (12b-1) fees for Retail B Shares so that such fees are expected to
be ___%. Total Fund

-37-
<PAGE>

operating expenses for Retail B Shares after these fee waivers are expected
to be __%. These fee waivers may be revised or discontinued at any time.

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
PORTFOLIO MANAGER

The Fund's portfolio manager is Peter Larson, a Vice President of the Adviser.
He's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Larson has been with the Adviser and its predecessors
since 1963 and has managed the Fund, including the Predecessor Fund, since it
began operations.

-38-
<PAGE>

Galaxy Small Company Equity Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests most of its assets in the common stocks of small companies that
have market capitalizations of $1.5 billion or less. The Fund invests primarily
in the common stock of U.S. companies, but may invest up to 20% of its assets in
foreign equity securities.

In selecting investments for the Fund, the Adviser looks for promising
industries. It then looks within those industries for what are judged to be
reasonably priced companies that have above-average growth potential. The
Adviser consults a wide range of sources, including management, competitors,
other industry sources and regional brokerage analysts.

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

[Sidenote:]
GROWTH STOCKS
Growth stocks offer strong revenue and earnings potential, and accompanying
capital growth, with less dividend income than value stocks.

THE MAIN RISKS OF INVESTING IN THE FUND

The value of your investment in the Fund will go up and down with the value of
the investments which the Fund holds. You could lose money on your investment
in the

-39-
<PAGE>

Fund, or the Fund's investments may not perform as well as other investments,
even in times of rising markets.

In addition, the Fund also carries the following risks:

- - SMALL COMPANIES RISK: Smaller companies tend to have limited resources,
product lines and market share. As a result, their share prices tend to
fluctuate more than those of larger companies. Their shares may also trade
less frequently and in limited volume, making them potentially less liquid.
The price of small company stocks might fall regardless of trends in the
broader market.
- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
stocks may be more volatile and less liquid than U.S. stocks.
- - HEDGING: The Fund may invest in derivatives, such as certain types of
options and foreign currencies, to hedge against market risk or the
currency risk of its foreign investments. There's no guarantee hedging will
always work. It can also prevent the Fund from making a gain if markets
move in the opposite direction to the hedge.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

-40-
<PAGE>

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (12/30/91)
- --------------------------------------------------------------------------------
Retail B Shares --% --% --% (3/4/96)
- --------------------------------------------------------------------------------
Russell 2000 Index --% --% --% (since 12/30/91)
--% (since 3/4/96)
- --------------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

-41-
<PAGE>

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution and operating
Management service (12b-1) Other expenses
fees fees expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% None --%* --%*
- --------------------------------------------------------------------------------
Retail B Shares --% --%* --% --%*
- --------------------------------------------------------------------------------
</TABLE>

* Affiliates of the Adviser are waiving a portion of the shareholder
servicing fees for Retail A Shares so that Other expenses for Retail A
Shares are expected to be __%. Affiliates of the Adviser are also waiving
a portion of the Distribution and service (12b-1) fees for Retail B Shares
so that such fees are expected to be __%. Total Fund operating expenses
after these fee waivers are expected to be ___% for Retail A Shares and
___% for Retail B Shares. These fee waivers may be revised or discontinued
at any time.

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-42-
<PAGE>

[Sidenote:]
PORTFOLIO MANAGER

The Fund's portfolio manager is Stephen D. Barbaro, CFA, a Vice President of the
Adviser. He's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Barbaro has been the Fund's portfolio manager since it
began operations. He has been with the Adviser and its predecessors since 1976.

-43-
<PAGE>

ADDITIONAL INFORMATION ABOUT RISK

The main risks associated with an investment in each of the Galaxy Equity Funds
have been described above. The following supplements that discussion.

- - SECURITIES LENDING: To obtain interest income, each Fund may lend its
portfolio securities to broker-dealers, banks or institutional borrowers in
return for collateral equal in value to at least the current price of the
securities loaned. There is the risk that, when lending portfolio
securities, the borrower may not return the securities to the Fund on a
timely basis. Therefore, the Fund may lose the opportunity to sell the
securities at an attractive price. In addition, in the event that the
borrower of the securities would file for bankruptcy or become insolvent,
the Fund might have to wait for court action before it gets the securities
back.

- - TEMPORARY DEFENSIVE POSITIONS: Each Fund may temporarily hold investments
that are not part of its principal investment strategy to try to avoid
losses during unfavorable market conditions. These investments may include
cash (which will not earn any income), money market instruments, debt
securities issued or guaranteed by the U.S. Government or its agencies and,
in the case of the International Equity Fund, foreign money market
instruments, debt securities of foreign national governments and their
agencies, and the securities of U.S. issuers. This strategy could prevent
a Fund from achieving its investment objective and could reduce the Fund's
return and affect its performance during a market upswing.

- - SELECTION OF INVESTMENTS: The Adviser evaluates the risks and rewards
presented by all securities purchased by each Fund and how they advance the
Fund's investment objective. It's possible, however, that these
evaluations will prove to be inaccurate.

- - OTHER TYPES OF INVESTMENTS: This prospectus describes each Fund's
principal investment strategies and the particular types of securities in
which each Fund principally invests. Each Fund may, from time to time,
pursue other investment strategies and make other types of investments in
support of its overall investment goal. These supplemental investment
strategies - and the risks involved - are described in detail in the
Statement of Additional Information (SAI) which is referred to on the back
cover of this prospectus.

- - FREQUENT TRADING: Each Fund may trade its investments frequently in trying
to achieve its investment goal. This usually increases the chance that the
Fund will pay investors short-term capital gains. These gains are taxable
at higher rates than long-term capital gains. Frequent trading could also
mean higher brokerage commissions and other transaction costs, which could
reduce the Fund's returns.

-44-
<PAGE>

- - YEAR 2000 RISKS: As with other mutual funds, financial and business
organizations and individuals around the world, the Funds could be
adversely affected if the computer systems used by the Adviser and the
Funds' other service providers don't properly process and calculate
date-related information and data from and after January 1, 2000. This is
commonly known as the "Year 2000" or "Y2K" problem. The Adviser is taking
steps to address the Y2K problem with respect to the computer systems that
it uses and to obtain assurances that comparable steps are being taken by
the Funds' other major service providers. At this time, however, there can
be no assurance that these steps will be sufficient to avoid any adverse
impact on the Funds.

-45-
<PAGE>

FUND MANAGEMENT

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

The management fees paid to the Adviser by the Funds during the last fiscal year
are set forth below. The Strategic Equity Fund began operations during the last
fiscal year and the fee shown is that which is currently in effect.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FUND MANAGEMENT FEE AS A % OF NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Asset Allocation --%
- --------------------------------------------------------------------------------
Equity Income --%
- --------------------------------------------------------------------------------
Growth and Income --%
- --------------------------------------------------------------------------------
Strategic Equity --%
- --------------------------------------------------------------------------------
Equity Value --%
- --------------------------------------------------------------------------------
Equity Growth --%
- --------------------------------------------------------------------------------
International Equity --%
- --------------------------------------------------------------------------------
Small Cap Value --%
- --------------------------------------------------------------------------------
Small Company Equity --%
- --------------------------------------------------------------------------------
</TABLE>

SUB-ADVISER: The Adviser has delegated some of its advisory
responsibilities with respect to the International Equity Fund to Oechsle
International Advisors, LLC as Sub-Adviser. The Sub-Adviser determines which
securities will be purchased, retained or sold for the Fund, places orders for
the Fund and provides the Adviser with information on international investment
and economic developments. The Adviser assists and consults with the Sub-Adviser
as to the Fund's investment program, approves the list of foreign countries
recommended by the Sub-Adviser for investment and manages the Fund's daily cash
position. The Sub-Adviser's fees are paid by the Adviser.

The Sub-Adviser has its main office at One International Place, Boston,
Massachusetts 02210. The Sub-Adviser is the successor to Oechsle International
Advisors, L.P., an international investment firm founded in 1986. At December
31, 1998, the Sub-Adviser had discretionary management authority over
approximately $-- billion in assets. The Adviser's parent company, Fleet
Financial Group, Inc., owns an interest in the Sub-Adviser.

-46-
<PAGE>

HOW TO INVEST IN THE FUNDS

HOW SALES CHARGES WORK

You will normally pay a sales charge to invest in the Funds. If you buy Retail A
Shares, you'll usually pay a sales charge (sometimes called a front-end load) at
the time you buy your shares. If you buy Retail B Shares, you may have to pay a
contingent deferred sales charge (sometimes called a back-end load or CDSC) when
you sell your shares. This section explains these two options.

[Sidenote:]
NET ASSET VALUE

The price you pay for your shares is based on the net asset value per share
(NAV). It's the value of a Fund's assets attributable to Retail A Shares or
Retail B Shares, minus the value of the Fund's liabilities attributable to
Retail A Shares or Retail B Shares, divided by the number of Retail A Shares or
Retail B Shares held by investors.

RETAIL A SHARES

The table below shows the sales charge you'll pay if you buy Retail A Shares of
the Funds. The offering price is the NAV of the shares purchased, plus any
applicable sales charge.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total sales charge
- --------------------------------------------------------------------------------
Amount of your investment As a % of the offering As a % of your
price per share investment
- --------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 3.75% 3.90%
- --------------------------------------------------------------------------------
$50,000 but less than
$100,000 3.50% 3.63%
- --------------------------------------------------------------------------------
$100,000 but less than
$250,000 3.00% 3.09%
- --------------------------------------------------------------------------------
$250,000 but less than
$500,000 2.50% 2.56%
- --------------------------------------------------------------------------------
$500,000 and over 0.00%(1) 0.00%(1)
- --------------------------------------------------------------------------------
</TABLE>

(1) There is no front-end sales charge on investments in Retail A Shares of
$500,000 or more. However, if you sell the shares within one year after buying
them, you'll pay a CDSC of 1% of the offering price or 1% of the net asset value
of your shares, whichever is less, unless the shares were sold because of the
death or disability of the shareholder.

-47-
<PAGE>

Galaxy's distributor may from time to time implement programs under which a
broker-dealer's sales force may be eligible to win nominal awards for certain
sales efforts. If any such program is made available to any broker-dealer, it
will be made available to all broker-dealers on the same terms. Payments made
under such programs are made by Galaxy's distributor 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.

Certain affiliates of Fleet may, at their own expense, provide additional
compensation to affiliated broker-dealers whose customers purchase significant
amounts of Retail A Shares of one or more Funds and to unaffiliated
broker-dealers whose customers purchase Retail A Shares of one or more of the
Funds. Such compensation will not represent an additional expense to the Funds
or their shareholders, since it will be paid from the assets of the Fleet
affiliates.

There's no sales charge when you buy Retail A Shares if:

- - You buy shares by reinvesting your dividends and distributions.
- - You buy shares for a 401(k) or SIMPLE IRA retirement account.
- - You buy shares for any retirement account that held Galaxy shares prior to
January 1, 1999.
- - You buy shares for any Traditional IRA, Roth IRA, Education IRA, Keogh or
SEP retirement account and your total Retail A Share retirement account
balance is $30,000 or more.
- - You buy shares with money from another Galaxy Fund on which you've already
paid a sales charge (as long as you buy the new shares within 90 days after
selling your other shares).
- - You're an investment professional who places trades for your clients and
charges them a fee.
- - You buy shares under an all-inclusive fee program (sometimes called a "wrap
fee program") offered by a broker-dealer or other financial institution.
- - You were a Galaxy shareholder before December 1, 1995.
- - You previously paid a sales charge for the shares of another mutual fund
company (as long as you buy the Galaxy shares within 60 days of selling
your other shares).

[Sidenote:]
Ask your investment professional or Galaxy's distributor, or consult the SAI,
for other instances in which the sales load is waived. When you buy your shares,
you must tell your investment professional or Galaxy's distributor that you
qualify for a sales load waiver. To contact Galaxy's distributor, call
1-877-BUY-GALAXY (1-877-289-4252).

RETAIL B SHARES

If you buy Retail B Shares of the Funds, you won't pay a CDSC unless you sell
your shares within six years of buying them. The following table shows the
schedule of CDSC charges:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
IF YOU SELL YOUR SHARES YOU'LL PAY A CDSC OF
- --------------------------------------------------------------------------------
<S> <C>
during the first year 5.00%
- --------------------------------------------------------------------------------
during the second year 4.00%
- --------------------------------------------------------------------------------
during the third year 3.00%
- --------------------------------------------------------------------------------
during the fourth year 3.00%
- --------------------------------------------------------------------------------
during the fifth year 2.00%
- --------------------------------------------------------------------------------
during the sixth year 1.00%
- --------------------------------------------------------------------------------
after the sixth year None
- --------------------------------------------------------------------------------
</TABLE>

-48-
<PAGE>

For purposes of calculating the CDSC, all purchases made during a calendar month
are considered to be made on the first day of that month. The CDSC is based on
the value of the Retail B Shares on the date that they are sold or the original
cost of the shares, whichever is lower. To keep your CDSC as low as possible
each time you sell shares, we'll first sell any shares in your account that are
not subject to a CDSC. If there are not enough of these, we'll sell those shares
that have the lowest CDSC. There is no CDSC on Retail B Shares that you acquire
by reinvesting your dividends and distributions.

In addition, there's no CDSC when Retail B Shares are sold because of the death
or disability of a shareholder and in certain other circumstances such as
exchanges. Ask your investment professional or Galaxy's distributor, or consult
the SAI, for other instances in which the CDSC is waived. To contact Galaxy's
distributor, call 1-877-BUY-GALAXY (1-877-289-4252).

DISTRIBUTION AND SHAREHOLDER SERVICE FEES

Retail A Shares of the Funds pay shareholder service fees at an annual rate of
up to 0.30% of each Fund's Retail A Share assets. Retail B Shares of the Funds
pay distribution (12b-1) and shareholder service fees at an annual rate of up to
0.95% of each Fund's Retail B Share assets. Galaxy has adopted a plan under
Rule 12b-1 that allows each Fund to pay fees from its Retail B Share assets for
selling and distributing Retail B Shares and for services provided to
shareholders. Because 12b-1 fees are paid on an ongoing basis, over time they
increase the cost of your investment and may cost more than paying other sales
charges.

CONVERTING RETAIL B SHARES TO RETAIL A SHARES

Six years after you buy Retail B Shares of a Fund, they will automatically
convert to Retail A Shares of the Fund. This allows you to benefit from the
lower annual expenses of Retail A Shares.

CHOOSING BETWEEN RETAIL A SHARES AND RETAIL B SHARES

In deciding whether to buy Retail A Shares or Retail B Shares, you should
consider how long you plan to hold the shares. Over time, the higher fees on
Retail B Shares may equal or exceed the initial sales charge and fees for Retail
A Shares. Retail A Shares may be a better choice if you qualify to have the
sales charge reduced or eliminated or if you plan to sell your shares within one
or two years. Consult your financial professional for help in choosing the
appropriate share class.

-49-
<PAGE>

BUYING, SELLING AND EXCHANGING SHARES

You can buy and sell Retail A Shares and Retail B Shares of the Funds on any day
that the Funds are open for business, which is any day that the New York Stock
Exchange is open. Retail A Shares and Retail B Shares have different prices. The
price at which you buy shares is the NAV next determined after your order is
accepted, plus any applicable sales charge. The price at which you sell shares
is the NAV next determined, less any applicable CDSC. NAV is determined on each
day the New York Stock Exchange is open for trading at the close of regular
trading that day (usually 4:00 p.m. Eastern time). If market prices are readily
available for securities owned by the Fund, they're valued at those prices. If
market prices are not readily available for some securities, they are valued at
fair value under the supervision of Galaxy's Board of Trustees.

Sometimes, the price of a security trading on a foreign stock exchange may be
affected by events that happen after that exchange closes. If this happens, the
fair value of the security may be determined using other factors and may not
reflect the security's last quoted price. In addition, foreign securities may
trade on days when shares of the Funds are not priced. As a result, the net
asset value per share of a Fund holding these securities may change on days when
you won't be able to buy or sell Fund shares.

[Sidenote:]
MINIMUM INVESTMENT AMOUNTS

The minimum initial investment to open a Fund account is:
- - $2,500 for regular accounts
- - $500 for retirement plan accounts such as IRA, SEP and Keogh Plan accounts
- - $100 for college savings accounts, including Education IRA accounts.

There is generally no minimum initial investment if you participate in the
Automatic Investment Program or in a salary reduction retirement plan such as a
SIMPLE IRA or 401(k). You generally can make additional investments for as
little as $100. See GALAXY INVESTOR PROGRAMS below for information on other
minimums for initial and additional investments.

Usually, you must keep at least $250 in your account other than retirement plan
accounts. If your account falls below $250 because you sell or exchange shares,
Galaxy may redeem your shares and close your account. Galaxy will give you 60
days' notice in writing before closing your account.

-50-
<PAGE>

HOW TO BUY SHARES

You can buy shares through your financial institution or directly from Galaxy's
distributor by calling 1-877-BUY-GALAXY (1-877-289-4252). A broker or agent who
places orders on your behalf may charge you a separate fee for their services.

BUYING BY MAIL

Complete a purchase application and mail it, together with a check payable to
each Fund in which you want to invest, to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

To make additional investments, send your check to the address above along with
one of the following:
- - the detachable form that's included with your Galaxy statement or your
confirmation of a prior transaction
- - a letter stating the amount of your investment, the name of the Fund you
want to invest in, and your account number.

If your check is returned because of insufficient funds, Galaxy will cancel your
order.

BUYING BY WIRE

To make an initial or additional investment by wire, send U.S. funds through the
Federal Reserve System to Fleet National Bank as agent for Galaxy's distributor.
You should wire money and registration instructions to:

Fleet National Bank
75 State Street
Boston, MA 02109
ABA #0110-0013-8
DDA #79673-5702
Ref: The Galaxy Fund
(Account number)
(Account registration)

If you're making an initial investment by wire, you must promptly complete a
purchase application and send it to The Galaxy Fund, P.O. Box 5108, 4400
Computer Drive,

-51-
<PAGE>

Westborough, MA 01581. Call Galaxy's distributor at 1-877-BUY-GALAXY
(1-877-289-4252) for a purchase application.

Your financial institution may charge you a fee for sending funds by wire.

CUSTOMERS OF FINANCIAL INSTITUTIONS

If you are a customer of a financial institution such as a bank, savings and
loan association or broker-dealer, including a financial institution affiliated
with the Adviser, you should place your order through your financial
institution. Your financial institution is responsible for sending your order to
Galaxy's distributor and wiring the money to Galaxy's custodian. For details,
please contact your financial institution.

DISCOUNT PLANS

You may have the sales charges on purchases of Retail A Shares reduced or waived
completely through the discount plans described below:

- - RIGHTS OF ACCUMULATION: You can add the value of the Retail A Shares that
you already own in any Galaxy Fund that charges a sales load to your next
investment in Retail A Shares for purposes of calculating the sales charge.
- - LETTER OF INTENT: You can purchase Retail A Shares of any Galaxy Fund that
charges a sales load over a 13-month period and receive the same sales
charge as if all of the shares had been purchased at the same time. To
participate, complete the Letter of Intent section on the account
application.
- - REINVESTMENT PRIVILEGE: You can reinvest some or all of the money that you
receive when you sell Retail A Shares of the Funds in Retail A Shares of
any Galaxy Fund within 90 days without paying a sales charge.
- - GROUP SALES: If you belong to a qualified group with 50,000 or more
members, you can buy Retail A Shares at a reduced sales charge, based on
the number of qualified group members.

[Sidenote:]
You must tell your investment professional or Galaxy's distributor when you buy
your shares that you want to take advantage of any of these discount plans. See
the SAI for additional requirements that may apply. To contact Galaxy's
distributor, call 1-877-BUY-GALAXY (1-877-289-4252).

HOW TO SELL SHARES

You can sell your shares in several ways: by mail, by telephone, by wire, or
through your financial institution.

-52-
<PAGE>

SELLING BY MAIL

Send your request in writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

You must include the following:
- - The name of the Fund
- - The number of shares or the dollar amount you want to sell
- - Your account number
- - Your Social Security number or tax identification number
- - The signatures of each registered owner of the account (the signatures must
match the names on the account registration).

Additional documents may be required for certain types of shareholders, such as
corporations, partnerships, executors, trustees, administrators or guardians.

[Sidenote:]
SIGNATURE GUARANTEES

When selling your shares by mail or by phone, you must have your signature
guaranteed if:
- - you're selling shares worth more than $50,000
- - you want us to send your money to an address other than the address on your
account, unless your assets are transferred to a successor custodian
- - you want us to send your money to the address on your account that's
changed within the last 30 days, or
- - you want us to make the check payable to someone else.

Your signature must be guaranteed by a bank that's a member of the FDIC, a trust
company, a member firm of a national securities exchange or any other eligible
institution. A notarized signature is not sufficient.

SELLING BY PHONE

You can sell shares by calling Galaxy's distributor at 1-877-BUY-GALAXY
(1-877-289-4252) unless you tell us on the account application or in writing
that you don't want this privilege. If you have difficulty getting through to
Galaxy because of unusual market conditions, consider selling your shares by
mail or wire.

-53-
<PAGE>

SELLING BY WIRE

Notify Galaxy's distributor by phone or wire that you wish to sell shares and
have the sale proceeds wired to your account at any financial institution in the
U.S. To be eligible to use this privilege, you must complete the appropriate
section on the account application or notify Galaxy in writing (with a signature
guarantee). Your sale proceeds must be more than $1,000. Galaxy's distributor
deducts a $5 fee from your sale proceeds for each wire redemption.

The sale proceeds must be paid to the same bank and account you named on your
application or in your written instructions.

CUSTOMERS OF FINANCIAL INSTITUTIONS

Please contact your financial institution for information on how to sell your
shares. The financial institution is responsible for sending your order to
Galaxy's distributor and for crediting your account with the proceeds. Galaxy
doesn't charge a fee for wiring sale proceeds to your financial institution, but
your financial institution may charge you a fee.

HOW TO EXCHANGE SHARES

You may exchange Retail A Shares of a Fund having a value of at least $100 for
Retail A Shares of any other Galaxy Fund or for shares of any other Fund that's
managed by the Adviser or any of its affiliates in which you have an existing
account. You won't pay a sales charge for exchanging your Retail A Shares.

You may exchange Retail B Shares of a Fund for Retail B Shares of any other
Galaxy Fund. You won't pay a CDSC when you exchange your Retail B Shares.
However, when you sell the Retail B Shares you acquired in the exchange, you'll
pay a contingent deferred sales charge based on the date you bought the Retail B
Shares which you exchanged.

To exchange shares:

- - call Galaxy's distributor or use the InvestConnect voice response line at
1-877-BUY-GALAXY (1-877-289-4252)

- - send your request in writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

-54-
<PAGE>

- - ask your financial institution.

Galaxy doesn't charge any fee for making exchanges but your financial
institution might do so. You are generally limited to three exchanges per year.
Galaxy may refuse any exchange request and may change or cancel the exchange
privilege with 60 days' advance notice to shareholders.

OTHER TRANSACTION POLICIES

If Galaxy doesn't receive full payment for your order to buy shares within three
business days of the order date, Galaxy won't accept your order. Galaxy will
advise you if this happens and return any payment it may eventually receive. You
can only invest in shares of the Funds that are legally available in your state.

Galaxy may refuse any order to buy shares. Galaxy doesn't issue a certificate
when you buy shares but it does keep a record of shares issued to investors.

Galaxy won't accept your order to sell shares unless it has a completed account
application from you. Galaxy may refuse your order to sell or exchange shares by
wire or telephone if it believes it is advisable to do so. Galaxy or its
distributor may change or cancel the procedures for selling or exchanging shares
by wire or telephone at any time.

If you elect telephone privileges on the account application or in a letter to
Galaxy, you may be responsible for any fraudulent telephone orders as long as
Galaxy has taken reasonable precautions to verify your identity.

Galaxy normally pays you cash when you sell your shares, but it has the right to
deliver securities owned by a Fund instead of cash. When you sell these
securities, you'll pay brokerage charges.

Sales proceeds are normally sent to you within three business days but Galaxy
reserves the right to send sales proceeds within seven business days if sending
proceeds earlier could adversely affect a Fund.

If any shares that you're selling are part of an investment you've paid for with
a personal check, Galaxy will delay sending your sales proceeds until the check
clears, which can take up to 15 days.

-55-
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. Each Fund, except the International
Equity Fund, pays any dividends from net investment income each quarter. The
International Equity Fund pays dividends from net investment income annually.
Each Fund pays any net capital gains at least once a year. It's expected that
the Funds' annual distributions will normally -- but not always -- consist
primarily of capital gains rather than ordinary income. Dividends and
distributions are paid in cash unless you indicate in the account application
or in a letter to Galaxy that you want to have dividends and distributions
reinvested in additional shares.

FEDERAL TAXES. Each Fund contemplates declaring as dividends each year all or
substantially all of its taxable income, including its net capital gain (the
excess of long-term capital gain over short-term capital loss). You will be
subject to income tax on these distributions regardless of whether they are
paid in cash or reinvested in additional shares. Distributions attributable to
the net capital gain of a Fund will be taxable to you as long-term capital
gain, regardless of how long you have held your shares. Other Fund
distributions will generally be taxable as ordinary income. You will be
notified annually of the tax status of distributions to you.

You should note that if you purchase shares just prior to a capital gain
distribution, the purchase price will reflect the amount of the upcoming
distribution, but you will be taxed on the entire amount of the distribution
received, even though, as an economic matter, the distribution simply
constitutes a return of capital. This is known as "buying into a dividend."

You will recognize taxable gain or loss on a sale, exchange or redemption of
your shares, including an exchange for shares of another Fund, based on the
difference between your tax basis in the shares and the amount you receive for
them. (To aid in computing your tax basis, you generally should retain your
account statements for the periods during which you held shares.) Any loss
realized on shares held for six months or less will be treated as a long-term
capital loss to the extent of any capital gain dividends that were received on
the shares.

The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.

It is expected that the International Equity Fund will be subject to foreign
withholding taxes with respect to dividends or interest received from sources
in foreign countries. The Fund may make an election to treat a proportionate
amount of such taxes as constituting a distribution to each shareholder, which
would allow each shareholder either (1) to credit such proportionate amount of
taxes against U.S. federal income tax liability or (2) to take such amount as
an itemized deduction.

The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. You should consult your tax
adviser for further information regarding federal, state, local and/or foreign
tax consequences relevant to your specific situation.

STATE AND LOCAL TAXES. Shareholders may also be subject to state and local
taxes on distributions and redemptions. State income taxes may not apply
however to the portions of each Fund's distributions, if any, that are
attributable to interest on U.S. Government securities. Shareholders should
consult their tax advisers regarding the tax status of distributions in their
state and locality.

-56-
<PAGE>

GALAXY INVESTOR PROGRAMS

RETIREMENT PLANS

Retail A Shares and Retail B Shares of the Funds are available for purchase in
connection with any of the following retirement plans:

- - Individual Retirement Arrangements (IRAs), including Traditional, Roth,
Rollover and Education IRAs.
- - Simplified Employee Pension Plans (SEPs).
- - Keogh money purchase and profit sharing plans.
- - Salary reduction retirement plans set up by employers for their employees,
which are qualified under Section 401(k) and 403(b) of the Internal Revenue
Code.
- - SIMPLE IRA plans which are qualified under Section 408(p).

For information about eligibility requirements and other matters concerning
these plans and to obtain an application, call Galaxy's distributor at
1-877-BUY-GALAXY (1-877-289-4252).

OTHER PROGRAMS

It's also easy to buy or sell shares of the Funds by using one of the programs
described below. Just tell Galaxy the amount and how frequently you want to buy
or sell shares and Galaxy does the rest. For further information on any of these
programs, call Galaxy's distributor at 1-877-BUY-GALAXY (1-877-289-4252) or your
financial institution.

AUTOMATIC INVESTMENT PROGRAM

You can make automatic investments from your bank account every month or every
quarter. You can choose to make your investment on any day of the month or
quarter. The minimum investment is $50 a month or $150 a quarter except for
Education IRAs, in which case the minimum investment is $40 a month or $125 a
quarter.

PAYROLL DEDUCTION PROGRAM

You can make regular investments from your paycheck. The minimum investment is
$25 per pay period. Send a completed Galaxy Payroll Deduction Application to
your employer's payroll department. They'll arrange to have your investment
deducted from your paycheck.

-57-
<PAGE>

COLLEGE INVESTMENT PROGRAM

The minimum for initial and additional investments through the College
Investment Program is $100 unless you participate in the Automatic Investment
Program, in which case the minimum for initial and additional investments is
$50. You can also save for college by opening an Education IRA account. The
minimum for initial and additional investments in an Education IRA is $100
unless you participate in the Automatic Investment Program, in which case the
minimum for initial and additional investments is $40.

DIRECT DEPOSIT PROGRAM

This program lets you deposit your social security payments in your Fund account
automatically. There's no minimum deposit. You can cancel the program by
notifying the Social Security Administration in writing.

SYSTEMATIC WITHDRAWAL PLAN

You can make regular withdrawals from your investment account every month, every
quarter, every six months or once a year. You need a minimum account balance of
$10,000 to participate in the plan. No CDSC will be charged on withdrawals of
Retail B Shares made through the plan that don't annually exceed 12% of your
account's value.

You may cancel your participation in any of these programs, other than the
Direct Deposit Program, by writing to Galaxy at:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

Please allow at least five days for the cancellation to be processed.

-58-
<PAGE>

HOW TO REACH GALAXY

THROUGH YOUR FINANCIAL INSTITUTION

Your financial institution can help you buy, sell or exchange shares and can
answer questions about your account.

GALAXY SHAREHOLDER SERVICES

Call Galaxy's distributor at 1-877-BUY-GALAXY (1-877-289-4252), Monday through
Friday, 8 a.m. to 6 p.m. (Eastern time) for help from a Galaxy representative.

INVESTCONNECT

InvestConnect is Galaxy's Shareholder Voice Response System. Call
1-877-BUY-GALAXY (1-877-289-4252) from any touch-tone phone for automated access
to account information and current Fund prices and performance, or to place
orders to sell or exchange shares. It's available 24 hours a day, seven days a
week.

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

If you live outside the United States, contact Galaxy by calling 1-508-855-5237.

THE INTERNET

Please visit Galaxy's website at: www.galaxyfunds.com

-59-
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables shown below will help you understand the
financial performance for the Funds' Retail A Shares and Retail B Shares for the
past five years (or the period since a particular Fund began operations or a
particular class of shares was first offered). Certain information reflects the
financial performance of a single Retail A Share or Retail B Share. The total
returns in the tables represent the rate that an investor would have earned (or
lost) on an investment in Retail A Shares and Retail B Shares of each Fund,
assuming all dividends and distributions were reinvested. This information has
been audited by [____________________], independent accountants, whose report,
along with the Funds' financial statements, are included in the Funds' Annual
Report and [__________________________________] into the SAI. The Equity
Income, International Equity and Small Cap Value Funds did not sell Retail B
Shares during the periods covered by the tables.

-60-
<PAGE>

ASSET ALLOCATION FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------------- ------------------- ---------------------- --------- --------
RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES B SHARES A SHARES B SHARES A SHARES B SHARES(1) A SHARES A SHARES
--------- -------- -------- -------- --------- ------------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period. . . . . . . . . . . $ 14.52 $ 14.51 $ 12.82 $ 13.59 $ 10.67 $ 11.15
-------- ------- -------- -------- ------- -------
Income from Investment Operations:
Net investment income(2) . . . . . . . . 0.40 0.29 0.30 0.13 0.30 0.27
Net realized and unrealized gain
(loss) on investments . . . . . . . 2.43 2.42 1.83 0.91 2.16 (0.49)
-------- ------- -------- -------- ------- -------
Total from Investment
Operations . . . . . . . . . . . . 2.83 2.71 2.13 1.04 2.46 (0.22)
-------- ------- -------- -------- ------- -------
Less Dividends:
Dividends from net investment
income. . . . . . . . . . . . . . . . . (0.38) (0.28) (0.30) (0.12) (0.31) (0.26)
Dividends from net realized
capital gains . . . . . . . . . . . . . (0.51) (0.51) (0.13) -- -- --
-------- ------- -------- -------- ------- -------
Total Dividends . . . . . . . . . . (0.89) (0.79) (0.43) (0.12) (0.31) (0.26)
-------- ------- -------- -------- ------- -------
Net increase (decrease) in net asset value. . 1.94 1.92 1.70 0.92 2.15 (0.48)
-------- ------- -------- -------- ------- -------
Net Asset Value, End of Period. . . . . . . . $ 16.46 $ 16.43 $ 14.52 $ 14.51 $ 12.82 $ 10.67
-------- -------- -------- -------- ------- -------
-------- -------- -------- -------- ------- -------
Total Return(5) . . . . . . . . . . . . . . . 20.23% 19.34% 16.92% 7.71%(3) 23.42% (2.02)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . $177,239 $ 30,688 $116,852 $ 3,557 $76,368 $73,574
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . 2.66% 1.95% 2.29% 1.73%(4) 2.52% 2.66%
Operating expenses including
reimbursement/waiver. . . . . . . . 1.37% 2.10% 1.42% 1.95%(4) 1.48% 1.21%
Operating expenses excluding
reimbursement/waiver. . . . . . . . 1.37% 2.19% 1.42% 2.15%(4) 1.50% 1.22%
Portfolio Turnover Rate . . . . . . . . . . . 58% 58% 48% 48% 41% 23%
</TABLE>

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

(1) The Fund began issuing Retail B Shares on March 4, 1996.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 was $____, $0.40, $0.30,
$0.30 and $0.27, respectively. Net investment income per share before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for Retail B Shares for the years ended October 31, 1998 and October 31,
1997 and for the period ended October 31, 1996 was $____, $0.28 and $0.12,
respectively.
(3) Not Annualized.
(4) Annualized.
(5) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.

-61-
<PAGE>

EQUITY INCOME FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ----------- ----------- ---------
RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES A SHARES A SHARES(2) A SHARES A SHARES
---------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period. . . . . . . . . $ 16.91 $ 14.98 $ 12.74 $ 12.85
------- ------- -------- --------
Income from Investment Operations:
Net investment income(1) . . . . . . . . . . . . 0.30 0.30 0.28 0.30
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . 3.35 2.47 2.47 0.07
------- ------- -------- --------
Total from Investment Operations . . . . . 3.65 2.77 2.75 0.37
------- ------- -------- --------
Less Dividends:
Dividends from net investment income . . . . . . (0.30) (0.30) (0.30) (0.29)
Dividends from net realized capital gains . . . (1.44) (0.54) (0.21) (0.19)
------- ------- -------- --------
Total Dividends . . . . . . . . . . . (1.74) (0.84) (0.51) (0.48)
------- ------- -------- --------
Net increase (decrease) in net asset value . . . . . 1.91 1.93 2.24 (0.11)
------- ------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . $ 18.82 $ 16.91 $ 14.98 $ 12.74
------- ------- -------- --------
------- ------- -------- --------
Total Return(2) . . . . . . . . . . . . . . . . . . . 23.28% 19.01% 22.23% 2.94%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . $169,276 $126,952 $81,802 $63,532
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . 1.70% 1.86% 2.08% 2.45%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . 1.39% 1.40% 1.49% 1.11%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . 1.41% 1.40% 1.51% 1.12%
Portfolio Turnover Rate . . . . . . . . . . . . . . . 37% 45% 21% 31%
</TABLE>

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

(1) Net investment income per share before reimbursement/waiver of fees by
the Adviser and/or the Fund's administrator for Retail A Shares for the
years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $___, $0.30,
$0.30, $0.28 and $0.30, respectively.

(2) Calculation does not include the effect of any sales charge for Retail
A Shares.

-62-
<PAGE>

GROWTH AND INCOME FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------------------
1998 1997 1996(2) 1995 1994
------------------- -------------------- ------------------------ --------- ---------
RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES B SHARES A SHARES B SHARES A SHARES B SHARES(2) A SHARES A SHARES
-------- -------- --------- --------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period. . . . . . . $ 13.78 $ 13.77 $ 12.35 $ 12.97 $ 11.15 $ 10.69
-------- -------- -------- -------- ------- --------
Income from Investment Operations:
Net investment income(3) . . . . 0.18 0.10 0.21 0.07 0.24 0.22
Net realized gain (loss) on
investments . . . . . . . . . . 3.67 3.65 2.16 0.81 1.70 0.72
-------- -------- -------- -------- ------- --------
Total from Investment
Operations . . . . . . . . 3.85 3.75 2.37 0.88 1.94 0.94
-------- -------- -------- -------- ------- --------
Less Dividends:
Dividends from net investment
income. . . . . . . . . . . . . (0.20) (0.10) (0.21) (0.08) (0.25) (0.20)
Dividends from net realized
gains . . . . . . . . . . . . . (1.19) (0.19) (0.73) -- (0.49) (0.28)
-------- -------- -------- -------- ------- --------
Total Dividends . . . . . . (1.39) (1.29) (0.94) (0.08) (0.74) (0.48)
-------- -------- -------- -------- ------- --------
Net increase (decrease) in
net asset value. . . . . . . . . . . 2.46 2.46 1.43 0.80 1.20 0.46
-------- -------- -------- -------- ------- --------
Net Asset Value, End of Period $ 16.24 $ 16.23 $ 13.78 $ 13.77 $ 12.35 $ 11.15
-------- -------- -------- -------- ------- --------
-------- -------- -------- -------- ------- --------
Total Return(4) . . . . . . . . . . . 30.10% 29.11% 20.25% 6.83%(5) 18.52% 9.12%
Ratios/Supplemental Data:
Net Assets, End of
Period (000's). . . . . . . . . $141,884 $ 35,178 $ 77,776 $ 4,562 $51,078 $ 22,244
Ratios to average net assets:
Net investment income
including
reimbursement/waiver. . . . . . 1.18% 0.31% 1.65% 0.79%(6) 2.10% 2.06%
Operating expenses including
reimbursement/waiver. . . . 1.27% 2.05% 1.34% 1.96%(6) 1.32% 1.29%
Operating expenses excluding
reimbursement/waiver. . . . 1.45% 2.28% 1.45% 2.11%(6) 1.77% 1.74%
Portfolio Turnover Rate . . . . . . . 93% 93% 59% 59% 51% 73%
</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. 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 Shares 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.
(2) The Fund began issuing Retail B Shares on March 4, 1996.
(3) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for Retail A Shares for the years
ended October 31, 1998, 1997 and 1996 was $____, $0.18 and $0.19,
respectively. Net investment income per share before reimbursement/waiver
of fees by the Adviser and/or the Fund's administrator for Retail B Shares
for the years ended October 31, 1998 and October 31, 1997 and for the
period ended October 31, 1996 was $____, $0.08 and $0.05, respectively.
Net investment income per share before reimbursement/waiver of fees by
other parties for Retail A Shares for the years ended October 31, 1995 and
1994 was $0.22 and $0.18, respectively (unaudited).
(4) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.
(5) Not annualized.
(6) Annualized.

-63-
<PAGE>

STRATEGIC EQUITY FUND(1)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

PERIOD ENDED
OCTOBER 31, 1998
--------------------------------------
RETAIL RETAIL
A SHARES B SHARES
-------- --------
<S> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . . . . .
Income from Investment Operations:
Net investment income(2) . . . . . . . . . . . . . . . . . . . . . .
Net realized and unrealized gain (loss) on investments . . . . . . .
Total from Investment Operations . . . . . . . . . . . . . . .
Less Dividends:
Dividends from net investment income . . . . . . . . . . . . . . . .
Dividends from net realized capital gains . . . . . . . . . . . . .
Total Dividends . . . . . . . . . . . . . . . . . . . . . . . .
Net increase (decrease) in net asset value . . . . . . . . . . . . . . .
Net Asset Value, End of Period . . . . . . . . . . . . . . . . . . . . .

Total Return(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . %(4) %(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . . .
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . . . . . . %(5) %(5)
Operating expenses including reimbursement/waiver . . . . . . . . . %(5) %(5)
Operating expenses excluding reimbursement/waiver . . . . . . . . . %(5) %(5)
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . . . . . %(4) %(4)
</TABLE>

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

(1) The Fund commenced operations on March 4, 1998.
(2) Net investment income per share is less than $______.
(3) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.
(4) Not annualized.
(5) Annualized.

-64-
<PAGE>

EQUITY VALUE FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------- --------------------- --------------------- -------------------
RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES B SHARES A SHARES B SHARES A SHARES B SHARES(1) A SHARES A SHARES
-------- -------- -------- -------- -------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period . . . . . $ 15.96 $ 15.99 $ 14.33 $ 14.74 $ 13.31 $ 13.12
---------- -------- --------- ------- ------- --------
Income from Investment Operations:
Net investment income(2) . . . 0.11 -- 0.14 0.04 0.22 0.18
Net realized and
unrealized gain
(loss) on investments . . 4.16 4.17 2.74 1.25 2.24 0.45
---------- -------- --------- ------- ------- --------
Total from Investment
Operations . . . . . . . 4.27 4.17 2.88 1.29 2.46 0.63
---------- -------- --------- ------- ------- --------
Less Dividends:
Dividends from net
investment income . . . . . . (0.12) (0.02) (0.14) (0.04) (0.23) (0.16)
Dividends from net realized
capital gains . . . . . . . . (1.90) (1.90) (1.11) -- (1.21) (0.28)
---------- -------- --------- ------- ------- --------
Total Dividends . . . . . (2.02) (1.92) (1.25) (0.04) (1.44) (0.44)
---------- -------- --------- ------- ------- --------
Net increase (decrease) in
net asset value. . . . . . . . . . 2.25 2.25 1.63 1.25 1.02 0.19
---------- -------- --------- ------- ------- --------
Net Asset Value, End of Period . . $ 18.21 $ 18.24 $ 15.96 $15.99 $ 14.33 $ 13.31
---------- -------- --------- ------- ------- --------
---------- -------- --------- ------- ------- --------

Total Return(3) . . . . . . . . . . 29.48% 28.60% 21.49% 8.80%(4) 20.81% 4.97%
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . . . $ 182,641 $14,958 $ 131,998 $1,916 $96,555 $74,001
Ratios to average net assets:
Net investment income
including
Reimbursement/waiver . . 0.63% (0.13)% 1.00% 0.43%(5) 1.62% 1.45%
Operating expenses including
Reimbursement/waiver . . 1.38% 2.07% 1.45% 1.94%(5) 1.49% 1.08%
Operating expenses excluding
Reimbursement/waiver . . 1.38% 2.38% 1.45% 2.24%(5) 1.50% 1.11%
Portfolio Turnover Rate . . . . . . 111% 111% 116% 116% 76% 71%
</TABLE>

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

(1) The Fund began issuing Retail B Shares on March 4, 1996.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 was $____, $0.11, $0.14,
$0.22 and $0.18, respectively. Net investment income (loss) per share
before reimbursement/waiver of fees by the Adviser and/or the Fund's
administrator for Retail b Shares for the years ended October 31, 1998 and
1997 and for the period ended October 31, 1996 was $____, $(0.03) and
$0.01, respectively.
(3) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.
(4) Not annualized.
(5) Annualized.

-65-
<PAGE>

EQUITY GROWTH FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------- --------------------- --------------------- -------------------
RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES B SHARES A SHARES B SHARES A SHARES B SHARES(1) A SHARES A SHARES
-------- -------- -------- -------- -------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period . . . . . . . $ 20.37 $ 20.26 $ 17.29 $ 18.77 $ 14.18 $ 13.76
-------- -------- -------- ------- ------- -------
Income from Investment Operations:
Net investment income (loss)(2). . 0.07 (0.09)(4) 0.10 (0.01) 0.14 0.17
Net realized and unrealized
gain (loss) on investments) . . . 6.05 6.02 3.39 1.50 3.28 0.47
-------- -------- -------- ------- ------- -------
Total from Investment
Operations . . . . . . . . . 6.12 5.93 3.49 1.49 3.42 0.64
-------- -------- -------- ------- ------- -------
Less Dividends:
Dividends from net
investment income . . . . . . . . (0.07) -- (0.11) -- (0.14) (0.16)
Dividends from net
realized capital gains. . . . . . (1.28) (1.28) (0.30) -- (0.17) (0.06)
-------- -------- -------- ------- ------- -------
Total Dividends . . . . . . . (1.35) (1.28) (0.41) -- (0.31) (0.22)
-------- -------- -------- ------- ------- -------
Net increase (decrease) in net
asset value. . . . . . . . . . . . . . 4.77 4.65 3.08 1.49 3.11 0.42
-------- -------- -------- ------- ------- -------
Net Asset Value, End of Period . . . . $ 25.14 $ 24.91 $ 20.37 $ 20.26 $ 17.29 $ 14.18
-------- -------- -------- ------- ------- -------
-------- -------- -------- ------- ------- -------

Total Return(3) . . . . . . . . . . . . 31.61% 30.78% 20.51% 7.95%(5) 24.54% 4.72%
Ratios/Supplemental Data:
Net Assets, End of Period
(000's) . . . . . . . . . . . . . $226,330 $20,363 $160,800 $ 3,995 $98,911 $70,338
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . 0.30% (0.40)% 0.50% (0.16)%(6) 0.85% 1.22%
Operating expenses including
reimbursement/waiver . . . . 1.37% 2.07% 1.40% 1.92%(6) 1.45% 0.98%
Operating expenses excluding
reimbursement/waiver . . . . 1.37% 2.30% 1.40% 2.29%(6) 1.47% 0.99%
Portfolio Turnover Rate . . . . . . . . 66% 66% 36% 36% 14% 18%
</TABLE>

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

(1) The Fund began issuing Retail B Shares on March 4, 1996.
(2) Net investment income (loss) per share before reimbursement/waiver of fees
by the Adviser and/or the Fund's administrator for Retail A Shares for the
years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $____, $0.07,
$0.10, $0.13 and $0.17, respectively. Net investment income (loss) per
share before reimbursement/waiver of fees by the Adviser and/or the Fund's
administrator for Retail B Shares for the years ended October 31, 1998 and
1997 and for the period ended October 31, 1996 was $___, $(0.14) and
($0.03), respectively.
(3) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.
(4) The selected per share data was calculated using the weighted average
shares outstanding method for the year.
(5) Not annualized.
(6) Annualized.

-66-
<PAGE>

INTERNATIONAL EQUITY FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------
1998 1997 1996 1995 1994
-------- --------- -------- -------- ------------
RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES A SHARES A SHARES A SHARES A SHARES
-------- --------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period. . . . . . . $ 13.94 $ 12.92 $ 13.20 $ 12.13
-------- -------- ---------- --------
Income from Investment Operations:
Net investment income (loss)(1) . . . . . . 0.01 0.11 0.11 0.06
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . 2.09 1.27 (0.21) 1.02
-------- -------- ---------- --------
Total from Investment Operations . . . 2.10 1.38 (0.10) 1.08
-------- -------- ---------- --------
Less Dividends:
Dividends from net investment income . . . . (0.18) (0.12) (0.02) (0.01)
Dividends from net realized capital gains. . (0.68) (0.24) (0.16) --
-------- -------- ---------- --------
Total Dividends . . . . . . . . . (0.86) (0.36) (0.18) (0.01)
-------- -------- ---------- --------
Net increase (decrease) in net asset value . . . 1.24 1.02 (0.28) 1.07
-------- -------- ---------- --------

Net Asset Value, End of Period . . . . . . . . . $ 15.18 $ 13.94 $ 12.92 $ 13.20
-------- -------- ---------- --------
-------- -------- ---------- --------
Total Return(2) . . . . . . . . . . . . . . . . . 15.88% 10.86% (0.64)% 8.91%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . .
Ratios to average net assets: $ 56,592 $ 35,144 $ 30,104 $ 32,887
Net investment income including
reimbursement/waiver . . . . . . . . . 0.03% 0.78% 0.84% 0.69%
Operating expenses including
reimbursement/waiver . . . . . . . . . 1.60% 1.70% 1.76% 1.49%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . 1.85% 1.98% 2.03% 1.79%
Portfolio Turnover Rate . . . . . . . . . . . . . 45% 146% 48% 39%
</TABLE>

(1) Net investment income (loss) per share before reimbursement/waiver of fees
by the Adviser and/or the Fund's administrator for Retail A Shares for the
years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $____, $(0.01),
$0.07, $0.08 and $0.03, respectively.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares.

-67-
<PAGE>

SMALL CAP VALUE FUND
(FOR A SHARE(1) OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------
1998 1997 1996(1) 1995 1994
--------- -------- --------- -------- --------
RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES A SHARES A SHARES A SHARES A SHARES
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>

Net Asset Value, Beginning of Period. . . . . . . $ 14.75 $ 12.68 $ 11.06 $ 11.21
-------- -------- --------- --------
Income from Investment Operations:
Net investment income(2) . . . . . . . . . . (0.04)(4) 0.01 (0.02) (0.01)
Net realized gain (loss) on investments. . . 5.72 2.95 2.21 0.18
-------- -------- --------- --------
Total from Investment Operations. . . . 5.68 2.96 2.19 0.17
-------- -------- --------- --------
Less Dividends:
Dividends from net investment income . . . . -- (0.02) -- --
Dividends in excess of net investment
income. . . . . . . . . . . . . . . . . -- -- -- --
Dividends from net realized gains. . . . . . (2.14) (0.87) (0.57) (0.32)
-------- -------- --------- --------
Total Dividends . . . . . . . . . . . . (2.14) (0.89) (0.57) (0.32)
-------- -------- --------- --------
Net increase (decrease) in net asset value. . . . 3.54 2.07 1.62 (0.15)
-------- -------- --------- --------
Net Asset Value, End of Period. . . . . . . . . . $ 18.29 $ 14.75 $ 12.68 $ 11.06
-------- -------- --------- --------
-------- -------- --------- --------
Total Return(3) . . . . . . . . . . . . . . . . . 43.58% 24.77% 21.27% 1.64%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . $63,658 $ 34,402 $ 27,546 $ 19,764
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . . . (0.25)% 0.08% (0.19)% (0.10)%
Operating expenses including
reimbursement/waiver. . . . . . . . . . 1.30% 1.40% 1.35% 1.31%
Operating expenses excluding
reimbursement/waiver. . . . . . . . . . 1.52% 1.55% 1.85% 1.84%
Portfolio Turnover Rate . . . . . . . . . . . . . 52% 39% 32% 29%
</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. 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.
(2) Net investment income (loss) per share before reimbursement/waiver of fees
by the Adviser and/or the Fund's administrator for Retail A Shares for the
years ended October 31, 1998, 1997 and 1996 was $___, $(0.02) and $0.01,
respectively. Net investment income (loss) per share before
reimbursement/waiver of fees by other parties for Retail A Shares for the
years ended October 31, 1995 and 1994 was $(0.08) and $(0.06), respectively
(unaudited).
(3) Calculation does not include the effect of any sales charge for Retail A
Shares.
(4) The selected per share data was calculated using the weighted average
shares outstanding method for the year.

-68-
<PAGE>

SMALL COMPANY EQUITY FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------- --------------------- --------------------- --------- ---------
RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL RETAIL
A SHARES B SHARES A SHARES B SHARES A SHARES(1) B SHARES(1) A SHARES A SHARES
-------- -------- -------- -------- -------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period. . . . . . . . $ 19.96 $ 19.91 $ 16.28 $ 17.27 $ 12.35 $ 12.41
-------- -------- -------- -------- -------- -------
Income from Investment Operations:
Net investment income (loss)(2). . (0.18) (0.21) (0.14) (0.19)(3) (0.09) (0.01)
Net realized and unrealized gain
(loss) on investments . . . . 3.54 3.41 3.99 2.83 4.21 --
-------- -------- -------- -------- -------- -------
Total from Investment
Operations . . . . . . . . . 3.36 3.20 3.85 2.64 4.12 (0.01)
-------- -------- -------- -------- -------- -------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . -- -- -- -- -- --
Dividends from net realized
capital gains. . . . . . . . . . . (2.38) (2.38) (0.17) -- (0.19) (0.05)
-------- -------- -------- -------- -------- -------
Total Dividends. . . . . . . . (2.38) (2.38) (0.17) -- (0.19) (0.05)
-------- -------- -------- -------- -------- -------
Net increase (decrease) in net
asset value . . . . . . . . . . . . . . 0.98 0.82 3.68 2.64 3.93 (0.06)
-------- -------- -------- -------- -------- -------
Net Asset Value, End of Period . . . . . $ 20.94 $ 20.73 $ 19.96 $ 19.91 $ 16.28 $ 12.35
-------- -------- -------- -------- -------- -------
-------- -------- -------- -------- -------- -------
Total Return(4) . . . . . . . . . . 19.08% 18.23% 23.97% 15.34%(5) 34.01% (0.06)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . $135,593 $14,731 $111,101 $ 3,659 $ 45,668 $30,845
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . (1.02)% (1.76)% (1.03)% (1.50)%(6) (0.85)% (0.40)%
Operating expenses including
reimbursement/waiver . . . . . . 1.46% 2.20% 1.57% 2.04%(6) 1.60% 1.31%
Operating expenses excluding
reimbursement/waiver . . . . . . 1.48% 2.44% 1.57% 2.44%6 1.64% 1.34%
Portfolio Turnover Rate. . . . . . . . . . 69% 69% 82% 82% 54% 35%
</TABLE>

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

(1) The Fund began issuing Retail B Shares on March 4, 1996.
(2) Net investment income (loss) per share before reimbursement/waiver of fees
by the Adviser and/or the Fund's administrator for Retail A Shares for the
years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $____, $(0.18),
$(0.14), $(0.09) and $(0.01), respectively. Net investment income (loss)
per share before reimbursement/waiver of fees by the Adviser and/or the
Fund's administrator for Retail B Shares for the years ended October 31,
1998 and October 31, 1997 and for the period ended October 31, 1996 was
$____, $(0.24) and $(0.24), respectively.
(3) The selected per share data was calculated using the weighted average
shares outstanding method for the period.
(4) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.
(5) Not annualized.
(6) Annualized.

-69-
<PAGE>

[Back Cover Page]

Where to find more information

You'll find more information about the Funds in the following documents:

ANNUAL AND SEMI-ANNUAL REPORTS

Galaxy's annual and semi-annual reports contain more information about each Fund
and a discussion about the market conditions and investment strategies that had
a significant effect on each Fund's performance during the last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI contains detailed information about the Funds and their policies. By
law, it's incorporated by reference into (considered to be part of) this
prospectus.

You can get a free copy of these documents, request other information about the
Funds and make shareholder inquiries by calling Galaxy at 1-877-BUY-GALAXY
(1-877-289-4252) or by writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If you buy your shares through a financial institution, you may contact your
institution for more information.

You can write to the Securities and Exchange Commission (SEC) Public Reference
Section and ask them to mail you information about the Funds, including the SAI.
They'll charge you a fee for this service. You can also visit the SEC Public
Reference Room and copy the documents while you're there. For information about
the operation of the Public Reference Room, call the SEC.

Public Reference Section of the SEC
Washington, DC 20549-6009
1-800-SEC-0330

Reports and other information about the Funds are also available on the SEC's
website at http://www.sec.gov.

Galaxy's Investment Company Act File No. is 811-4636.

PROGALEQ

-70-
<PAGE>

[Front cover page]

The Galaxy Fund

Prospectus
February 28, 1999

Trust Shares

<PAGE>

Contents

Information about the Funds. . . . . . . . . . . . . . . . . . . . . .
Galaxy Asset Allocation Fund . . . . . . . . . . . . . . . . . . . .
Galaxy Equity Income Fund . . . . . . . . . . . . . . . . . . . . .
Galaxy Growth and Income Fund. . . . . . . . . . . . . . . . . . . .
Galaxy Strategic Equity Fund . . . . . . . . . . . . . . . . . . . .
Galaxy Equity Value Fund . . . . . . . . . . . . . . . . . . . . . .
Galaxy Equity Growth Fund. . . . . . . . . . . . . . . . . . . . . .
Galaxy International Equity Fund . . . . . . . . . . . . . . . . . .
Galaxy Small Cap Value Fund. . . . . . . . . . . . . . . . . . . . .
Galaxy Small Company Equity Fund . . . . . . . . . . . . . . . . . .
Additional information about risk. . . . . . . . . . . . . . . . . .

Fund management. . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to invest in the Funds . . . . . . . . . . . . . . . . . . . . . .
Buying and selling shares. . . . . . . . . . . . . . . . . . . . . .
How to buy shares. . . . . . . . . . . . . . . . . . . . . . . . .
How to sell shares . . . . . . . . . . . . . . . . . . . . . . . .
Other transaction policies . . . . . . . . . . . . . . . . . . . .

Dividends, distributions and taxes . . . . . . . . . . . . . . . . . .
Financial highlights . . . . . . . . . . . . . . . . . . . . . . . . .

<PAGE>
INFORMATION ABOUT THE FUNDS

Beginning on the next page, you'll find the following important information
about each Fund:

WHICH FUND IS RIGHT FOR YOU?

Not all mutual funds are for everyone. Your investment goals and tolerance for
risk will determine which fund is right for you.

<PAGE>

Risk spectrum Fund Primary investments
- --------------------------------------------------------------------------------
Asset Allocation Common stocks and fixed income
securities of domestic companies
-----------------------------------------------------------
Conservative Equity Income Common stocks of domestic companies
selected primarily for their income
potential
-----------------------------------------------------------
Growth & Income Common stocks of companies selected
for their growth and income
potential
-----------------------------------------------------------
Strategic Equity Equity securities of large and
medium sized companies believed to
be undervalued
-----------------------------------------------------------
Moderate Equity Value Equity securities of all size
companies believed to be
undervalued
-----------------------------------------------------------
Equity Growth Equity securities of growth-
oriented companies
-----------------------------------------------------------
International Equity Equity securities of foreign
companies
-----------------------------------------------------------
Aggressive Small Cap Value Equity securities of smaller
companies believed to be
undervalued
-----------------------------------------------------------
Small Company Equity Equity securities of smaller
growth-oriented companies
- --------------------------------------------------------------------------------

THE FUNDS' INVESTMENT ADVISER

[Sidenote:]
An investment in the Funds isn't a Fleet Bank deposit and it isn't insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

-2-
<PAGE>

Galaxy Asset Allocation Fund

THE FUND'S INVESTMENT OBJECTIVE

[Sidenote:]
CURRENT INCOME
Current income includes both dividends from stocks and interest income from
fixed income securities, less Fund expenses.

THE FUND'S MAIN INVESTMENT STRATEGIES

THE MAIN RISKS OF INVESTING IN THE FUND

-3-
<PAGE>

In addition, the Fund also carries the following risks:

INTEREST RATE RISK: The value of fixed income investments such as bonds are
affected by movements in interest rates. Bond prices tend to fall when interest
rates rise and to rise when interest rates fall.

CREDIT RISK: The value of fixed income investments also depends on the ability
of an issuer to make principal and interest payments. If an issuer can't meet
its payment obligations or if its credit rating is lowered, the value of its
securities will decline.

PREPAYMENT RISK: Changes in interest rates may cause certain fixed income
investments held by the Fund to be paid off much sooner or later than expected,
which could adversely affect the Fund's value.

PORTFOLIO COMPOSITION: The level of risk could increase if a larger percentage
of the Fund is invested in one particular asset class, such as stocks or bonds.
However, asset allocation funds are generally less volatile than portfolios that
contain only stocks.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[BAR CHART GOES HERE]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

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

1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (12/30/91)
- --------------------------------------------------------------------------------
S&P 500 --% --% --% (since 12/30/91)
- --------------------------------------------------------------------------------
</TABLE>

-4-
<PAGE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% None --% --%
- --------------------------------------------------------------------------------
</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

- -------------------------------------------------------------------------
1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------
Trust Shares $-- $-- $-- $--
- -------------------------------------------------------------------------
</TABLE>

[Sidenote:]
PORTFOLIO MANAGERS

The Fund's portfolio managers are Donald Jones, a Vice President of the Adviser,
and David Lindsay, a Senior Vice President of the Adviser. They are primarily
responsible for the day-to-

-5-
<PAGE>

day management of the Fund's investment portfolio. Mr. Jones has managed the
equity portion of the Fund's portfolio, including determining the allocation of
the Fund's assets between equities and fixed income investments, since May of
1995. He has been with the Adviser and its predecessors since 1977. Mr. Lindsay
has managed the fixed income portion of the Fund since January of 1997. He has
been with the Adviser and its predecessors since 1986.

-6-
<PAGE>

Galaxy Equity Income Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks current income and capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

THE MAIN RISKS OF INVESTING IN THE FUND

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-7-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

- -----------------------------------------------------------------------------
1 year 5 years Since inception
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (12/14/90)
- -----------------------------------------------------------------------------
S&P 500 --% --% --% (since 12/14/90)
- -----------------------------------------------------------------------------

</TABLE>
FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% --% --% --%
- ------------------------------------------------------------------------------
</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<S> <C> <C> <C> <C>
Trust Shares $-- $-- $-- $--
- -------------------------------------------------------------------------

</TABLE>

-8-
<PAGE>

[Sidenote:]
PORTFOLIO MANAGER

-9-
<PAGE>

Galaxy Growth and Income Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks to provide a relatively high total return through long-term
capital appreciation and current income.

[Sidenote:]
CURRENT INCOME
Current income includes both dividends from stocks and interest income from
fixed income securities, less Fund expenses.

THE FUND'S MAIN INVESTMENT STRATEGIES

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

[Sidenote:]
GROWTH STOCKS
Growth stocks offer strong revenue and earnings potential, and accompanying
capital growth, with less dividend income than value stocks.

THE MAIN RISKS OF INVESTING IN THE FUND

-10-
<PAGE>

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

- -------------------------------------------------------------------------------
1 year 5 years Since inception
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (2/12/93)
- -------------------------------------------------------------------------------
S&P 500 --% --% --% (since 2/12/93)
- -------------------------------------------------------------------------------

</TABLE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

-11-
<PAGE>

Annual Fund operating expenses (fees deducted from the Fund's assets)

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% None --% --%
- -------------------------------------------------------------------------------

</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares $-- $-- $-- $--
- -------------------------------------------------------------------------
</TABLE>

[Sidenote:]
PORTFOLIO MANAGER

The Fund's portfolio manager is Gregory M. Miller, a Vice-President of the
Adviser. He's primarily responsible for the day-to-day management of the Fund's
investment portfolio. After seven years assisting in the Fund's management, Mr.
Miller became the Fund's portfolio manager in July of 1998. He joined the
Adviser in 1985.

-12-
<PAGE>

Galaxy Strategic Equity Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

THE MAIN RISKS OF INVESTING IN THE FUND

In addition, the Fund also carries the following risks:

-13-
<PAGE>

changes in the value of the equity securities into which they will convert,
convertible securities are also subject to stock market risk.
- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
stocks may be more volatile and less liquid than U.S. stocks.
- - HEDGING: The Fund may invest in derivatives, such as options, futures and
foreign currencies, to hedge against market risk or the currency risk of
its foreign investments. There's no guarantee hedging will always work. It
can also prevent the Fund from making a gain if markets move in the
opposite direction to the hedge.

HOW THE FUND HAS PERFORMED

The Fund doesn't have a long-term performance record since it has been operation
for less than one calendar year.

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --% --%*
- ------------------------------------------------------------------------------

</TABLE>

* The Adviser is waiving a portion of the Management fees so that such fees
are expected to be __%. Total Fund operating expenses after this waiver
are expected to be ___%. This fee waiver may be revised or discontinued at
any time.

-14-
<PAGE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

- -------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares $-- $-- $-- $--
- -------------------------------------------------------------------------

</TABLE>

[Sidenote:]
PORTFOLIO MANAGER

-15-
<PAGE>

Galaxy Equity Value Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term capital appreciation. Income is secondary to the
objective of capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests mainly in common stocks that the Adviser believes are
undervalued. The Fund invests most of its assets in companies that have a market
capitalization of more than $500 million.

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

[Sidenote:]
VALUE STOCKS
Value stocks are ones that appear to be underpriced based on measures such as
lower price-to-earnings and price-to-book value ratios.

THE MAIN RISKS OF INVESTING IN THE FUND

16
<PAGE>

In addition, the Fund also carries the following risk:

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

-17-
<PAGE>

- -------------------------------------------------------------------------------
1 year 5 years 10 years Since inception
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% --% --% --% (9/1/88)
- -------------------------------------------------------------------------------
S&P 500 --% --% --% --% (since 9/1/88)
- -------------------------------------------------------------------------------
Lipper Growth and --% --% --% --% (since 9/1/88)
Income Funds
Average
- -------------------------------------------------------------------------------

</TABLE>

[Sidenote:]
The Lipper Growth and Income Funds Average is an unmanaged index that measures
the performance of a select group of mutual funds with investment objectives
similar to that of the Fund.

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

- -------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% None --% --%
- -------------------------------------------------------------------------------

</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-18-
<PAGE>

[Sidenote:]
PORTFOLIO MANAGER

-19-
<PAGE>

Galaxy Equity Growth Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

[Sidenote:]
GROWTH STOCKS
Growth stocks offer strong revenue and earnings potential, and accompanying
capital growth, with less dividend income than value stocks.

THE MAIN RISKS OF INVESTING IN THE FUND

-20-
<PAGE>

In addition, the Fund also carries the following risks:

- - CONVERTIBLE SECURITIES: Securities that can be converted into common stock,
such as certain debt securities and preferred stock, are subject to the
usual risks associated with fixed income investments, such as interest rate
risk and credit risk. In addition, because they react to changes in the
value of the equity securities into which they will convert, convertible
securities are also subject to stock market risk.
- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
stocks may be more volatile and less liquid than U.S. stocks.
- - HEDGING: The Fund may invest in derivatives, such as certain types of
options and foreign currencies, to hedge against market risk or the
currency risk of its foreign investments. There's no guarantee hedging will
always work. It can also prevent the Fund from making a gain if markets
move in the opposite direction to the hedge.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-21-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

</TABLE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% None --% --%
- ------------------------------------------------------------------------------

</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

</TABLE>

-22-
<PAGE>

[Sidenote:]
PORTFOLIO MANAGER

-23-
<PAGE>

Galaxy International Equity Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks long-term capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

[Sidenote:]
SUB-ADVISER
The Adviser has appointed Oechsle International Advisors, LLC as Sub-Adviser to
assist it in the day-to-day management of the Fund's investment portfolio.

THE MAIN RISKS OF INVESTING IN THE FUND

-24-
<PAGE>

In addition, the Fund also carries the following risks:

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

-25-
<PAGE>

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

- ------------------------------------------------------------------------------
1 year 5 years Since inception
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (12/30/91)
- ------------------------------------------------------------------------------
MSCI EAFE Index --% --% --% (since 12/30/91)
- ------------------------------------------------------------------------------

</TABLE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

</TABLE>

The Adviser is waiving a portion of the Management fees so that such fees are
expected to be ___%. Total Fund operating expenses after this waiver are
expected to be ___%. This fee waiver may be revised or discontinued at any
time.

EXAMPLE

-26-
<PAGE>

- - the Fund's operating expenses remain the same.

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

</TABLE>

[Sidenote:]
PORTFOLIO MANAGERS

The Fund's portfolio managers are Singleton Dewey Keesler, Jr. and Kathleen
Harris. They're primarily responsible for the day-to-day management of the
Fund's investment portfolio. Mr. Keesler is Chief Investment Officer and
portfolio manager/research analyst with the Sub-Adviser. He has been
associated with the Sub-Adviser and its predecessor since 1985. Ms. Harris
has been a portfolio manager at the Sub-Adviser and its predecessor since
January 1995. She was previously portfolio manager and investment director
for the State of Wisconsin Investment Board. Mr. Keesler and Ms. Harris have
co-managed the Fund since August 1996.

-27-
<PAGE>

Galaxy Small Cap Value Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks to provide long-term capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

[Sidenote:]
VALUE STOCKS
Value stocks are ones that appear to be underpriced based on measures such as
lower price-to-earnings and price-to-book value ratios.

-28-
<PAGE>

THE MAIN RISKS OF INVESTING IN THE FUND

In addition, the Fund also carries the following risks:

HOW THE FUND HAS PERFORMED

-29-
<PAGE>

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

The Fund began operations on December 14, 1992 as a separate portfolio (the
Predecessor Fund) of The Shawmut Funds. 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 classes of shares, Investment Shares
and Trust Shares, that were similar to the Fund's Retail A Shares and Trust
Shares. In connection with the reorganization, shareholders of the Predecessor
Fund exchanged their Investment Shares and Trust Shares for Retail A Shares and
Trust Shares of the Fund. The returns for the periods prior to December 4, 1995
are for Trust Shares of the Predecessor Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

- ----------------------------------------------------------------------------
1 year 5 years Since inception
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (2/12/93)
- ----------------------------------------------------------------------------
Russell 2000 Index --% --% --% (since 2/12/93)
- ----------------------------------------------------------------------------
S&P 600 --% --% --% (since 2/12/93)
- ----------------------------------------------------------------------------

</TABLE>

[Sidenote:]
The Russell 2000 Index is an unmanaged index that tracks the performance of the
2,000 smallest of the 3,000 largest U.S. companies, based on market
capitalization.

-30-
<PAGE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses deducted from the Fund's assets
when you own and hold Trust Shares of the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% None --% --%
- ------------------------------------------------------------------------------

</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

</TABLE>

[Sidenote:]
PORTFOLIO MANAGER

-31-
<PAGE>

Galaxy Small Company Equity Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks capital appreciation.

THE FUND'S MAIN INVESTMENT STRATEGIES

[Sidenote:]
MARKET CAPITALIZATION
A company's market capitalization is the price of a share of its stock,
multiplied by the number of shares held by investors.

[Sidenote:]
GROWTH STOCKS
Growth stocks offer strong revenue and earnings potential, and accompanying
capital growth, with less dividend income than value stocks.

THE MAIN RISKS OF INVESTING IN THE FUND

-32-
<PAGE>

In addition, the Fund also carries the following risks:

- - SMALL COMPANIES RISK: Smaller companies tend to have limited resources,
product lines and market share. As a result, their share prices tend to
fluctuate more than those of larger companies. Their shares may also trade
less frequently and in limited volume, making them potentially less liquid.
The price of small company stocks might fall regardless of trends in the
broader market.
- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
stocks may be more volatile and less liquid than U.S. stocks.
- - HEDGING: The Fund may invest in derivatives, such as certain types of
options and foreign currencies, to hedge against market risk or the
currency risk of its foreign investments. There's no guarantee hedging will
always work. It can also prevent the Fund from making a gain if markets
move in the opposite direction to the hedge.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-33-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

- -----------------------------------------------------------------------------
1 year 5 years Since inception
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (12/30/91)
- -----------------------------------------------------------------------------
Russell 2000 Index --% --% --% (since 12/30/91)
- -----------------------------------------------------------------------------

</TABLE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% None --% --%
- ------------------------------------------------------------------------------

</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

</TABLE>

-34-
<PAGE>

[Sidenote:]
PORTFOLIO MANAGER

-35-
<PAGE>

ADDITIONAL INFORMATION ABOUT RISK

The main risks associated with an investment in each of the Galaxy Equity Funds
have been described below. The following supplements that discussion.

-36-
<PAGE>

commonly known as the "Year 2000" or "Y2K" problem. The Adviser is taking
steps to address the Y2K problem with respect to the computer systems that
it uses and to obtain assurances that comparable steps are being taken by
the Funds' other major service providers. At this time, however, there can
be no assurance that these steps will be sufficient to avoid any adverse
impact on the Funds.

-37-
<PAGE>

FUND MANAGEMENT

- -----------------------------------------------------------------------------
FUND MANAGEMENT FEE AS A % OF NET ASSETS
- -----------------------------------------------------------------------------
<S> <C>
Asset Allocation --%
- -----------------------------------------------------------------------------
Equity Income --%
- -----------------------------------------------------------------------------
Growth and Income --%
- -----------------------------------------------------------------------------
Strategic Equity --%
- -----------------------------------------------------------------------------
Equity Value --%
- -----------------------------------------------------------------------------
Equity Growth --%
- -----------------------------------------------------------------------------
International Equity --%
- -----------------------------------------------------------------------------
Small Cap Value --%
- -----------------------------------------------------------------------------
Small Company Equity --%
- -----------------------------------------------------------------------------
</TABLE>
SUB-ADVISER: The Adviser has delegated some of its advisory
responsibilities with respect to the International Equity Fund to Oechsle
International Advisors, LLC as Sub-Adviser. The Sub-Adviser determines which
securities will be purchased, retained or sold for the Fund, places orders for
the Fund and provides the Adviser with information on international investment
and economic developments. The Adviser assists and consults with the Sub-Adviser
as to the Fund's investment program, approves the list of foreign countries
recommended by the Sub-Adviser for investment and manages the Fund's daily cash
position. The Sub-Adviser's fees are paid by the Adviser.

SUB-ACCOUNT SERVICES: Affiliates of the Adviser and certain other parties
may receive fees from Galaxy's transfer agent for providing certain
sub-accounting and administrative services to participant sub-accounts with
respect to Trust Shares of the Funds held by defined contribution plans. The
transfer agency fees payable by Trust Shares of the Funds have been

-38-
<PAGE>

increased by an amount equal to these fees, so that the holders of Trust Shares
indirectly bear these fees.

-39-
<PAGE>

HOW TO INVEST IN THE FUNDS

BUYING AND SELLING SHARES

Trust Shares of the Funds are available for purchase by the following types of
investors:

- - investors maintaining a qualified account at a bank or trust institution,
including subsidiaries of Fleet Financial Group, Inc.

- - participants in employer-sponsored defined contribution plans

Qualified accounts include discretionary investment management accounts,
custodial accounts, agency accounts and different types of tax-advantaged
accounts. Your institution can provide more information about which types of
accounts are eligible.

You can buy and sell Trust Shares of the Funds on any business day. A business
day is any day that Galaxy's distributor, Galaxy's custodian and your
institution or employer-sponsored plan are open for business.

The price at which you buy shares is the net asset value (NAV) per share next
determined after your order is accepted. The price at which you sell shares is
the NAV per share next determined after receipt of your order. NAV is determined
on each day the New York Stock Exchange is open for trading at the close of
regular trading that day (usually 4:00 p.m. Eastern time). If market prices are
readily available for securities owned by the Fund, they're valued at those
prices. If market prices are not readily available for some securities, they are
valued at fair value under the supervision of Galaxy's Board of Trustees.

[Sidenote:]
NET ASSET VALUE

The price you pay for your shares is based on the net asset value per share
(NAV). It's the value of a Fund's assets attributable to Trust Shares, minus the
value of the Fund's liabilities attributable to Trust Shares, divided by the
number of Trust Shares held by investors.

-40-
<PAGE>

HOW TO BUY SHARES

You can buy Trust Shares by following the procedures established by your
financial institution or your employer-sponsored plan. Your financial
institution or plan administrator is responsible for sending your order to
Galaxy's distributor and wiring payment to Galaxy's custodian. The institution
or employer-sponsored plan holds the shares in your name and receives all
confirmations of purchases and sales.

Clients, members and employees of the Sub-Adviser also may buy Trust Shares of
the International Equity Fund by contacting Galaxy's distributor at
1-877-BUY-GALAXY (1-877-289-4252).

[Sidenote:]
INVESTMENT MINIMUMS
Galaxy does not have any minimum investment requirements for initial or
additional investments in Trust Shares but financial institutions and
employer-sponsored plans may do so. They may also require you to maintain a
minimum account balance.

HOW TO SELL SHARES

You can sell Trust Shares by following the procedures established by your
financial institution or your employer-sponsored plan. Your financial
institution or plan administrator is responsible for sending your order to
Galaxy's distributor and for crediting your account with the proceeds. Galaxy
doesn't charge for wiring the proceeds, but your financial institution or
employer-sponsored plan may do so. Contact your financial institution or plan
administrator for more information.

OTHER TRANSACTION POLICIES

If Galaxy doesn't receive full payment for your order to buy shares by 4:00 p.m.
on the next business day, Galaxy won't accept your order. Galaxy will advise
your institution or plan administrator if this happens.

Galaxy may refuse any order to buy shares. Galaxy doesn't issue a certificate
when you buy shares but it does keep a record of shares issued to investors.

Sales proceeds are normally wired to your institution or plan administrator on
the next business day but Galaxy reserves the right to send sales proceeds
within seven business days if sending proceeds earlier could adversely affect a
Fund.

Galaxy may ask for any information it might reasonably need to make sure that
you've authorized a sale of shares.

-41-
<PAGE>

Galaxy may close any account after 60 days' written notice if the value of the
account drops below $250 as a result of selling shares.

-42-
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. Each Fund, except the
International Equity Fund, pays any dividends from net investment income each
quarter. The International Equity Fund pays dividends from net investment
income annually. Each Fund pays any net capital gains at least once a year.
It's expected that the Funds' annual distributions will normally -- but not
always -- consist primarily of capital gains rather than ordinary income.
Dividends and distributions are paid in cash unless you tell your financial
institution or plan administrator in writing that you want to have dividends
and distributions reinvested in additional shares.

FEDERAL TAXES. Each Fund contemplates declaring as dividends each year
all or substantially all of its taxable income, including its net capital
gain (the excess of long-term capital gain over short-term capital loss). You
will be subject to income tax on these distributions regardless of whether
they are paid in cash or reinvested in additional shares. Distributions
attributable to the net capital gain of a Fund will be taxable to you as
long-term capital gain, regardless of how long you have held your shares.
Other Fund distributions will generally be taxable as ordinary income. You
will be notified annually of the tax status of distributions to you.

You should note that if you purchase shares just prior to a capital gain
distribution, the purchase price will reflect the amount of the upcoming
distribution, but you will be taxed on the entire amount of the
distribution received, even though, as an economic matter, the distribution
simply constitutes a return of capital. This is known as "buying into a
dividend."

Any loss realized on shares held for six months or less will be treated as a
long-term capital loss to the extent of any capital gain dividends that were
received on the shares.

It is expected that the International Equity Fund will be subject to foreign
withholding taxes with respect to dividends received from sources in foreign
countries. The Fund may make an election to treat a proportionate amount of
such taxes as constituting a distribution to each shareholder, which would
allow each shareholder either (1) to credit such proportionate amount of
taxes against U.S. federal income tax liability or (2) to take such amount
as an itemized deduction.

The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. You should consult your
tax adviser for further information regarding federal, state, local and/or
foreign tax consequences relevant to your specific situation.

-43-
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables shown below will help you understand the
financial performance for the Funds' Trust Shares for the past five years (or
the period since a particular Fund began operations). Certain information
reflects the financial performance of a single Trust Share. The total returns in
the tables represent the rate that an investor would have earned (or lost) on an
investment in Trust Shares of each Fund, assuming all dividends and
distributions were reinvested. This information has been audited by
[____________________], independent accountants, whose report, along with the
Funds' financial statements, are included in the Funds' Annual Report and
[__________________________________] into the SAI.

-44-
<PAGE>

ASSET ALLOCATION FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------
TRUST SHARES
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . . $ 14.53 $ 12.83 $ 10.68 $ 11.15
------- -------- ------- --------
Income from Investment Operations:
Net investment income(1). . . . . . . . . . . . . . . . . . . . 0.43 0.33 0.32 0.28
Net realized and unrealized gain (loss) on investments. . . . . 2.42 1.83 2.16 (0.49)
------- -------- ------- --------
Total from Investment Operations . . . . . . . . . . . . 2.85 2.16 2.48 (0.21)
------- -------- ------- --------
Less Dividends:
Dividends from net investment income. . . . . . . . . . . . . . (0.40) (0.33) (0.33) (0.26)
Dividends from net realized capital gains . . . . . . . . . . . (0.51) (0.13) -- --
------- -------- ------- --------
Total Dividends. . . . . . . . . . . . . . . . . . . . . (0.91) (0.46) (0.33) (0.26)
------- -------- ------- --------
Net increase (decrease) in net asset value. . . . . . . . . . . . 1.94 1.70 2.15 (0.47 )
------- -------- ------- --------
Net Asset Value, End of Period. . . . . . . . . . . . . . . . . . $ 16.47 $ 14.53 $ 12.83 $ 10.68
------- -------- ------- --------
------- -------- ------- --------
Total Return. . . . . . . . . . . . . . . . . . . . . . . . . . . 20.42% 17.19% 23.68% (1.93)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . . $171,741 $123,603 $76,771 $65,464
Ratios to average net assets:
Net investment income including reimbursement/waiver. . . . . . 2.82% 2.52% 2.74% 2.70%
Operating expenses including reimbursement/waiver . . . . . . 1.21% 1.19% 1.26% 1.18%
Operating expenses excluding reimbursement/waiver . . . . . . 1.22% 1.21% 1.30% 1.18%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . . 58% 48% 41% 23%

</TABLE>

- --------------------------------------
(1) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for Trust Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 was $_____, $0.43, $0.33,
$0.32 and $0.28, respectively.

-45-
<PAGE>
<TABLE>
<CAPTION>

EQUITY INCOME FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
----------------------------------------------------------------
TRUST SHARES
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . $ 16.93 $ 14.99 $ 12.75 $ 12.85
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(1). . . . . . . . . . . . . . . . . . 0.38 0.37 0.36 0.31
Net realized and unrealized gain (loss) on investments . . 3.35 2.48 2.45 0.07
-------- -------- -------- --------
Total from Investment Operations . . . . . . . . . . . . 3.73 2.85 2.81 0.38
-------- -------- -------- --------
Less Dividends

Dividends from net investment income . . . . . . . . . . . (0.38) (0.37) (0.36) (0.29)
Dividends from net realized capital gains . . . . . . . . . (1.44) (0.54) (0.21) (0.19)
-------- -------- -------- --------
Total Dividends: . . . . . . . . . . . . . . . . . . . . . (1.82) (0.91) (0.57) (0.48)
-------- -------- -------- --------
Net increase (decrease) in net asset value . . . . . . . . . 1.91 1.94 2.24 (0.10)
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . . $ 18.84 $ 16.93 $ 14.99 $ 12.75
-------- -------- -------- --------
-------- -------- -------- --------
Total Return . . . . . . . . . . . . . . . . . . . . . . . . 23.80% 19.65% 22.81% 3.02%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $119,505 $106,094 $87,819 $78,880
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . 2.14% 2.32% 2.60% 2.49%
Operating expenses including reimbursement/waiver . . . . 0.95% 0.94% 0.98% 1.07%
Operating expenses excluding reimbursement/waiver . . . . 0.97% 0.94% 1.00% 1.07%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . 37% 45% 21% 31%
</TABLE>

- -------------------------------
(1) Net investment income per share before reimbursement/waiver of fees by
the Adviser and/or the Fund's administrator for Trust Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 was $_____, $0.38, $0.37,
$0.36, and $0.31, respectively.

-46-

<PAGE>

GROWTH AND INCOME FUND(1)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31,
-------------------------------------------------------
1998 1997 1996(1) 1995 1994
-------------------------------------------------------
TRUST SHARES
-------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . . $ 13.80 $ 12.35 $ 11.15 $ 10.69
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(2) . . . . . . . . . . . . . . . . . . 0.22 0.27 0.28 0.25
Net realized and unrealized
gain (loss) on investments . . . . . . . . . . . . . . . . 3.68 2.16 1.69 0.72
-------- -------- -------- --------
Total from Investment Operations . . . . . . . . . . . . . 3.90 2.43 1.97 0.97
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . (0.23) (0.25) (0.28) (0.23)
Dividends from net realized capital gains . . . . . . . . . (1.19) (0.73) (0.49) (0.28)
-------- -------- -------- --------
Total Dividends . . . . . . . . . . . . . . . . . . . . . (1.42) (0.98) (0.77) (0.51)
-------- -------- -------- --------
Net increase (decrease) in net asset value . . . . . . . . . 2.48 1.45 1.20 0.46
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . . . $ 16.28 $ 13.80 $ 12.35 $ 11.15
-------- -------- -------- --------
-------- -------- -------- --------
Total Return . . . . . . . . . . . . . . . . . . . . . . . . . 30.43% 20.77% 18.80% 9.45%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $246,654 $186,708 $189,011 $156,827
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . 1.44% 2.01% 2.42% 2.31%
Operating expenses including reimbursement/waiver . . . . 1.03% 1.02% 1.07% 1.04%
Operating expenses excluding reimbursement/waiver . . . . . 1.06% 1.03% 1.27% 1.24%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . . . 93% 59% 51% 73%
</TABLE>

- ----------------------
(1) The Fund commenced operations on December 14, 1992 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds. 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.
(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, 1998,
1997 and 1996 was $____, $0.21 and $0.27, respectively. Net investment
income per share before reimbursement/waiver of fees by other parties for
the years ended October 31, 1995 and 1994 was $0.25 and $0.22.

-47-
<PAGE>
<TABLE>
<CAPTION>

STRATEGIC EQUITY FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

PERIOD ENDED
OCTOBER 31, 1998(1)
--------------------------
TRUST SHARES
--------------------------
<S> <C>
Net Asset Value, Beginning of Period
Income from Investment Operations:
Net investment income(2) . . . . . . . . . . . . . .
Net realized and unrealized gain on investments. . .
Total from Investment Operations . . . . . . . . .
Less Dividends:
Dividends from net investment income . . . . . . .
Dividends from net realized capital gains . . . . .
Total Dividends . . . . . . . . . . . . . . . . .
Net increase (decrease) in net asset value . . . . . .
Net Asset Value, End of Period . . . . . . . . . . . .
Total Return . . . . . . . . . . . . . . . . . . . . .

Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . .
Ratios to average net assets:
Net investment income (loss) including
reimbursement/waiver . . . . . . . . . . . . . . .
Operating expenses including reimbursement/waiver. .
Operating expenses excluding reimbursement/waiver. .
Portfolio Turnover Rate . . . . . . . . . . . . . . . .
</TABLE>

- ---------------------------
(1) The Fund commenced operations on March 4, 1998.
(2) Net investment income per share before reimbursement/waiver of fees
by the Adviser and the Fund's administrator for Trust Shares
was $______.
(3) Not annualized.
(4) Annualized.

-48-

EQUITY VALUE FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31,
-----------------------------------------------------------------------------
1998 1997 1996 1995 1994
-----------------------------------------------------------------------------
TRUST SHARES
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .. . . $ 15.96 $ 14.33 $ 13.32 $ 13.12
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(1) . . . . . . . . 0.17 0.21 0.28 0.19
Net realized and unrealized
gain (loss) on investments. . . . . . 4.16 2.74 2.24 0.45
-------- -------- -------- --------
Total from Investment Operations . . 4.33 2.95 2.52 0.64
-------- -------- -------- --------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . . (0.18) (0.21) (0.30) (0.16)
Dividends from net realized
capital gains . . . . . . . . . . . . (1.90) (1.11) (1.21) (0.28)
-------- -------- -------- --------
Total Dividends . . . . . . . . . . . (2.08) (1.32) (1.51) (0.44)
-------- -------- -------- --------
Net increase (decrease) in net
asset value . . . . . . . . . . . . . 2.25 1.63 1.01 0.20
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . $ 18.21 $ 15.96 $ 14.33 $ 13.32
-------- -------- -------- --------
-------- -------- -------- --------
Total Return . . . . . . . . . . . . . . . 29.87% 22.05% 21.31% 5.05%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . $241,532 $194,827 $165,330 $154,403
Ratios to average net assets:
Net investment income
including reimbursement/
waiver . . . . . . . . . . . . . . . 0.98% 1.42% 2.10% 1.46%
Operating expenses
including reimbursement/
waiver . . . . . . . . . . . . . . . 1.04% 1.03% 1.02% 1.06%
Operating expenses
excluding reimbursement/
waiver. . . . . . . . . . . . . . . . 1.04% 1.03% 1.02% 1.06%
Portfolio Turnover Rate . . . . . . . . . . 111% 116% 76% 71%
</TABLE>

- -------------------------
(1) Net investment income per share before reimbursement/waiver of fees by
the Adviser and/or the Fund's administrator for Trust Shares for the
years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $_____,
$0.17, $0.21, $0.28 and $0.19, respectively.

-49-

EQUITY GROWTH FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
------------------------------------------------------------------------
TRUST SHARES
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . $ 20.39 $ 17.30 $ 14.19 $ 13.76
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(1). . . . . . . . . 0.16 0.17 0.20 0.18
Net realized and unrealized
gain (loss) on investments. . . . . . . 6.06 3.40 3.28 0.47
-------- -------- -------- --------
Total from Investment Operations . . . . . 6.22 3.57 3.48 0.65
-------- -------- -------- --------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . . . (0.16) (0.18) (0.20) (0.16)
Dividends from net realized
capital gains . . . . . . . . . . . . . . (1.28) (0.30) (0.17) (0.06)
-------- -------- -------- --------
Total Dividends. . . . . . . . . . . . . . . (1.44) (0.48) (0.37) (0.22)
-------- -------- -------- --------
Net increase (decrease) in net
asset value . . . . . . . . . . . . . . . 4.78 3.09 3.11 0.43
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . $ 25.17 $ 20.39 $ 17.30 $ 14.19
-------- -------- -------- --------
-------- -------- -------- --------
Total Return . . . . . . . . . . . . . . . . 32.16% 21.03% 25.08% 4.80%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . $745,537 $562,419 $420,016 $362,094
Ratios to average net assets:
Net investment income
including reimbursement/waiver . . . . . 0.72% 0.92% 1.31% 1.27%
Operating expenses including reimbursement/
waiver . . . . . . . . . . . . . . . . . 0.95% 0.98% 1.00% 0.93%
Operating expenses excluding reimbursement/
waiver . . . . . . . . . . . . . . . . . 0.95% 0.98% 1.00% 0.93%
Portfolio Turnover Rate . . . . . . . . . . 66% 36% 14% 18%
</TABLE>

- -------------------------------
(1) Net investment income per share before reimbursement/waiver of fees by
the Adviser and/or the Fund's administrator for Trust Shares for the
years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $_____,
$0.16, $0.17, $0.20, and $0.18, respectively.

-50-
<PAGE>
<TABLE>
<CAPTION>

INTERNATIONAL EQUITY FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31,
--------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------------------------
TRUST SHARES
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . $ 14.01 $ 12.98 $ 13.20 $ 12.13
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(1). . . . . . . . . . 0.08 0.17 0.16 0.06
Net realized and unrealized
gain (loss) on investments . . . . . . . . 2.12 1.30 (0.18) 1.02
-------- -------- -------- --------
Total from Investment Operations . . . . 2.20 1.47 (0.02) 1.08
-------- -------- -------- --------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . . . . . (0.20) (0.20) (0.04) (0.01)
Dividends from net realized
capital gains . . . . . . . . . . . . . . (0.68) (0.24) (0.16) --
-------- -------- -------- --------
Total Dividends . . . . . . . . . . . . . (0.88) (0.44) (0.20) (0.01)
-------- -------- -------- --------
Net increase (decrease) in net asset
value . . . . . . . . . . . . . . . . . . 1.32 1.03 (0.22) 1.07
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . $ 15.33 $ 14.01 $ 12.98 $ 13.20
-------- -------- -------- --------
-------- -------- -------- --------
Total Return . . . . . . . . . . . . . . . . 16.60% 11.51% (0.02)% 8.91%

Ratios/Supplemental Data:
Net Assets, End of Period
(000's) . . . . . . . . . . . . . . . . . $265,124 $172,561 $89,614 $82,350
Ratios to average net assets:
Net investment income
including reimbursement/
waiver . . . . . . . . . . . . . . . . . . 0.57% 1.40% 1.36% 0.74%
Operating expenses
including reimbursement/
waiver . . . . . . . . . . . . . . . . . . 1.06% 1.08% 1.22% 1.43%
Operating expenses
excluding reimbursement/
waiver . . . . . . . . . . . . . . . . . . 1.32% 1.36% 1.48% 1.72%
Portfolio Turnover Rate . . . . . . . . . . . 45% 146% 48% 39%

</TABLE>
- ----------------------------------
(1) Net investment income per share before reimbursement/waiver of fees by
the Adviser and/or the Fund's administrator for Trust Shares for the
years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $_____,
$0.04, $0.13, $0.13 and $0.04, respectively.

-51-
<PAGE>

SMALL CAP VALUE FUND(1)
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31,
---------------------------------------------------------------------
1998 1997 1996(1) 1995 1994
---------------------------------------------------------------------
TRUST SHARES
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period. . . . . . $ 14.76 $ 12.71 $ 11.07 $ 11.21
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(2) . . . . . . . . . . 0.01 0.05 0.01 0.02
Net realized and unrealized
gain (loss) on investments. . . . . . . . . 5.74 2.97 2.21 0.17
-------- -------- -------- --------
Total from Investment Operations. . . . . . 5.75 3.02 2.22 0.19
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income . . . . -- (0.05) (0.01) (0.01)
Dividends in excess of net
investment income . . . . . . . . . . . . . -- (0.01) -- --
Dividends from net realized
capital gains . . . . . . . . . . . . . . . (2.14) (0.91) (0.57) (0.32)
-------- -------- -------- --------
Total Dividends . . . . . . . . . . . . . . (2.14) (0.97) (0.58) (0.33)
-------- -------- -------- --------
Net increase (decrease) in net asset value. . . 3.61 2.05 1.64 (0.14)
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . . $ 18.37 $ 14.76 $ 12.71 $ 11.07
-------- -------- -------- --------
-------- -------- -------- --------
Total Return . . . . . . . . . . . . . . . . . 44.08% 25.22% 21.52% 1.86%

Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . $189,257 $137,341 $121,364 $101,905
Ratios to average net assets:
Net investment income
including reimbursement/waiver . . . . . . . . 0.09% 0.45% 0.07% 0.15%
Operating expenses
including reimbursement/waiver. . . . . . . 0.96% 1.05% 1.10% 1.06%
Operating expenses
excluding reimbursement/waiver. . . . . . . 0.96% 1.06% 1.35% 1.34%
Portfolio Turnover Rate . . . . . . . . . . . . 52% 39% 32% 29%
</TABLE>

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

(1) The Fund commenced operations on December 14, 1992 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds. 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.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for the years ended October 31,
1998, 1997 and 1996 was $____, $0.05 and $0.05, respectively. Net
investment income (loss) per share before reimbursement/waiver of fees by
other parties for the years ended October 31, 1995 and 1994 was $(0.03)
and $(0.01).

-52-
<PAGE>

SMALL COMPANY EQUITY FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

YEAR ENDED
OCTOBER 31,
-------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------------------------------------------------------------
TRUST SHARES
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . $ 20.20 $ 16.38 $ 12.36 $ 12.41
-------- -------- -------- --------
Income from Investment Operations:
Net investment income (loss)(1) . . . . . . (0.11) (0.09) (0.04) --
Net realized and unrealized
gain (loss) on investments . . . . . . . . 3.61 4.08 4.25 --
-------- -------- -------- --------
Total from Investment Operations . . . 3.50 3.99 4.21 --
-------- -------- -------- --------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . . . . . -- -- -- --
Dividends from net realized
capital gains . . . . . . . . . . . . . . (2.38) (0.17) (0.19) (0.05)
-------- -------- -------- --------
Total Dividends . . . . . . . . . . . . . (2.38) (0.17) (0.19) (0.05)
-------- -------- -------- --------
Net increase (decrease) in net asset
value . . . . . . . . . . . . . . . . . . 1.12 3.82 4.02 (0.05)
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . $ 21.32 $ 20.20 $ 16.38 $ 12.36
-------- -------- -------- --------
-------- -------- -------- --------
Total Return . . . . . . . . . . . . . . . . 19.59% 24.69% 34.73% 0.02%

Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $310,751 $174,990 $94,831 $66,462
Ratios to average net assets:
Net investment income (loss)
including reimbursement/
waiver . . . . . . . . . . . . . . . . . . (0.65)% (0.60)% (0.37)% (0.35)%
Operating expenses
including reimbursement/
waiver . . . . . . . . . . . . . . . . . . 1.09% 1.14% 1.12% 1.27%
Operating expenses
excluding reimbursement/
waiver . . . . . . . . . . . . . . . . . . 1.12% 1.14% 1.12% 1.27%
Portfolio Turnover Rate . . . . . . . . . . . 69% 82% 54% 35%
</TABLE>

- ------------------------------
(1) Net investment income (loss) per share before reimbursement/waiver of fees
by the Adviser and/or the Fund's administrator for Trust Shares for the
years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $____,
$(0.11), $(0.09), $(0.04), and $0.00, respectively.

-53-

<PAGE>

[Back Cover Page]

Where to find more information

You'll find more information about the Funds in the following documents:

ANNUAL AND SEMI-ANNUAL REPORTS
Galaxy's annual and semi-annual reports contain more information about each Fund
and a discussion about the market conditions and investment strategies that had
a significant effect on each Fund's performance during the last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains detailed information about the Funds and their policies. By
law, it's incorporated by reference into (considered to be part of) this
prospectus.

You can get a free copy of these documents, request other information about the
Funds and make shareholder inquiries by calling Galaxy at 1-877-BUY-GALAXY
(1-877-289-4252) or by writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If you buy your shares through a financial institution, you may contact your
institution for more information.

Public Reference Section of the SEC
Washington, DC 20549-6009
1-800-SEC-0330

Reports and other information about the Funds are also available on the SEC's
website at http://www.sec.gov.

Galaxy's Investment Company Act File No. is 811-4636.

PROGALTREQ

-54-

<PAGE>

[Front cover page]

The Galaxy Fund

Prospectus
February 28, 1999

Galaxy Short-Term Bond Fund
Galaxy Intermediate Government Income Fund
Galaxy High Quality Bond Fund

Retail A Shares and Retail B Shares

<PAGE>

Contents

<TABLE>
<S><C>
Information about the Funds. . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Short-Term Bond Fund . . . . . . . . . . . . . . . . . . . . . .
Galaxy Intermediate Government Income Fund. . . . . . . . . . . . . . .
Galaxy High Quality Bond Fund. . . . . . . . . . . . . . . . . . . . .
Additional information about risk . . . . . . . . . . . . . . . . . . .

Fund management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to invest in the Funds . . . . . . . . . . . . . . . . . . . . . . . .
How sales charges work. . . . . . . . . . . . . . . . . . . . . . . . .
Buying, selling and exchanging shares . . . . . . . . . . . . . . . . .
How to buy shares . . . . . . . . . . . . . . . . . . . . . . . . . .
How to sell shares. . . . . . . . . . . . . . . . . . . . . . . . . .
How to exchange shares. . . . . . . . . . . . . . . . . . . . . . . .
Other transaction policies. . . . . . . . . . . . . . . . . . . . . .

Dividends, distributions and taxes . . . . . . . . . . . . . . . . . . . .

Galaxy investor programs . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement plans. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other programs. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to reach Galaxy. . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

<PAGE>

INFORMATION ABOUT THE FUNDS

This prospectus describes the Galaxy Taxable Bond Funds. Each Fund invests
primarily in debt obligations, such as bonds, notes and commercial paper.

Beginning on the next page, you'll find the following important information
about each Fund:

WHICH FUND IS RIGHT FOR YOU?

Not all mutual funds are for everyone. Your investment goals and tolerance for
risk will determine which fund is right for you.

The table below provides information as to which type of investor might want to
invest in each of the Galaxy Taxable Bond Funds. It's meant as a general guide
only. Consult your financial professional to help you decide which Fund is right
for you.

<PAGE>

- --------------------------------------------------------------------------------
GALAXY FUND MAY BE BEST SUITED FOR INVESTORS WHO ...
- --------------------------------------------------------------------------------
Galaxy Short-Term Bond Fund - want current income greater than that
normally provided by a money market
fund
- want less change in the value of
their investment than normally
associated with long-term funds
- --------------------------------------------------------------------------------
Galaxy Intermediate Government - want current income
Income Fund - want the extra margin of safety
associated with U.S. Government
securities
- can accept fluctuations in price and
yield
- --------------------------------------------------------------------------------
Galaxy High Quality Bond Fund - want current income
- want the added safety associated with
bonds with lower credit risk than
other debt securities
- can accept fluctuations in price and
yield
- --------------------------------------------------------------------------------

THE FUNDS' INVESTMENT ADVISER

[Sidenote:]
An investment in the Funds isn't a Fleet Bank deposit and it isn't insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

-2-
<PAGE>

Galaxy Short-Term Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks a high level of current income consistent with preservation of
capital.

[Sidenote:]
PRESERVATION OF CAPITAL

Preservation of capital means protecting the amount of money you invest in a
fund. If a fund seeks to preserve capital, it will try to maintain a relatively
stable share price so your investment is protected.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests primarily in debt obligations of U.S. and foreign corporations,
including bonds and notes, and in debt obligations issued or guaranteed by the
U.S. Government and its agencies or instrumentalities or by foreign governments
or their political subdivisions and instrumentalities. It also invests in
asset-backed and mortgage-backed securities and in money market instruments,
such as commercial paper and the obligations of U.S. and foreign banks.

In selecting portfolio securities for the Fund, the Adviser develops and manages
yield curve strategies. The Adviser's sector specialists then help to determine
the market sectors in which the Fund should concentrate its investments.

Nearly all Fund investments will be of investment grade quality. These are
securities which have one of the top four ratings assigned by Standard & Poor's
Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or unrated
securities determined by the Adviser to be of comparable quality. Under normal
market conditions, the Fund will invest at least 65% of its total assets in
securities rated in one of the three highest rating categories assigned by S&P
and Moody's, or unrated securities determined by the Adviser to be of comparable
quality.

The Fund's average weighted maturity will generally be less than three years.

[Sidenote:]
WHAT IS A DEBT OBLIGATION?

When a Fund buys a debt obligation such as a bond, it is in effect lending money
to the company, government or other entity that issued the bond. In return, the
issuer has an obligation to make regular interest payments and to repay the
original amount of the loan on a given date, known as the maturity date. A bond
MATURES when it reaches its maturity date. Bonds usually have fixed

-3-

<PAGE>

interest rates, although some have rates that fluctuate based on market
conditions and other factors.

[Sidenote:]
Average weighted maturity gives you the average time until all debt obligations
in a Fund come due or MATURE. It is calculated by averaging the time to maturity
of all debt obligations held by a Fund with each maturity "weighted" according
to the percentage of assets it represents.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. These can occur within or outside the U.S. or worldwide, and may affect
only particular companies or industries. You could lose money if the Fund's
investments fall in value.

In addition, the Fund also carries the following risks:

- - INTEREST RATE RISK: The prices of debt securities generally tend to move in
the opposite direction to interest rates. When rates are rising, the prices
of debt securities tend to fall. When rates are falling, the prices of debt
securities tend to rise. Generally, the longer the time until maturity, the
more sensitive the price of a debt security is to interest rate changes.
- - CREDIT RISK: The value of debt securities also depends on the ability of
issuers to make principal and interest payments. If an issuer can't meet
its payment obligations or if its credit rating is lowered, the value of
its debt securities may fall.
- - PREPAYMENT RISK: Changes in interest rates may cause certain debt
securities held by the Fund, particularly asset-backed and mortgage-backed
securities, to be paid off much sooner or later than expected, which could
adversely affect the Fund's value.
- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information about
the issuers of securities, and political or economic instability. Foreign
securities may be more volatile and less liquid than U.S. securities.

HOW THE FUND HAS PERFORMED

The bar chart and the table below show how the Fund has performed in the past.
Both assume that all dividends and distributions are reinvested in the Fund. How
the Fund has performed in the past doesn't necessarily show how it will perform
in the future.

-4-
<PAGE>

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares of the Fund has
varied from year to year, thereby giving some indication of the risk of
investing in the Fund. The returns for Retail B Shares were different than the
figures shown because each class of shares has different expenses. The figures
don't include any sales charges that investors pay when buying or selling shares
of the Fund. If sales charges were included, the returns would be lower.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (12/30/91)
- --------------------------------------------------------------------------------
Retail B Shares --% -- --% (3/4/96)
- --------------------------------------------------------------------------------
Lehman Brothers --% --% --% (since 12/30/91)
One to Three Year --% (since 3/4/96)
Government Bond
Index
- --------------------------------------------------------------------------------
</TABLE>

For current yield information, please call 1-877-BUY-GALAXY (1-877-289-4252).

[Sidenote:]
The Lehman Brothers One to Three Year Government Bond Index is an unmanaged
index which tracks the performance of short-term U.S. Government bonds.

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

-5-
<PAGE>

Shareholder fees (fees you pay directly)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Maximum sales charge (load) Maximum deferred sales
on purchases, shown as a % charge (load) shown as a %
of the offering price of the offering price or
sale price, whichever is
less
- --------------------------------------------------------------------------------
<S> <C> <C>
Retail A Shares 3.75%(1) None(2)
- --------------------------------------------------------------------------------
Retail B Shares None 5.00%(3)
- --------------------------------------------------------------------------------
</TABLE>

(1) Reduced sales charges may be available. See "How to invest in the Funds -
How sales charges work."
(2) Except for investments of $500,000 or more. See "How to invest in the
Funds -- How sales charges work."
(3) This amount applies if you sell your shares in the first year after purchase
and gradually declines to 1% in the sixth year after purchase. After six years,
your Retail B Shares will automatically convert to Retail A Shares. See "How to
invest in the Funds -- How sales charges work."

Annual Fund operating expenses (fees deducted from the Fund's assets)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Distribution and Total Fund
Management service (12b-1) Other operating
fees fees expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%(*) None --% --%(*)
- --------------------------------------------------------------------------------
Retail B Shares --%(*) --% --% --%(*)
- --------------------------------------------------------------------------------
</TABLE>

(*) The Adviser is waiving a portion of the Management fees so that such fees
are expected to be ___%. Total Fund operating expenses after this waiver
are expected to be ___% for Retail A Shares and ___% for Retail B Shares.
This fee waiver may be revised or discontinued at any time.

EXAMPLE

-6-
<PAGE>

- - your investment has a 5% return each year
- - the Fund's operating expenses remain the same.

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A $-- $-- $-- $--
Shares
- --------------------------------------------------------------------------------
Retail B $-- $-- $-- $--
Shares
- --------------------------------------------------------------------------------
If you hold Retail B Shares, you would pay the following expenses if you didn't
sell your shares:
- --------------------------------------------------------------------------------
Retail B $-- $-- $-- $--
Shares
- --------------------------------------------------------------------------------
</TABLE>

[Sidenote:]
THE PORTFOLIO MANAGER

The Fund's portfolio manager is Perry Vieth, a Vice President of the Adviser.
He's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Vieth's investment experience dates from 1986. Before
joining the Adviser, he was associated with Shawmut Investment Advisors and with
Fuji Securities Inc. He has managed the Fund since March 1, 1996.

-7-
<PAGE>

Galaxy Intermediate Government Income Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks the highest level of current income consistent with prudent risk
of capital.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 65% of its assets in debt obligations issued
or guaranteed by the U.S. Government or its agencies and instrumentalities. It
also invests in debt obligations of U.S. corporations, asset-backed and
mortgage-backed securities and money market instruments, such as commercial
paper and obligations of U.S. banks and U.S. branches of foreign banks.

In selecting portfolio securities for the Fund, the Adviser monitors and
evaluates economic trends. It establishes duration targets, ranges of interest
rates on bonds of various maturities and determines the appropriate
allocation of the Fund's investments among various market sectors.

[Sidenote:]
U.S. Government obligations are debt obligations issued or guaranteed by the
U.S. Government or one of its agencies or instrumentalities. U.S. Government
obligations generally have less credit risk than other debt obligations.

Nearly all Fund investments will be of investment grade quality and will have
one of the top three credit quality ratings of Standard & Poor's Ratings Group
or Moody's Investors Service, Inc., or unrated securities determined by the
Adviser to be of comparable quality.

The Fund's average weighted maturity will generally be between three to ten
years.

THE MAIN RISKS OF INVESTING IN THE FUND

-8-
<PAGE>

In addition, the Fund also carries the following risks:

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares of the Fund has
varied from year to year, thereby giving some indication of the risk of
investing in the Fund. The Fund did not offer Retail B Shares during the period
shown. The returns for Retail B Shares would have been different than the
figures shown because each class of shares has different expenses. The figures
don't include any sales charges that investors pay when buying or selling shares
of the Fund. If sales charges were included, the returns would be lower.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

-9-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years 10 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% --% --% --% (9/1/88)
- --------------------------------------------------------------------------------
Retail B Shares(1) -- -- -- --
Lehman Brothers
Intermediate
Government/
Corporate Bond --% --% --% --% (since 9/1/88)
Index
- --------------------------------------------------------------------------------
Lehman Brothers
Aggregate Bond
Index --% --% --% --% (since 9/1/88)
- --------------------------------------------------------------------------------
</TABLE>

(1) Retail B shares were first offered on November 1, 1998.

For current yield information, please call 1-877-BUY-GALAXY (1-877-289-4252).

[Sidenote:]
The Lehman Brothers Intermediate Government/Corporate Bond Index is an unmanaged
index which tracks the performance of intermediate U.S. Government and corporate
bonds. The Lehman Brothers Aggregate Bond Index is an unmanaged index made up of
the Lehman Brothers Government/Corporate Bond Index, its Mortgage Backed
Securities Index and its Asset Backed Securities Index.

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

Shareholder fees (fees you pay directly)

-10-
<PAGE>

(1) Reduced sales charges may be available. See "How to invest in the
Funds - How sales charges work."
(2) Except for investments of $500,000 or more. See "How to invest in the
Funds -- How sales charges work."
(3) This amount applies if you sell your shares in the first year after purchase
and gradually declines to 1% in the sixth year after purchase. After six years,
your Retail B Shares will automatically convert to Retail A Shares. See "How to
invest in the Funds -- How sales charges work."

Annual Fund operating expenses (fees deducted from the Fund's assets)

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-11-
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A $-- $-- $-- $--
Shares
- --------------------------------------------------------------------------------
Retail B $-- $-- $-- $--
Shares
- --------------------------------------------------------------------------------
If you hold Retail B Shares, you would pay the following expenses if you
didn't sell your shares:
- --------------------------------------------------------------------------------
Retail B $-- $-- $-- $--
Shares
- --------------------------------------------------------------------------------
</TABLE>

[Sidenote:]

THE PORTFOLIO MANAGER

The Fund's portfolio manager is Marie M. Schofield, a Vice President of the
Adviser. She's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Ms. Schofield has been with the Adviser since 1990 and
has over 20 years of investment experience. She has managed the Fund since
December 1, 1996.

-12-
<PAGE>

High Quality Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks a high level of current income consistent with prudent risk of
capital.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests primarily in obligations issued or guaranteed by the U.S.
Government, its agencies and instrumentalities, as well as in corporate debt
obligations such as notes and bonds. The Fund also invests in asset-backed and
mortgage-backed securities and in money market instruments, such as commercial
paper and bank obligations.

Nearly all Fund investments will be of investment grade quality. These are
securities which have one of the top four credit quality ratings of Standard &
Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or
unrated securities determined by the Adviser to be of comparable quality. Under
normal market conditions, the Fund will invest at least 65% of its total assets
in high-quality securities rated in one of the two highest rating categories
assigned by S&P and Moody's, or unrated securities determined by the Adviser to
be of comparable quality.

The Fund's average weighted maturity will vary from time to time depending on
current market and economic conditions and the Adviser's assessment of probable
changes in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

In addition, the Fund also carries the following risks:

-13-
<PAGE>

- - CREDIT RISK: The value of debt securities also depends on the ability of
issuers to make principal and interest payments. If an issuer can't meet
its payment obligations or if its credit rating is lowered, the value of
its debt securities may fall.
- - PREPAYMENT RISK: Changes in interest rates may cause certain debt
securities held by the Fund, particularly asset-backed and mortgage-backed
securities, to be paid off much sooner or later than expected, which could
adversely affect the Fund's value.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (12/14/90)
- --------------------------------------------------------------------------------
Retail B Shares --% -- --% (3/4/96)
- --------------------------------------------------------------------------------
Lehman Brothers
Long-Term
Government/ --% --% --% (since 12/14/96)
Corporate Bond --% (since 3/4/96)
Index
- --------------------------------------------------------------------------------
</TABLE>

-14-
<PAGE>

For current yield information, please call 1-877-BUY-GALAXY (1-877-289-4252).

[Sidenote:]
The Lehman Brothers Long-Term Government/Corporate Bond Index is an unmanaged
index which tracks the performance of long-term U.S. Government and corporate
bonds.

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

Shareholder fees (fees you pay directly)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Maximum sales charge (load) Maximum deferred sales
on purchases shown as a % of charge (load) shown as a %
the offering price of the offering price or
sale price, whichever is
less
- --------------------------------------------------------------------------------
<S> <C> <C>
Retail A Shares 3.75%(1) None(2)
- --------------------------------------------------------------------------------
Retail B Shares None 5.00%(3)
- --------------------------------------------------------------------------------
</TABLE>

(1) Reduced sales charges may be available. See "How to invest in the
Funds - How sales charges work."
(2) Except for investments of $500,000 or more. See "How to invest in the
Funds -- How sales charges work."
(3) This amount applies if you sell your shares in the first year after purchase
and gradually declines to 1% in the sixth year after purchase. After six years,
your Retail B Shares will automatically convert to Retail A Shares. See "How to
invest in the Funds -- How sales charges work."

-15-
<PAGE>

Annual Fund operating expenses (fees deducted from the Fund's assets)

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<TABLE>
<CAPTION>
1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A $-- $-- $-- $--
Shares
- --------------------------------------------------------------------------------
Retail B $-- $-- $-- $--
Shares
- --------------------------------------------------------------------------------
If you hold Retail B Shares, you would pay the following expenses if you didn't
sell your shares:
- --------------------------------------------------------------------------------
Retail B $-- $-- $-- $--
Shares
- --------------------------------------------------------------------------------
</TABLE>

-16-
<PAGE>

[Sidenote:]

THE PORTFOLIO MANAGER

-17-
<PAGE>

ADDITIONAL INFORMATION ABOUT RISK

The principal risks associated with an investment in each of the Galaxy Taxable
Bond Funds have been described above. The following supplements that
discussion.

- - TEMPORARY DEFENSIVE POSITIONS: Under unusual market conditions, each Fund
may hold uninvested cash (which will not earn any income) and invest
without limit in money market instruments, including short-term U.S.
Government securities. This strategy could prevent a Fund from achieving
its investment objective.

-18-
<PAGE>

FUND MANAGEMENT

The management fees paid to the Adviser by the Funds during the last fiscal year
are set forth below.

-19-
<PAGE>

HOW TO INVEST IN THE FUNDS

HOW SALES CHARGES WORK

[Sidenote:]
NET ASSET VALUE

RETAIL A SHARES

The table below shows the sales charge you'll pay if you buy Retail A Shares of
the Funds. The offering price is the NAV of the shares purchased, plus any
applicable sales charge.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------

Total sales charge
- --------------------------------------------------------------------------------
Amount of your investment As a % of the offering As a % of your
price per share investment
- --------------------------------------------------------------------------------
<S> <C> <C>
Less than $50,000 3.75% 3.90%
- --------------------------------------------------------------------------------
$50,000 but less than
$100,000 3.50% 3.63%
- --------------------------------------------------------------------------------
$100,000 but less than
$250,000 3.00% 3.09%
- --------------------------------------------------------------------------------
$250,000 but less than
$500,000 2.50% 2.56%
- --------------------------------------------------------------------------------
$500,000 and over 0.00%(1) 0.00%(1)
- --------------------------------------------------------------------------------
</TABLE>

Galaxy's distributor may from time to time implement programs under which a
broker-dealer's sales force may be eligible to win nominal awards for certain
sales efforts. If any such program is made available to any broker-dealer, it
will be made available to all broker-dealers on the same terms. Payments made
under such programs are made by Galaxy's distributor 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.

Certain affiliates of Fleet may, at their own expense, provide additional
compensation to affiliated broker-dealers whose customers purchase
significant amounts of Retail A Shares of one or more Funds and to
unaffiliated broker-dealers whose customers purchase Retail A Shares of one
or more of the Funds. Such compensation will not represent an additional
expense to the Funds or their shareholders, since it will be paid from the
assets of the Fleet affiliates.

There's no sales charge when you buy Retail A Shares if:

-20-
<PAGE>

- - You buy shares by reinvesting your dividends and distributions.
- - You buy shares for a 401(k) or SIMPLE IRA retirement account.
- - You buy shares for any retirement account that held Galaxy shares prior to
January 1, 1999.
- - You buy shares for any Traditional IRA, Roth IRA, Education IRA, Keogh
or SEP retirement account and your total Retail A Share retirement account
balance is $30,000 or more.
- - You buy shares with money from another Galaxy Fund on which you've already
paid a sales charge (as long as you buy the new shares within 90 days after
selling your other shares).
- - You're an investment professional who places trades for your clients and
charges them a fee.
- - You buy shares under an all-inclusive fee program (sometimes called a "wrap
fee program") offered by a broker-dealer or other financial institution.
- - You were a Galaxy shareholder before December 1, 1995.
- - You previously paid a sales charge for the shares of another mutual fund
company (as long as you buy the Galaxy shares within 60 days of selling
your other shares).

RETAIL B SHARES

If you buy Retail B Shares of the Funds, you won't pay a CDSC unless you sell
your shares within six years of buying them. The following table shows the
schedule of CDSC charges:

In addition, there's no CDSC when Retail B Shares are sold because of the death
or disability of a shareholder and in certain other circumstances such as
exchanges. Ask your investment

-21-
<PAGE>

professional or Galaxy's distributor, or consult the SAI, for other instances in
which the CDSC is waived. To contact Galaxy's distributor, call
1-877-BUY-GALAXY (1-877-289-4252).

DISTRIBUTION AND SHAREHOLDER SERVICE FEES

Retail A Shares of the Funds pay shareholder service fees at an annual rate of
up to 0.15% of each Fund's Retail A Share assets. Retail B Shares of the Funds
pay distribution (12b-1) and shareholder service fees at an annual rate of up to
0.80% of each Fund's Retail B Share assets. Galaxy has adopted a plan under
Rule 12b-1 that allows each Fund to pay fees from its Retail B Share assets for
selling and distributing Retail B Shares and for services provided to
shareholders. Because 12b-1 fees are paid on an ongoing basis, over time they
increase the cost of your investment and may cost more than paying other sales
charges.

CONVERTING RETAIL B SHARES TO RETAIL A SHARES

Six years after you buy Retail B Shares of a Fund, they will automatically
convert to Retail A Shares of the Fund. This allows you to benefit from the
lower annual expenses of Retail A Shares.

CHOOSING BETWEEN RETAIL A SHARES AND RETAIL B SHARES

-22-
<PAGE>

BUYING, SELLING AND EXCHANGING SHARES

[Sidenote:]
MINIMUM INVESTMENT AMOUNTS

-23-
<PAGE>

HOW TO BUY SHARES

BUYING BY MAIL

Complete a purchase application and mail it, together with a check payable to
each Fund in which you want to invest, to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If your check is returned because of insufficient funds, Galaxy will cancel your
order.

BUYING BY WIRE

Fleet National Bank
75 State Street
Boston, MA 02109
ABA #0110-0013-8
DDA #79673-5702
Ref: The Galaxy Fund
(Account number)
(Account registration)

If you're making an initial investment by wire, you must promptly complete a
purchase application and send it to The Galaxy Fund, P.O. Box 5108, 4400
Computer Drive, Westborough, MA 01581. Call Galaxy's distributor at
1-877-BUY-GALAXY (1-877-289-4252) for a purchase application.

-24-
<PAGE>

Your financial institution may charge you a fee for sending funds by wire.

CUSTOMERS OF FINANCIAL INSTITUTIONS

DISCOUNT PLANS

You may have the sales charges on purchases of Retail A Shares reduced or waived
completely through the discount plans described below:

HOW TO SELL SHARES

You can sell your shares in several ways: by mail, by telephone, by wire, or
through your financial institution.

SELLING BY MAIL

Send your request in writing to:

-25-
<PAGE>

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

Additional documents may be required for certain types of shareholders, such as
corporations, partnerships, executors, trustees, administrators or guardians.

[Sidenote:]
SIGNATURE GUARANTEES

SELLING BY PHONE

SELLING BY WIRE

-26-
<PAGE>

in writing (with a signature guarantee). Your sale proceeds must be more than
$1,000. Galaxy's distributor deducts a $5 fee from your sale proceeds for each
wire redemption.

The sale proceeds must be paid to the same bank and account you named on your
application or in your written instructions.

CUSTOMERS OF FINANCIAL INSTITUTIONS

HOW TO EXCHANGE SHARES

To exchange shares:

- - call Galaxy's distributor or use the InvestConnect voice response line at
1-877-BUY-GALAXY (1-877-289-4252)

- - send your request in writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

- - ask your financial institution.

-27-
<PAGE>

OTHER TRANSACTION POLICIES

Galaxy may refuse any order to buy shares. Galaxy doesn't issue a certificate
when you buy shares but it does keep a record of shares issued to investors.

Galaxy normally pays you cash when you sell your shares, but it has the right to
deliver securities owned by a Fund instead of cash. When you sell these
securities, you'll pay brokerage charges.

If any shares that you're selling are part of an investment you've paid for with
a personal check, Galaxy will delay sending your sales proceeds until the check
clears, which can take up to 15 days.

-28-
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. Each Fund declares any dividends
from net investment income daily and pays them monthly. Each Fund pays any
net capital gains at least once a year. It's expected that the Funds' annual
distributions will normally -- but not always --consist primarily of ordinary
income rather than capital gains. Dividends and distributions are paid in
cash unless you indicate in the account application or in a letter to Galaxy
that you want to have dividends and distributions reinvested in additional
shares.

FEDERAL TAXES. Each Fund contemplates declaring as dividends each year all or
substantially all of its taxable income, including its net capital gain (the
excess of long-term capital gain over short-term capital loss). You will be
subject to income tax on these distributions regardless of whether they are
paid in cash or reinvested in additional shares. Distributions attributable
to the net capital gain of a Fund will be taxable to you as long-term capital
gain, regardless of how long you have held your shares. Other Fund
distributions will generally be taxable as ordinary income. You will be
notified annually of the tax status of distributions to you.

You will recognize taxable gain or loss on a sale, exchange or redemption of
your shares, including an exchange for shares of another Fund, based on the
difference between your tax basis in the shares and the amount you receive
for them. (To aid in computing your tax basis, you generally should retain
your account statements for the periods during which you held shares.) Any
loss realized on shares held for six months or less will be treated as a
long-term capital loss to the extent of any capital gain dividends that were
received on the shares.

The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.

The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. You should consult your
tax adviser for further information regarding federal, state, local and/or
foreign tax consequences relevant to your specific situation.

STATE AND LOCAL TAXES. Shareholders may also be subject to state and local
taxes on distributions and redemptions. State income taxes may not apply
however to the portions of each Fund's distributions, if any, that are
attributable to interest on U.S. Government securities or on securities of a
particular state. Shareholders should consult their tax advisers regarding
the tax status of distributions in their state and locality.

-29-
<PAGE>

GALAXY INVESTOR PROGRAMS

RETIREMENT PLANS

Retail A Shares and Retail B Shares of the Funds are available for purchase in
connection with any of the following retirement plans:

For information about eligibility requirements and other matters concerning
these plans and to obtain an application, call Galaxy's distributor at
1-877-BUY-GALAXY (1-877-289-4252).

OTHER PROGRAMS

AUTOMATIC INVESTMENT PROGRAM

PAYROLL DEDUCTION PROGRAM

-30-
<PAGE>

COLLEGE INVESTMENT PROGRAM

DIRECT DEPOSIT PROGRAM

SYSTEMATIC WITHDRAWAL PLAN

You may cancel your participation in any of these programs, other than the
Direct Deposit Program, by writing to Galaxy at:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

Please allow at least five days for the cancellation to be processed.

-31-
<PAGE>

HOW TO REACH GALAXY

THROUGH YOUR FINANCIAL INSTITUTION

Your financial institution can help you buy, sell or exchange shares and can
answer questions about your account.

GALAXY SHAREHOLDER SERVICES

Call Galaxy's distributor at 1-877-BUY-GALAXY (1-877-289-4252), Monday through
Friday, 8 a.m. to 6 p.m. (Eastern time) for help from a Galaxy representative.

INVESTCONNECT

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

If you live outside the United States, contact Galaxy by calling 1-508-855-5237.

THE INTERNET

Please visit Galaxy's website at: www.galaxyfunds.com

-32-
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables shown below will help you understand the
financial performance for the Funds' Retail A Shares and Retail B Shares for the
past five years (or the period since a particular Fund began operations or a
particular class of shares was first offered). Certain information reflects the
financial performance of a single Retail A Share or Retail B Share. The total
returns in the tables represent the rate that an investor would have earned (or
lost) on an investment in Retail A Shares and Retail B Shares of each Fund,
assuming all dividends and distributions were reinvested. This information has
been audited by [____________________], independent accountants, whose report,
along with the Funds' financial statements, are included in the Funds' Annual
Report and [__________________________________] into the SAI. The Intermediate
Government Income Fund did not sell Retail B Shares during the periods covered
by the tables.

-33-
<PAGE>

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

<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- --------------- --------------- ---- ----
Retail Retail Retail Retail Retail Retail Retail Retail
A B A B A B A A
Shares Shares Shares Shares Shares Shares(1) Shares Shares
------ ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . $ 9.99 $ 9.99 $ 10.06 $ 10.09 $ 9.73 $ 10.30
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(2) . . . . . . . . . . . . . . . . . 0.53 0.46 0.52 0.31 0.55 0.44
Net realized and unrealized gain (loss) on investments . . 0.02 0.03 (0.07) (0.10) 0.33 (0.51)
------- ------- ------- ------- ------- -------
Total from Investment Operations . . . . . . . . . . . . 0.55 0.49 0.45 0.21 0.88 (0.07)
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . . . (0.53) (0.47) (0.52) (0.31) (0.55) (0.44)
Dividends from net realized capital gains. . . . . . . . . -- -- -- -- -- --
Dividends in excess of net realized capital gains. . . . . -- -- -- -- -- (0.06)
------- ------- ------- ------- ------- -------
Total Dividends. . . . . . . . . . . . . . . . . . . . . (0.53) (0.47) (0.52) (0.31) (0.55) (0.50)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value . . . . . . . . . 0.02 0.02 (0.07) (0.10) 0.33 (0.57)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . . $ 10.01 $ 10.01 $ 9.99 $ 9.99 $ 10.06 $ 9.73
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------

Total Return(3). . . . . . . . . . . . . . . . . . . . . . . 5.64% 4.99% 4.63% 2.12%(4) 9.28% (0.68)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . . $27,961 $ 905 $33,388 $ 260 $31,542 $34,061
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . 5.29% 4.56% 5.22% 4.73%(5) 5.54% 4.43%
Operating expenses including reimbursement/waiver. . . . . 1.00% 1.75% 1.11% 1.77%(5) 0.99% 0.93%
Operating expenses excluding reimbursement/waiver. . . . . 1.21% 2.01% 1.35% 1.98%(5) 1.32% 1.14%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . 173% 173% 214% 214% 289% 233%
</TABLE>

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

(1) The Fund began offering Retail B Shares on March 4, 1996.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 was $___, $0.51, $0.50,
$0.52 and $0.42, respectively. Net investment income per share before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for Retail B Shares for the years ended October 31, 1998 and October 31,
1997 and for the period ended October 31, 1996 was $__, $0.44 and $0.29,
respectively.
(3) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.
(4) Not annualized.
(5) Annualized.

-34-
<PAGE>

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

<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Retail Retail Retail Retail Retail
A Shares A Shares A Shares A Shares A Shares
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . $ 10.06 $ 10.28 $ 9.68 $ 10.72
------- ------- ------- -------
Income from Investment Operations:
Net investment income(1) . . . . . . . . . . . . . . . . 0.59 0.57 0.61 0.57
Net realized and unrealized gain (loss) on investments . 0.12 (0.22) 0.60 (1.03)
------- ------- ------- -------
Total from Investment Operations . . . . . . . . . . . 0.71 0.35 1.21 (0.46)
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . . . (0.59) (0.57) (0.61) (0.56)
Dividends in excess of net investment income . . . . . . -- -- -- (0.01)
Dividends from net realized capital gains . . . . . . . . -- -- -- --
Dividends in excess of net realized capital gains . . . . -- -- -- (0.01)
------- ------- ------- -------
Total Dividends . . . . . . . . . . . . . . . . . . . . (0.59) (0.57) (0.61) (0.58)
------- ------- ------- -------
Net increase (decrease) in net asset value . . . . . . . . 0.12 (0.22) 0.60 (1.04)
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . $ 10.18 $ 10.06 $ 10.28 $ 9.68
------- ------- ------- -------
------- ------- ------- -------
Total Return(2) . . . . . . . . . . . . . . . . . . . . . . 7.33% 3.58% 12.85% (4.42)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . $65,626 $79,741 $79,558 $94,669
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . . . 5.90% 5.69% 6.10% 5.58%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . . . 1.02% 1.04% 1.02% 0.78%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . . . 1.22% 1.24% 1.26% 0.99%
Portfolio Turnover Rate . . . . . . . . . . . . . . . . . . 128% 235% 145% 124%
</TABLE>

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

(1) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 was $__, $0.57, $0.55,
$0.58 and $0.54, respectively.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares.

-35-
<PAGE>

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

<TABLE>
<CAPTION>
Year Ended
Year Ended Year Ended Year Ended October 31,
October 31, 1998 October 31, 1997 October 31, 1996 1995 1994
----------------- ----------------- ----------------- ---- ----
Retail Retail Retail Retail Retail Retail Retail Retail
A Shares B Shares A Shares B Shares A Shares B Shares(1) A Shares A Shares
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period. . . . . . . $ 10.47 $ 10.47 $ 10.63 $ 10.72 $ 9.54 $ 11.37
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income(2). . . . . . . . . . . . 0.60 0.53 0.59 0.36 0.62 0.64
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . 0.23 0.24 (0.16) (0.25) 1.09 (1.56)
------- ------- ------- ------- ------- -------
Total from Investment Operations. . . . . . . 0.83 0.77 0.43 0.11 1.71 (0.92)
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income. . . . . . (0.60) (0.54) (0.59) (0.36) (0.62) (0.64)
Dividends from net realized capital gains . . . -- -- -- -- -- --
Dividends in excess of net realized capital
gains . . . . . . . . . . . . . . . . . . . . . -- -- -- -- -- (0.27)
------- ------- ------- ------- ------- -------
Total Dividends . . . . . . . . . . . . . . . (0.60) (0.54) (0.59) (0.36) (0.62) (0.91)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value . . . 0.23 0.23 (0.16) (0.25) 1.09 (1.83)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . $ 10.70 $ 10.70 $ 10.47 $ 10.47 $ 10.63 $ 9.54
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Total Return(3) . . . . . . . . . . . . . . . . . 8.22% 7.59% 4.24% 1.14%(4) 18.46% (8.41)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . $27,950 $ 1,998 $30,984 $ 646 $30,093 $26,654
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . . . . . . 5.73% 5.07% 5.66% 5.34%(5) 6.16% 6.25%
Operating expenses including
reimbursement/waiver. . . . . . . . . . . . . 1.01% 1.69% 1.07% 1.60%(5) 1.02% 0.81%
Operating expenses excluding
reimbursement/waiver. . . . . . . . . . . . . 1.21% 1.95% 1.28% 1.81%(5) 1.26% 1.02%
Portfolio Turnover Rate . . . . . . . . . . . . . 182% 182% 163% 163% 110% 108%
</TABLE>

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

(1) The Fund began offering Retail B Shares on March 4, 1996.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 was $____, $0.58, $0.57,
$0.59 and $0.62, respectively. Net investment income per share before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for Retail B Shares for the years ended October 31, 1998 and October 31,
1997 and for the period ended October 31, 1996 was $___, $0.51 and $0.34,
respectively.
(3) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.
(4) Not annualized.
(5) Annualized.

-36-
<PAGE>

[Back Cover Page]

Where to find more information

You'll find more information about the Funds in the following documents:

You can get a free copy of these documents, request other information about the
Funds and make shareholder inquiries by calling Galaxy at 1-877-BUY-GALAXY
(1-877-289-4252) or writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If you buy your shares through a financial institution, you may contact your
institution for more information.

You can write to the Securities and Exchange Commission (SEC) Public Reference
Section and ask them to mail you information about the Funds, including the SAI.
They'll charge you a fee for this service. You can also visit the Public
Reference Room and copy the documents while you're there. For information about
the operation of the Public Reference Room, call the SEC.

Public Reference Section of the SEC
Washington, DC 20549-6009.
1-800-SEC-0330

Reports and other information about the Funds are also available on the SEC's
website at http://www.sec.gov.

Galaxy's Investment Company Act File No. is 811-4636.

PROGAL-BND

-37-
<PAGE>

[Front cover page]

The Galaxy Fund

Prospectus
February 28, 1999

Galaxy Short-Term Bond Fund
Galaxy Intermediate Government Income Fund
Galaxy High Quality Bond Fund
Galaxy Corporate Bond Fund

Trust Shares

<PAGE>

Contents

Information about the Funds. . . . . . . . . . . . . . . . . . . . . .
Galaxy Short-Term Bond Fund . . . . . . . . . . . . . . . . . . . .
Galaxy Intermediate Government Income Fund. . . . . . . . . . . . .
Galaxy High Quality Bond Fund . . . . . . . . . . . . . . . . . . .
Galaxy Corporate Bond Fund. . . . . . . . . . . . . . . . . . . . .
Additional information about risk . . . . . . . . . . . . . . . . .

Fund management. . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to invest in the Funds . . . . . . . . . . . . . . . . . . . . . .
Buying and selling shares . . . . . . . . . . . . . . . . . . . . .
How to buy shares. . . . . . . . . . . . . . . . . . . . . . . .
How to sell shares . . . . . . . . . . . . . . . . . . . . . . .
Other transaction policies . . . . . . . . . . . . . . . . . . .

Dividends, distributions and taxes . . . . . . . . . . . . . . . . . .

How to reach Galaxy. . . . . . . . . . . . . . . . . . . . . . . . . .

Financial highlights . . . . . . . . . . . . . . . . . . . . . . . . .

<PAGE>

INFORMATION ABOUT THE FUNDS

This prospectus describes the Galaxy Taxable Bond Funds. Each Fund invests
primarily in debt obligations, such as bonds, notes and commercial paper.

Beginning on the next page, you'll find the following important information
about each Fund:

WHICH FUND IS RIGHT FOR YOU?

Not all mutual funds are for everyone. Your investment goals and tolerance for
risk will determine which fund is right for you.

<PAGE>

- --------------------------------------------------------------------------------
GALAXY FUND MAY BE BEST SUITED FOR INVESTORS WHO ...
- --------------------------------------------------------------------------------
<S> <C>
Galaxy Short-Term Bond Fund - want current income greater than
that normally provided by a money
market fund
- want less change in the value of
their investment than normally
associated with long-term funds
- --------------------------------------------------------------------------------
Galaxy Intermediate Government - want current income
Income Fund - want the extra margin of safety
associated with U.S. Government
securities
- can accept fluctuations in price
and yield
- --------------------------------------------------------------------------------
Galaxy High Quality Bond Fund - want current income
- want the added safety associated
with bonds with lower credit risk
than other debt securities
- can accept fluctuations in price
and yield
- --------------------------------------------------------------------------------
Galaxy Corporate Bond Fund - want current income from corporate
debt securities
- can accept fluctuations in price
and yield
- --------------------------------------------------------------------------------
</TABLE>

THE FUNDS' INVESTMENT ADVISER

[Sidenote:]
An investment in the Funds isn't a Fleet Bank deposit and it isn't insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

-2-
<PAGE>

Galaxy Short-Term Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks a high level of current income consistent with preservation of
capital.

[Sidenote:]
PRESERVATION OF CAPITAL

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund's average weighted maturity will generally be less than three years.

[Sidenote:]
WHAT IS A DEBT OBLIGATION?

-3-
<PAGE>

interest rates, although some have rates that fluctuate based on market
conditions and other factors.

THE MAIN RISKS OF INVESTING IN THE FUND

In addition, the Fund also carries the following risks:

HOW THE FUND HAS PERFORMED

-4-
<PAGE>

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares of the Fund has varied
from year to year, thereby giving some indication of the risk of investing in
the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (12/30/91)
- --------------------------------------------------------------------------------
Lehman Brothers One to Three
Year Government Bond Index --% --% --% (since 12/30/91)
- --------------------------------------------------------------------------------
</TABLE>

For current yield information, please call 1-877-BUY-GALAXY (1-877-289-4252).

[Sidenote:]
The Lehman Brothers One to Three Year Government Bond Index is an unmanaged
index which tracks the performance of short-term U.S. Government bonds.

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

-5-
<PAGE>

Annual Fund operating expenses (fees deducted from the Fund's assets)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution operating
Management fees (12b-1) fees Other expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --% --%*
- --------------------------------------------------------------------------------
</TABLE>

* The Adviser is waiving a portion of the Management fees so that such fees
are expected to be ___%. Total Fund operating expenses after this waiver
are expected to be ___%. This fee waiver may be revised or discontinued at
any time.

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
THE PORTFOLIO MANAGER

-6-
<PAGE>

Galaxy Intermediate Government Income Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks the highest level of current income consistent with prudent risk
of capital.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund's average weighted maturity will generally be between three to ten
years.

THE MAIN RISKS OF INVESTING IN THE FUND

-7-
<PAGE>

In addition, the Fund also carries the following risks:

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares of the Fund has varied
from year to year, thereby giving some indication of the risk of investing in
the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

-8-
<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
1 year 5 years 10 years Since inception
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% --% --% --% (9/1/88)
- -------------------------------------------------------------------------------
Lehman Brothers
Intermediate
Government/
Corporate Bond
Index --% --% --% --% (since 9/1/88)
- -------------------------------------------------------------------------------
Lehman Brothers
Aggregate Bond
Index --% --% --% --% (since 9/1/88)
- -------------------------------------------------------------------------------
</TABLE>

For current yield information, please call 1-877-BUY-GALAXY (1-877-289-4252).

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay from the Fund's assets
when you own shares of the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution operating
Management fees (12b-1) fees Other expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --% --%*
- --------------------------------------------------------------------------------
</TABLE>

-9-
<PAGE>

EXAMPLE

This example helps you compare the cost of investing in the Fund with the cost -
of investing in other mutual funds. The example assumes:
- - you invest $10,000 for the periods shown
- - you reinvest all dividends and distributions in the Fund
- - you sell all your shares at the end of the periods shown
- - your investment has a 5% return each year
- - the Fund's operating expenses remain the same.

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
THE PORTFOLIO MANAGER

The Fund's portfolio manager is Marie M. Schofield, a Vice President of the
Adviser. She's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Ms. Schofield has been with the Adviser since 1990 and has
over 20 years of investment experience. She has managed the Fund since December
1, 1996.

-10-
<PAGE>

High Quality Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks a high level of current income consistent with prudent risk of
capital.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund's average weighted maturity will vary from time to time depending on
current market and economic conditions and the Adviser's assessment of probable
changes in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

In addition, the Fund also carries the following risks:

-11-
<PAGE>

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares of the Fund has varied
from year to year, thereby giving some indication of the risk of investing in
the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (12/14/90)
- --------------------------------------------------------------------------------
Lehman Brothers Long-Term
Government/Corporate Bond
Index --% --% --% (since 12/14/96)
- --------------------------------------------------------------------------------
</TABLE>

For current yield information, please call 1-877-BUY-GALAXY (1-877-289-4252).

-12-
<PAGE>

[Sidenote:]
The Lehman Brothers Long-Term Government/Corporate Bond Index is an unmanaged
index which tracks the performance of long-term U.S. Government and corporate
bonds.

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution operating
Management fees (12b-1) fees Other expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --% --%*
- --------------------------------------------------------------------------------
</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-13-
<PAGE>

[Sidenote:]

THE PORTFOLIO MANAGER

The Fund's portfolio manager is Marie M. Schofield, a Vice President of the
Adviser. She's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Ms. Schofield has been with the Adviser since 1990 and has
over 20 years of investment experience. She has managed the Fund since December
1, 1996.

-14-
<PAGE>

Galaxy Corporate Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks a high level of current income.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 65% of its assets in corporate debt
obligations. These include obligations that are issued by U.S. and foreign
business corporations and obligations issued by agencies, instrumentalities or
authorities that are organized as corporations by the U.S., by states or
political subdivisions of the U.S., or by foreign governments or political
subdivisions. The Fund also invests in obligations issued or guaranteed by U.S.
or foreign governments, their agencies or instrumentalities, asset-backed and
mortgage-backed securities and money market instruments, such as commercial
paper and obligations of U.S. and foreign banks.

In selecting portfolio securities for the Fund, the Adviser monitors and
evaluates economic trends. It establishes duration targets, ranges of interest
payments on bonds of various maturities and determines the appropriate
allocation of the Fund's assets among various market sectors.

Substantially all of the Fund's investments will be of investment grade quality.
These are securities which have one of the top four ratings assigned by Standard
& Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or
unrated securities determined by the Adviser to be of comparable quality.

The Fund's average weighted maturity will generally be three to ten years.

THE MAIN RISKS OF INVESTING IN THE FUND

In addition, the Fund also carries the following risks:

-15-
<PAGE>

- - PREPAYMENT RISK: Changes in interest rates may cause certain debt
securities held by the Fund, particularly asset-backed and mortgage-backed
securities, to be paid off much sooner or later than expected, which could
adversely affect the Fund's value.
- - FOREIGN INVESTMENTS: Foreign investments may be riskier than U.S.
investments because of factors such as foreign government restrictions,
changes in currency exchange rates, incomplete financial information
about the issuers of securities, and political or economic instability.
Foreign securities be more volatile and less liquid than U.S. securities.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year Since Inception
- --------------------------------------------------------------------------------
<S> <C> <C>
Trust Shares --% --% (12/12/94)
- --------------------------------------------------------------------------------
Lehman Brothers
Intermediate Government/
Corporate Bond Index --% --% ( since 12/12/94)
- --------------------------------------------------------------------------------
</TABLE>

-16-
<PAGE>

For current yield information, please call 1-877-BUY-GALAXY (1-877-289-4252).

[Sidenote:]
The Lehman Brothers Intermediate Government/Corporate Bond Index is an
unmanaged index which tracks the performance of intermediate-term U.S.
Government and corporate bonds.

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Total Fund
Distribution operating
Management fees (12b-1) fees Other expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --% --%*
- --------------------------------------------------------------------------------
</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-17-
<PAGE>

[Sidenote:]
PORTFOLIO MANAGER

The Fund's portfolio manager is David Lindsay, a Senior Vice President of the
Adviser. He's primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Lindsay has managed the Fund since it began
operations. He has been with the Adviser and its predecessors since 1986.

-18-
<PAGE>

ADDITIONAL INFORMATION ABOUT RISK

The main risks associated with an investment in each of the Galaxy Taxable Bond
Funds have been described above. The following supplements that discussion.

FUND MANAGEMENT

The management fees paid to the Adviser by the Funds during the last fiscal year
are set forth below.

-20-
<PAGE>

HOW TO INVEST IN THE FUNDS

BUYING AND SELLING SHARES

Trust Shares of the Funds are available for purchase by the following types of
investors:

- - investors maintaining a qualified account at a bank or trust institution,
including subsidiaries of Fleet Financial Group, Inc.

- - participants in employer-sponsored defined contribution plans

In addition to the above types of investors, Trust Shares of the Corporate Bond
Fund are also available for purchase by:

- - customers of financial institutions, such as banks, savings or loan
associations and broker-dealers, including financial institutions
affiliated with the Adviser

- - investors purchasing shares directly from Galaxy's distributor

You can buy and sell Trust Shares of the Funds on any business day. For
customers of financial institutions (including customers maintaining qualified
accounts) and participants in employer-sponsored plans, a business day is any
day that Galaxy's distributor, Galaxy's custodian and your institution or
employer-sponsored plan are open for business. For investors purchasing shares
directly from Galaxy's distributor, a business day is any day that Galaxy's
distributor, Galaxy's custodian and Galaxy's transfer agent are open for
business.

-21-
<PAGE>

asset value per share of a Fund holding these securities may change on days when
you won't be able to buy or sell Fund shares.

[Sidenote:]
NET ASSET VALUE

HOW TO BUY SHARES

If you are a customer of a financial institution (including a customer who
maintains a qualified account) or a participant in an employer-sponsored plan,
you can buy Trust Shares by following the procedures established by your
financial institution or your employer-sponsored plan. Your financial
institution or plan administrator is responsible for sending your order and
payment to Galaxy's distributor and wiring payments to Galaxy's custodian. The
institution or employer-sponsored plan holds the shares in your name and
receives all confirmations of purchases and sales.

You can also buy Trust Shares of the Corporate Bond Fund directly from Galaxy's
distributor in any of the following ways:

BUYING BY MAIL

Complete a purchase application and mail it, together with a check payable to
the Galaxy Corporate Bond Fund, to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If your check is returned because of insufficient funds, Galaxy will cancel your
order.

-22-
<PAGE>

BUYING BY WIRE

Fleet National Bank
75 State Street
Boston, MA 02109
ABA #0110-0013-8
DDA #79673-5702
Ref: The Galaxy Fund
(Account number)
(Account registration)

Your financial institution may charge you a fee for sending funds by wire.

[Sidenote:]
INVESTMENT MINIMUMS

Galaxy does not have any minimum investment requirements for initial or
additional investments in Trust Shares but financial institutions and
employer-sponsored plans may do so. They may also require you to maintain a
minimum account balance.

HOW TO SELL SHARES

If you are a customer of a financial institution (including a customer who
maintains a qualified account) or a participant in an employer-sponsored plan,
you can sell Trust Shares by following the procedures established by your
financial institution or your employer-sponsored plan. Your financial
institution or plan administrator is responsible for sending your order to
Galaxy's distributor and for crediting your account with the proceeds. Galaxy
doesn't charge for wiring the proceeds, but your financial institution or
employer-sponsored plan may do so. Contact your financial institution or plan
administrator for more information.

You can also sell Trust Shares of the Corporate Bond Fund directly through
Galaxy's distributor in any of the following ways:

-23-
<PAGE>

SELLING BY MAIL

Send your request in writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

Additional documents may be required for certain types of shareholders, such as
corporations, partnerships, executors, trustees, administrators or guardians.

[Sidenote:]
SIGNATURE GUARANTEES

When selling your shares either by mail or by phone, you must have your
signature guaranteed if:
- - you're selling shares worth more than $50,000
- - you want us to send your money to an address other than the address on your
account, unless your assets are transferred to a successor custodian
- - you want us to send your money to the address on your account that's
changed within the last 30 days, or
- - you want us to make the check payable to someone else.

-24-
<PAGE>

SELLING BY PHONE

SELLING BY WIRE

The sale proceeds must be paid to the same bank and account you named on your
application or in your written instructions.

OTHER TRANSACTION POLICIES

If you purchased your shares through a financial institution or
employer-sponsored plan and Galaxy doesn't receive full payment for your order
to buy shares by 4:00 p.m. on the next business day, Galaxy won't accept your
order. Galaxy will advise your institution or plan administrator if this
happens.

If you purchased shares directly from Galaxy's distributor and Galaxy doesn't
receive full payment for your order to buy shares within three business days of
the order date, Galaxy won't accept your order. Galaxy will advise you if this
happens and return any payment it may eventually receive.

Galaxy may refuse any order to buy shares. Galaxy doesn't issue a certificate
when you buy shares but it does keep a record of shares issued to investors.

If you sell your shares directly through Galaxy's distributor, Galaxy won't
accept your order to sell shares unless it has a completed account application
from you. Galaxy may refuse to sell or exchange shares by wire or telephone if
it believes it is advisable to do so. Galaxy may change or cancel the
procedures for selling or exchanging shares by wire or telephone at any time.

If you purchased your shares directly from Galaxy's distributor and you elected
telephone privileges on the account application or in a letter to Galaxy, you
may be responsible for any

-25-
<PAGE>

fraudulent telephone orders as long as Galaxy has taken reasonable precautions
to verify your identity.

If you sell your shares through a financial institution or employer-sponsored
plan, sales proceeds are normally wired to your institution or plan
administrator on the next business day. If you sell your shares directly
through Galaxy's distributor, sales proceeds are normally sent to you within
three business days. In each case, Galaxy reserves the right to send sales
proceeds within seven business days if sending proceeds earlier could adversely
affect a Fund.

Galaxy may ask for any information it might reasonably need to make sure that
you've authorized a sale of shares.

Galaxy may close any account after 60 days' written notice if the value of the
account drops below $250 as a result of selling shares.

-26-
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. Each Fund declares any dividends
from net investment income daily and pays them monthly. Each Fund pays any
net capital gains at least once a year. It's expected that the Funds' annual
distributions will normally -- but not always -- consist primarily of ordinary
income rather than capital gains. Dividends and distributions are paid in
cash unless you tell your financial institution or plan administrator in
writing that you want to have dividends and distributions reinvested in
additional shares.

FEDERAL TAXES. Each Fund contemplates declaring as dividends each year all or
substantially all of its taxable income, including its net capital gain (the
excess of long-term capital gain over short-term capital loss). You will be
subject to income tax on these distributions regardless of whether they are
paid in cash or reinvested in additional shares. Distributions attributable
to the net capital gain of a Fund will be taxable to you as long-term capital
gain, regardless of how long you have held your shares. Other Fund
distributions will generally be taxable as ordinary income. You will be
notified annually of the tax status of distributions to you.

You will recognize taxable gain or loss on a sale, exchange or redemption of
your shares, including an exchange for shares of another Fund, based on the
difference between your tax basis in the shares and the amount you receive
for them. (To aid in computing your tax basis, you generally should retain
you account statements for the periods during which you held shares.) Any
loss realized on shares held for six months or less will be treated as a
long-term capital loss to the extent of any capital gain dividends that were
received on the shares.

The one major exception to these tax principles is that distributions on, and
sales, exchanges and redemptions of, shares held in and IRA (or other
tax-qualified plan) will not be currently taxable.

The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. You should consult your
tax adviser for further information regarding federal, state, local and/or
foreign tax consequences relevant to your specific situation.

STATE AND LOCAL TAXES. Shareholders may also be subject to state and local
taxes on distributions and redemptions. State income taxes may not apply
however to the portions of each Fund's distributions, if any, that are
attributable to interest on U.S. Government securities or on securities of a
particular state. Shareholders should consult their tax advisers regarding
the tax status of distributions in their state and locality.

-27-
<PAGE>

HOW TO REACH GALAXY

If you purchased your shares directly from Galaxy's distributor, you can reach
Galaxy in any of the following ways:

GALAXY SHAREHOLDER SERVICES

Call Galaxy's distributor at 1-877-BUY-GALAXY (1-877-289-4252), Monday through
Friday, 8 a.m. to 6 p.m. (Eastern time) for help from a Galaxy representative.

INVESTCONNECT

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

If you live outside the United States, contact Galaxy by calling 1-508-855-5237.

THE INTERNET

Please visit Galaxy's website at: www.galaxyfunds.com

-28-
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables shown below will help you understand the
financial performance for the Funds' Trust Shares for the past five years (or
the period since a particular Fund began operations). Certain information
reflects the financial performance of a single Trust Share. The total returns in
the tables represent the rate that an investor would have earned (or lost) on an
investment in Trust Shares of each Fund, assuming all dividends and
distributions were reinvested. This information has been audited by
[____________________], independent accountants, whose report, along with the
Funds' financial statements, are included in the Funds' Annual Report and
[__________________________________] into the SAI.

-29-
<PAGE>

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

YEAR ENDED OCTOBER 31,
-----------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
TRUST SHARES
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . $9.99 $10.06 $9.73 $10.30
------- ------- ------- -------
Income from Investment Operations:
Net investment income(1) . . . . . . . . . . 0.54 0.55 0.57 0.44
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . 0.02 (0.07) 0.33 (0.51)
------- ------- ------- -------
Total from Investment Operations. . . . . 0.56 0.48 0.90 (0.07)
------- ------- ------- -------
Less Dividends:
Dividends from net investment income . . . . (0.54) (0.55) (0.57) (0.44)
------- ------- ------- -------
Dividends from net realized capital gains. . -- -- -- --
Dividends in excess of net realized capital
gains . . . . . . . . . . . . . . . . . . . -- -- -- (0.06)
-- -- -- -------
Total Dividends . . . . . . . . . . . . . (0.54) (0.55) (0.57) (0.50)
------- ------- ------- -------
Net increase (decrease)
in net asset value . . . . . . . . . . . . . 0.02 (0.07) 0.33 (0.57)
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . $10.01 $9.99 $10.06 $9.73
------- ------- ------- -------
------- ------- ------- -------
Total Return . . . . . . . . . . . . . . . . . 5.77% 4.91% 9.55% (0.66)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . $49,837 $58,227 $35,088 $39,843
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . . . . . 5.43% 5.49% 5.79% 4.45%
Operating expenses including
reimbursement/waiver. . . . . . . . . . . . 0.86% 0.84% 0.74% 0.91%
Operating expenses excluding
reimbursement/waiver. . . . . . . . . . . . 1.07% 1.08% 1.02% 1.11%
Portfolio Turnover Rate. . . . . . . . . . . . 173% 214% 289% 233%
</TABLE>

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

(1) Net investment income per share for Trust Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $_____,
$0.52, $0.53, $0.54 and $0.42, respectively.

-30-
<PAGE>

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

YEAR ENDED OCTOBER 31,
-----------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----

TRUST SHARES
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . $10.06 $10.28 $9.68 $10.72
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(1) . . . . . . . . . . 0.62 0.60 0.64 0.57
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . 0.12 (0.22) 0.60 (1.03)
-------- -------- -------- --------
Total from Investment Operations. . . . . 0.74 0.38 1.24 (0.46)
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income . . . . (0.62) (0.60) (0.64) (0.56)
-------- -------- -------- --------
Dividends in excess of
net investment income . . . . . . . . . . . -- -- -- (0.01)
Dividends from net realized capital gains. . -- -- -- --
Dividends in excess of net realized capital
gains . . . . . . . . . . . . . . . . . . . -- -- -- (0.01)
-------- -------- -------- --------
Total Dividends . . . . . . . . . . . . . (0.62) (0.60) (0.64) (0.58)
-------- -------- -------- --------
Net increase (decrease) in net asset value . . 0.12 (0.22) 0.60 (1.04)
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . . $10.18 $10.06 $10.28 $9.68
-------- -------- -------- --------
-------- -------- -------- --------
Total Return . . . . . . . . . . . . . . . . . 7.63% 3.88% 13.18% (4.39)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . $209,215 $213,750 $186,037 $212,144
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . . . . . 6.19% 5.98% 6.39% 5.61%
Operating expenses including
reimbursement/waiver. . . . . . . . . . . . 0.74% 0.75% 0.73% 0.75%
Operating expenses excluding
reimbursement/waiver. . . . . . . . . . . . 0.94% 0.95% 0.94% 0.95%
Portfolio Turnover Rate. . . . . . . . . . . . 128% 235% 145% 124%
</TABLE>
- -------------------------

-31-
<PAGE>

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

YEAR ENDED OCTOBER 31,
-----------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----

TRUST SHARES
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . $10.47 $10.63 $9.54 $11.37
-------- -------- -------- --------
Income from Investment Operations:
Net investment income(1) . . . . . . . . . . 0.61 0.62 0.64 0.65
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . 0.23 (0.16) 1.09 (1.56)
-------- -------- -------- --------
Total from Investment Operations. . . . . 0.84 0.46 1.73 (0.91)
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income . . . . (0.61) (0.62) (0.64) (0.65)
-------- -------- -------- --------
Dividends from net realized capital gains. . -- -- -- --
Dividends in excess of net realized capital
gains . . . . . . . . . . . . . . . . . . . -- -- -- (0.27)
-------- -------- -------- --------
Total Dividends . . . . . . . . . . . . . (0.61) (0.62) (0.64) (0.92)
-------- -------- -------- --------
Net increase (decrease) in net asset value . . 0.23 (0.16) 1.09 (1.83)
-------- -------- -------- --------
Net Asset Value, End of Period . . . . . . . . $10.70 $10.47 $10.63 $9.54
-------- -------- -------- --------
-------- -------- -------- --------
Total Return . . . . . . . . . . . . . . . . . 8.36% 4.46% 18.66% (8.39)%
Ratios/Supplemental Data: Net Assets, End of
Period (000's). . . . . . . . . . . . . . . $182,398 $149,075 $134,631 $118,776
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . . . . . 5.88% 5.88% 6.33% 6.28%
Operating expenses including
reimbursement/waiver. . . . . . . . . . . . 0.87% 0.85% 0.85% 0.78%
Operating expenses excluding
reimbursement/waiver. . . . . . . . . . . . 1.09% 1.06% 1.07% 0.98%
Portfolio Turnover Rate. . . . . . . . . . . . 182% 163% 110% 108%
</TABLE>

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

-32-
<PAGE>

CORPORATE BOND FUND(1)
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

Year Ended October 31,
----------------------------------- Period ended
1998 1997 1998 October 31, 1995(1)
---- ---- ---- -------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period . . $10.53 $10.74 $10.00
------- -------- -------
Income from Investment
Operations:
Net investment income(2) . . . . . . . 0.66 0.64 0.61
Net realized and unrealized gain
(loss) on investments . . . . . . . 0.11 (0.13) 0.74
------- -------- -------
Total from Investment Operations . . . 0.77 0.51 1.35
------- -------- -------
Less Dividends:
Dividends from net investment income . (0.66) (0.64) (0.61)
Dividends from net realized
capital gains . . . . . . . . . . . . (0.01) (0.08) -------
------- -------- -------
Total Dividends. . . . . . . . . . (0.67) (0.72) (0.61)
------- -------- -------
Net increase (decrease)
in net asset value . . . . . . . . . . 0.10 (0.21) 0.74
----- ------- -------- -------
Net Asset Value, End of period . . . . . $10.63 $10.53 $10.74
----- ------- -------- -------
----- ------- -------- -------
Total Return . . . . . . . . . . . . . . 7.56% 5.00% 13.85%(3)
-----
Ratios/Supplemental Data:
Net Assets, End of period (000's). . . $91,728 $107,728 $37,391
-----
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . 6.27% 6.13% 6.61%(4)
-----
Operating expenses including
reimbursement/waiver . . . . . . . . 0.80% 0.85% 1.06%(4)
-----
Operating expenses excluding
reimbursement/waiver . . . . . . . . 1.00% 1.05% 1.26%(4)
-----
Portfolio Turnover Rate. . . . . . . . . 37% 84% 41%
-----
</TABLE>

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

(1) The Fund commenced operations on December 12, 1994.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for the years ended October 31,
1998, 1997 and 1996 and for the period ended October 31, 1995 was $_____,
$0.64, $0.62 and $0.57, respectively.
(3) Not annualized.
(4) Annualized.

-33-
<PAGE>

[Back Cover Page]

Where to find more information

You'll find more information about the Funds in the following documents:

You can get a free copy of these documents, request other information about the
Funds and make shareholder inquiries by calling Galaxy at 1-877-BUY-GALAXY
(1-877-289-4252) or writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If you buy your shares through a financial institution, you may contact your
institution for more information.

You can write to the Securities and Exchange Commission (SEC) Public Reference
Section and ask them to mail you information about the Funds, including the SAI.
They'll charge you a fee for this service. You can also visit the Public
Reference Room and copy the documents while you're there. For information about
the operation of the Public Reference Room, call the SEC.

Public Reference Section of the SEC
Washington, DC 20549-6009.
1-800-SEC-0330

Reports and other information about the Funds are also available on the SEC's
website at http://www.sec.gov.

Galaxy's Investment Company Act File No. is 811-4636.

PROGALTRBND

-34-
<PAGE>

[Front cover page]

The Galaxy Fund

Prospectus
February 28, 1999

Galaxy Tax-Exempt Bond Fund
Galaxy New Jersey Municipal Bond Fund
Galaxy New York Municipal Bond Fund
Galaxy Connecticut Municipal Bond Fund
Galaxy Massachusetts Municipal Bond Fund
Galaxy Rhode Island Municipal Bond Fund

Retail A Shares and Retail B Shares

<PAGE>

Contents

<TABLE>
<S> <C>
Information about the Funds. . . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Tax-Exempt Bond Fund. . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy New Jersey Municipal Bond Fund. . . . . . . . . . . . . . . . . . . .
Galaxy New York Municipal Bond Fund. . . . . . . . . . . . . . . . . . . . .
Galaxy Connecticut Municipal Bond Fund . . . . . . . . . . . . . . . . . . .
Galaxy Massachusetts Municipal Bond Fund . . . . . . . . . . . . . . . . . .
Galaxy Rhode Island Municipal Bond Fund. . . . . . . . . . . . . . . . . . .
Additional information about risk. . . . . . . . . . . . . . . . . . . . . .

Fund management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Dividends, distributions and taxes . . . . . . . . . . . . . . . . . . . . . .

Galaxy investor programs . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to reach Galaxy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

</TABLE>

<PAGE>

INFORMATION ABOUT THE FUNDS

This prospectus describes the Galaxy Tax-Exempt Bond Funds. The Funds invest
primarily in municipal securities, which are debt obligations of state and local
governments and other political or public bodies or agencies. The interest paid
on municipal securities is generally exempt from federal income tax and, in some
cases, from state and local income tax.

Beginning on the next page, you'll find the following important information
about each of the Galaxy Tax-Exempt Bond Funds:

[Sidenote:]
TAX-EQUIVALENT YIELD

One way to understand the tax advantages of a tax-exempt fund is to compare its
after-tax return to that of a taxable investment. For example, suppose a taxable
fund pays a return of 10%. If you're in the 36% federal income tax bracket, the
fund's return after taxes is 6.4%. When a tax-exempt fund pays a return of 10%,
you don't pay tax. So if you're in the 36% tax bracket that's the equivalent of
earning about 15.6% on a taxable fund. If you're in a low tax bracket, however,
it may not be helpful to invest in a tax-exempt fund if you can achieve a higher
after-tax return from a taxable investment.

WHICH FUND IS RIGHT FOR YOU?

The Funds are designed for investors who are looking for income that's free of
federal income tax and who can accept fluctuations in price and yield. A Fund
that specializes in a particular state is best suited to residents of that state
who are also looking for income that is free of the state's income tax.
TAX-EXEMPT FUNDS ARE NOT APPROPRIATE INVESTMENTS FOR TAX-DEFERRED RETIREMENT
ACCOUNTS, SUCH AS IRAS, BECAUSE THEIR RETURNS BEFORE TAXES ARE GENERALLY LOWER
THAN THOSE OF TAXABLE FUNDS.

THE FUNDS' INVESTMENT ADVISER

Fleet Investment Advisors Inc., which is referred to in this prospectus as THE
ADVISER, is the investment adviser for all of these Funds. The Adviser was
established in 1984 and has its main

<PAGE>

office at 75 State Street, Boston, Massachusetts 02109. The Adviser also
provides investment management and advisory services to individual and
institutional clients and manages the other Galaxy investment portfolios.

[Sidenote:]
An investment in the Funds isn't a Fleet Bank deposit and it isn't insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

-2-
<PAGE>

Galaxy Tax-Exempt Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks to provide shareholders with as high a level of current interest
income free of federal income tax as is consistent with preservation of capital.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in municipal securities
that pay interest which is exempt from regular federal income tax. Under normal
conditions, the Fund will invest no more than 20% of its assets in taxable
obligations, such as U.S. Government obligations, money market instruments and
repurchase agreements.

[Sidenote:]
State and local governments issue municipal securities to raise money to finance
public works, to repay outstanding obligations, to raise funds for general
operating expenses and to make loans to other public institutions. Some
municipal securities, known as private activity bonds, are backed by private
entities and are used to finance various non-public projects. Municipal
securities, which can be issued as bonds, notes or commercial paper, usually
have fixed interest rates, although some have interest rates that change from
time to time.

Municipal securities purchased by the Fund may include general obligation
securities, revenue securities and private activity bonds. The interest on
private activity bonds may be subject to the federal alternative minimum tax.

[Sidenote:]
TYPES OF MUNICIPAL SECURITIES

GENERAL OBLIGATION securities are secured by the issuer's full faith, credit and
taxing power. REVENUE OBLIGATION securities are usually payable only from
revenues derived from specific facilities or revenue sources. PRIVATE ACTIVITY
BONDS are usually revenue obligations since they are typically payable by the
private user of the facilities financed by the bonds.

Nearly all of the Fund's investments will be of investment grade quality. These
are securities which have one of the top four ratings assigned by Standard &
Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or
unrated securities determined by the Adviser to be of comparable quality. Under
normal market conditions, the Fund will invest at least 65% of its assets in
securities rated in one of the three highest rating categories assigned by S&P
or Moody's, or in unrated securities determined by the Adviser to be of
comparable quality.

-3-
<PAGE>

The Fund's average weighted maturity will vary from time to time depending on
current economic and market conditions and the Adviser's assessment of probable
changes in interest rates.

[Sidenote:]
Average weighted maturity gives you the average time until all debt securities
in a Fund come due or MATURE. It is calculated by averaging the time to
maturity of all debt securities held by a Fund with each maturity "weighted"
according to the percentage of assets it represents.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

-4-
<PAGE>

The figures don't include any sales charges that investors pay when buying or
selling shares of the Fund. If sales charges were included, the returns would be
lower.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (12/30/91)
- --------------------------------------------------------------------------------
Retail B Shares --% - --% (3/4/96)
- --------------------------------------------------------------------------------
Lehman Brothers --% --% --% (since 12/30/91)
Municipal Bond --% (since 3/4/96)
Index
- --------------------------------------------------------------------------------
</TABLE>

For current yield information, please call 1-877-BUY-GALAXY (1-877-289-4252).

[Sidenote:]
The Lehman Brothers Municipal Bond Index is an unmanaged index which tracks the
performance of municipal bonds.

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

-5-
<PAGE>

<TABLE>
<CAPTION>
Shareholder fees (fees you pay directly)
- --------------------------------------------------------------------------------
Maximum sales charge Maximum deferred sales charge
(load) on purchases (load) shown as a % of the
shown as a % of the offering price or sale price,
offering price whichever is less
- --------------------------------------------------------------------------------
<S> <C> <C>
Retail A Shares 3.75%(1) None(2)
- --------------------------------------------------------------------------------
Retail B Shares None 5.00%(3)
- --------------------------------------------------------------------------------
</TABLE>

(1) Reduced sales charges may be available. See "How to invest in the Funds -
How sales charges work"
(2) Except for investments of $500,000 or more. See "How to invest in the Funds
- How sales charges work."
(3) This amount applies if you sell your shares in the first year after
purchase and gradually declines to 1% in the sixth year after purchase.
After six years, your Retail B Shares will automatically convert to Retail
A Shares. See "How to invest in the Funds - How sales charges work."

Annual Fund operating expenses (fees deducted from the Fund's assets)
- --------------------------------------------------------------------------------
Total
Distribution Fund
Management and service Other operating
fees (12b-1) fees expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%* None --% --%*
- --------------------------------------------------------------------------------
Retail B Shares --%* --% --% --%*
- --------------------------------------------------------------------------------
</TABLE>

EXAMPLE

-6-
<PAGE>

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares $-- $-- $-- $--
- --------------------------------------------------------------------------------
Retail B Shares $-- $-- $-- $--
- --------------------------------------------------------------------------------
If you hold Retail B Shares, you would pay the following expenses if you didn't
sell your shares:
- --------------------------------------------------------------------------------
Retail B Shares $-- $-- $-- $--
- --------------------------------------------------------------------------------
</TABLE>

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-7-
<PAGE>

Galaxy New Jersey Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks as high a level of current interest income exempt from federal
income tax and, to the extent possible, from New Jersey personal income tax, as
is consistent with relative stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in municipal securities
that pay interest which is exempt from regular federal income tax, and at least
65% of its assets in New Jersey municipal securities, which are securities
issued by the State of New Jersey and other government issuers and that pay
interest which is exempt from both federal income tax and New Jersey personal
income tax. Under normal conditions, the Fund will invest no more than 20% of
its assets in taxable obligations, such as U.S. Government obligations, money
market instruments and repurchase agreements.

The Fund's average weighted maturity will vary from time to time depending on
current economic and market conditions and the Adviser's assessment of probable
changes in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and by swings in
investment markets. You could lose money if the Fund's investments fall in
value.

-8-
<PAGE>

In addition, the Fund also carries the following risks:

- - INTEREST RATE RISK: The prices of debt securities, including municipal
securities, tend to move in the opposite direction to interest rates. When
rates are rising, the prices of debt securities tend to fall. When rates
are falling, the prices of debt securities tend to rise. Generally, the
longer the time until maturity, the more sensitive the price of a debt
security is to interest rate changes.
- - CREDIT RISK: The value of debt securities, including municipal securities,
also depends on the ability of issuers to make principal and interest
payments. If an issuer can't meet its payment obligations or if its
credit rating is lowered, the value of its debt securities will fall. The
ability of a state or local government issuer to make payments can be
affected by many factors, including economic conditions, the flow of tax
revenues and changes in the level of federal, state or local aid. Some
municipal obligations are payable only from limited revenue sources or
private entities.
- - PREPAYMENT RISK: Changes in interest rates may cause certain municipal
securities held by the Fund to be paid off much sooner or later than
expected, which could adversely affect the Fund's value.
- - LACK OF DIVERSIFICATION: The Fund is not diversified, which means that it
can invest a large percentage of its assets in a small number of issuers.
As a result, a change in the value of any one investment held by the Fund
may affect the overall value of the Fund more than it would affect a
diversified fund which holds more investments.
- - SINGLE STATE RISK: Because the Fund invests primarily in New Jersey
municipal securities, it is likely to be especially susceptible to
economic, political and regulatory events that affect New Jersey.

HOW THE FUND HAS PERFORMED

The Fund doesn't have a long-term performance record since it has been in
operation for less than one calendar year. For current yield information, call
1-877-BUY-GALAXY (1-877-289-4252).

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

-9-
<PAGE>

Annual Fund operating expenses (fees deducted from the Fund's assets)
- --------------------------------------------------------------------------------
Total
Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%* None --%* --%*
- --------------------------------------------------------------------------------
</TABLE>

*The Adviser is waiving a portion of the Management fees so that such fees are
expected to be ___%. The Fund's administrator is waiving a portion of the
administration fees and reimbursing certain expenses so that Other expenses
are expected to be ____%. Total Fund operating expenses after these waivers
and reimbursements are expected to be ___%. These fee waivers and expense
reimbursements may be revised or discontinued at any time.

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-10-
<PAGE>

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-11-
<PAGE>

New York Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks 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.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in municipal securities
that pay interest which is exempt from regular federal income tax, and at least
65% of its assets in New York municipal securities, which are securities issued
by the State of New York and other government issuers and that pay interest
which is exempt from federal income tax and New York State and New York City
personal income tax. Under normal conditions, the Fund will invest no more than
20% of its assets in taxable obligations, such as U.S. Government obligations,
money market instruments and repurchase agreements.

Municipal securities purchased by the Fund may include general obligation
securities and private activity bonds. The interest on private activity bonds
may be subject to the federal alternative minimum tax.

The Fund's average weighted maturity will vary from time to time depending on
current economic and market conditions and the Adviser's assessment of probable
changes in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

- - INTEREST RATE RISK: The prices of debt securities, including municipal
securities, tend to move in the opposite direction to interest rates. When
rates are rising, the prices of debt securities

-12-
<PAGE>

tend to fall. When rates are falling, the prices of debt securities tend
to rise. Generally, the longer the time until maturity, the more sensitive
the price of a debt security is to interest rate changes.
- - CREDIT RISK: The value of debt securities, including municipal securities,
also depends on the ability of issuers to make principal and interest
payments. If an issuer can't meet its payment obligations or if its credit
rating is lowered, the value of its debt securities will fall. The ability
of a state or local government issuer to make payments can be affected by
many factors, including economic conditions, the flow of tax revenues and
changes in the level of federal, state or local aid. Some municipal
obligations are payable only from limited revenue sources or private
entities.
- - PREPAYMENT RISK: Changes in interest rates may cause certain municipal
securities held by the Fund to be paid off much sooner or later than
expected, which could adversely affect the Fund's value.
- - LACK OF DIVERSIFICATION: The Fund is not diversified, which means that it
can invest a large percentage of its assets in a small number of issuers.
As a result, a change in the value of any one investment held by the Fund
may affect the overall value of the Fund more than it would affect a
diversified fund which holds more investments.
- - SINGLE STATE RISK: Because the Fund invests primarily in New York municipal
securities, it is likely to be especially susceptible to economic,
political and regulatory events that affect New York.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares has varied from year
to year, thereby giving some indication of the risk of investing in the Fund.
The figures don't include any sales charges that investors pay when buying or
selling shares of the Fund. If sales charges were included, the returns would be
lower.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year
AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

-13-
<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------

1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (12/31/91)
- --------------------------------------------------------------------------------
Lehman Brothers
Municipal Bond
Index --% --% --% (since 12/31/91)
- --------------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

Shareholder fees (fees you pay directly)
- --------------------------------------------------------------------------------
Maximum sales charge Maximum deferred sales charge
(load) on purchases (load) shown as a % of the
shown as a % of the offering price or sale price,
offering price whichever is less
- --------------------------------------------------------------------------------
<S> <C> <C>
Retail A Shares 3.75%(1) None(2)
- --------------------------------------------------------------------------------
</TABLE>

Annual Fund operating expenses (fees deducted from the Fund's assets)
- --------------------------------------------------------------------------------
Total
Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%* None --% --%*
- --------------------------------------------------------------------------------
</TABLE>

EXAMPLE

This example helps you compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The example assumes:

-14-
<PAGE>

- - you invest $10,000 for the periods shown
- - you reinvest all dividends and distributions in the Fund
- - you sell all your shares at the end of the periods shown
- - your investment has a 5% return each year
- - the Fund's operating expenses remain the same.

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-15-
<PAGE>

Connecticut Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks 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.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in municipal securities
that pay interest which is exempt from regular federal income tax, and at least
65% of its assets in Connecticut municipal securities, which are securities
issued by the State of Connecticut and other government issuers and that pay
interest which is exempt from both federal income tax and Connecticut personal
income tax. Under normal conditions, the Fund will invest no more than 20% of
its assets in taxable obligations, such as U.S. Government obligations, money
market instruments and repurchase agreements.

Nearly all of the Fund's investments will be of investment grade quality. These
are securities which have one of the top four ratings assigned by Standard &
Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or
unrated securities determined by the Adviser to be of comparable quality. Under
normal market conditions, the Fund will invest at least 65% of its total assets
in securities rated in one of the three highest rating categories assigned by
S&P or Moody's, or in unrated securities determined by the Adviser to be of
comparable quality.

The Fund's average weighted maturity will vary from time to time depending on
current market conditions and the Adviser's assessment of probable changes in
interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

-16-
<PAGE>

longer the time until maturity, the more sensitive the price of a debt
security is to interest rate changes.
- - CREDIT RISK: The value of debt securities, including municipal securities,
also depends on the ability of issuers to make principal and interest
payments. If an issuer can't meet its payment obligations or if its credit
rating is lowered, the value of its debt securities will fall. The ability
of a state or local government issuer to make payments can be affected by
many factors, including economic conditions, the flow of tax revenues and
changes in the level of federal, state or local aid. Some municipal
obligations are payable only from limited revenue sources or private
entities.
- - PREPAYMENT RISK: Changes in interest rates may cause certain municipal
securities held by the Fund to be paid off much sooner or later than
expected, which could adversely affect the Fund's value.
- - LACK OF DIVERSIFICATION: The Fund is not diversified, which means that it
can invest a large percentage of its assets in a small number of issuers.
As a result, a change in the value of any one investment held by the Fund
may affect the overall value of the Fund more than it would affect a
diversified fund which holds more investments.
- - SINGLE STATE RISK: Because the Fund invests primarily in Connecticut
municipal securities, it is likely to be especially susceptible to
economic, political and regulatory events that affect Connecticut.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-17-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------

1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (3/16/93)
- --------------------------------------------------------------------------------
Lehman Brothers
Municipal Bond
Index --% --% --% (since 3/16/93)
- --------------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

* The Adviser is waiving a portion of the Management fees so that such fees
are expected to be ___%. Affiliates of the Adviser are waiving a portion
of the shareholder servicing fees so that Other expenses are expected to
be ___%. Total Fund operating expenses after these waivers are expected to
be ___%. These fee waivers may be revised or discontinued at any time.

-18-
<PAGE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-19-
<PAGE>

Massachusetts Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks 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.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in municipal securities
that pay interest which is exempt from regular federal income tax, and at least
65% of its assets in Massachusetts municipal securities, which are securities
issued by the Commonwealth of Massachusetts and other government issuers and
that pay interest which is exempt from both federal income tax and Massachusetts
personal income tax. Under normal conditions, the Fund will invest no more than
20% of its assets in taxable obligations, such as U.S. Government obligations,
money market instruments and repurchase agreements.

Nearly all of the Fund's investments will be of investment grade quality. These
are securities which have one of the top four ratings assigned by Standard &
Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or
unrated securities determined by the Adviser to be of comparable quality. Under
normal market conditions, the Fund will invest at least 65% of its total assets
in securities rated in one of the three highest rating categories assigned by
S&P or Moody's, or in unrated securities determined by the Adviser to be of
comparable quality.

The Fund's average weighted maturity will vary from time to time depending on
current economic and market conditions and the Adviser's assessment of probable
changes in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

- - INTEREST RATE RISK: The prices of debt securities, including municipal
securities, tend to move in the opposite direction to interest rates. When
rates are rising, the prices of debt securities

-20-
<PAGE>

- - PREPAYMENT RISK: Changes in interest rates may cause certain municipal
securities held by the fund to be paid off much sooner or later than
expected, which could adversely affect the Fund's value.

- - LACK OF DIVERSIFICATION: The Fund is not diversified, which means that it
can invest a large percentage of its assets in a small number of issuers.
As a result, a change in the value of any one investment held by the Fund
may affect the overall value of the Fund more than it would affect a
diversified fund which holds more investments.
- - SINGLE STATE RISK: Because the Fund invests primarily in Massachusetts
municipal securities, it is likely to be especially susceptible to
economic, political and regulatory events that affect Massachusetts.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

-21-
<PAGE>

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------

1 year 5 years Since inception
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (3/12/93)
- --------------------------------------------------------------------------------
Lehman Brothers
Municipal Bond
Index --% --% --% (since 3/12/93)
- --------------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)
- --------------------------------------------------------------------------------
Total
Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%* None --% --%*
- --------------------------------------------------------------------------------
</TABLE>

EXAMPLE

This example helps you compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The example assumes:
- - you invest $10,000 for the periods shown

-22-
<PAGE>

- - you reinvest all dividends and distributions in the Fund
- - you sell all your shares at the end of the periods shown
- - your investment has a 5% return each year
- - the Fund's operating expenses remain the same.

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-23-
<PAGE>

Rhode Island Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks 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.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in municipal securities
that pay interest which is exempt from regular federal income tax, and at least
65% of its assets in Rhode Island municipal securities, which are securities
issued by the State of Rhode Island and other government issuers and that pay
interest which is exempt from both federal income tax and Rhode Island personal
income tax. Under normal conditions, the Fund will invest no more than 20% of
its assets in taxable obligations, such as U.S. Government obligations, money
market instruments and repurchase agreements.

Nearly all of the Fund's investments will be of investment grade quality. These
are securities which have one of the top four ratings assigned by Standard &
Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or
unrated securities as determined by the Adviser to be of comparable quality.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in securities rated in one of the three highest rating categories
assigned by S&P or Moody's, or in unrated securities determined by the Adviser
to be of comparable quality.

The Fund's average weighted maturity will vary from time to time depending on
economic and market conditions and the Adviser's assessment of probable changes
in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

-24-
<PAGE>

longer the time until maturity, the more sensitive the price of a debt
security is to interest rate changes.
- - CREDIT RISK: The value of debt securities, including municipal securities,
also depends on the ability of issuers to make principal and interest
payments. If an issuer can't meet its payment obligations or if its credit
rating is lowered, the value of its debt securities will fall. The ability
of a state or local government issuer to make payments can be affected by
many factors, including economic conditions, the flow of tax revenues and
changes in the level of federal, state or local aid. Some municipal
obligations are payable only from limited revenue sources or private
entities.
- - PREPAYMENT RISK: Changes in interest rates may cause certain municipal
securities held by the Fund to be paid off much sooner or later than
expected, which could adversely affect the Fund's value.
- - LACK OF DIVERSIFICATION: The Fund is not diversified, which means that it
can invest a large percentage of its assets in a small number of issuers.
As a result, a change in the value of any one investment held by the Fund
may affect the overall value of the Fund more than it would affect a
diversified fund which holds more investments.
- - SINGLE STATE RISK: Because the Fund invests primarily in Rhode Island
municipal securities, it is likely to be especially susceptible to
economic, political and regulatory events that affect Rhode Island.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-25-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------

1 year Since inception
- --------------------------------------------------------------------------------
<S> <C> <C>
Retail A Shares --% --% (12/20/94)
- --------------------------------------------------------------------------------
Lehman Brothers
Municipal Bond
Index --% --% (since 12/20/94)
- --------------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following tables show the fees and expenses you pay when you own shares of
the Fund.

(1) Reduced sales charges may be available. See "How to invest in Funds - How
sales charges work."
(2) Except for investments of $500,000 or more. See "How to invest in the
Funds - How sales charges work."

Annual Fund operating expenses (fees deducted from the Fund's assets)
- --------------------------------------------------------------------------------
Total
Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%* None --% --%*
- --------------------------------------------------------------------------------
</TABLE>

-26-
<PAGE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-27-
<PAGE>

ADDITIONAL INFORMATION ABOUT RISK

The main risks associated with an investment in each of the Galaxy Tax-Exempt
Bond Funds have been described above. The following supplements that
discussion.

- - TEMPORARY DEFENSIVE POSITIONS: Each Fund may temporarily hold investments
that are not part of its main investment strategy to try to avoid losses
during unfavorable market conditions. These investments may include cash
(which will not earn any income) and taxable investments, such as money
market instruments and debt securities issued or guaranteed by the U.S.
Government or its agencies, in excess of 20% of its assets. This strategy
could prevent a Fund from achieving its investment objective.

- - OTHER TYPES OF INVESTMENTS: This prospectus describes each Fund's main
investment strategies and the particular types of securities in which each
Fund principally invests. Each Fund may, from time to time, pursue other
investment strategies and make other types of investments in support of its
overall investment goal. These supplemental investment strategies - and
the risks involved - are described in detail in the Statement of Additional
Information (SAI) which is referred to on the back cover of this
prospectus.

-28-
<PAGE>

FUND MANAGEMENT

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

The management fees paid to the Adviser by the Funds during the last fiscal year
are shown below. The New Jersey Municipal Bond Fund began operations during the
last fiscal year and the fee shown is that which is currently in effect.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FUND MANAGEMENT FEE AS A % OF NET ASSETS
- --------------------------------------------------------------------------------
<S> <C>
Tax-Exempt Bond --%
- --------------------------------------------------------------------------------
New Jersey Municipal Bond --%
- --------------------------------------------------------------------------------
New York Municipal Bond --%
- --------------------------------------------------------------------------------
Connecticut Municipal Bond --%
- --------------------------------------------------------------------------------
Massachusetts Municipal Bond --%
- --------------------------------------------------------------------------------
Rhode Island Municipal Bond --%
- --------------------------------------------------------------------------------
</TABLE>

-29-
<PAGE>

HOW TO INVEST IN THE FUNDS

All of the Funds offer Retail A Shares. The Tax-Exempt Bond Fund also offers
Retail B Shares.

HOW SALES CHARGES WORK

You will normally pay a sales charge to invest in the Funds. If you buy Retail A
Shares of a Fund, you'll usually pay a sales charge (sometimes called a
front-end load) at the time you buy your shares. If you buy Retail B Shares of
the Tax-Exempt Bond Fund, you may have to pay a contingent deferred sales charge
(sometimes called a back-end load or CDSC) when you sell your shares. This
section explains these two options.

[Sidenote:]
NET ASSET VALUE

RETAIL A SHARES

The table below shows the sales charge you'll pay if you buy Retail A Shares of
the Funds. The offering price is the NAV of the shares purchased, plus any
applicable sales charge.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------

-30-
<PAGE>

Galaxy's distributor may from time to time implement programs under which a
broker-dealer's sales force may be eligible to win nominal awards for certain
sales efforts. If any such program is made available to any broker-dealer, it
will be made available to all broker-dealers on the same terms. Payments made
under such programs are made by Galaxy's distributor 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.

There's no sales charge when you buy Retail A Shares if:

- - You buy shares by reinvesting your dividends and distributions.
- - You buy shares with money from another Galaxy Fund on which you've already
paid a sales charge (as long as you buy the new shares within 90 days after
selling your other shares).
- - You're an investment professional who places trades for your clients and
charges them a fee.
- - You buy shares under an all-inclusive fee program (sometimes called a "wrap
fee program") offered by a broker-dealer or other financial institution.
- - You were a Galaxy shareholder before December 1, 1995.
- - You previously paid a sales charge for the shares of another mutual fund
company (as long as you buy the Galaxy shares within 60 days of selling
your other shares).

RETAIL B SHARES

If you buy Retail B Shares of the Tax-Exempt Bond Fund, you won't pay a CDSC
unless you sell your shares within six years of buying them. The following table
shows the schedule of CDSC charges:

In addition, there's no CDSC when Retail B Shares are sold because of the death
or disability of a shareholder and in certain other circumstances such as
exchanges. Ask your investment

-31-
<PAGE>

professional or Galaxy's distributor, or consult the SAI, for other instances in
which the CDSC is waived. To contact Galaxy's distributor, call
1-877-BUY-GALAXY (1-877-289-4252).

DISTRIBUTION AND SHAREHOLDER SERVICE FEES

Retail A Shares of the Funds pay shareholder service fees at an annual rate of
up to 0.15% of each Fund's Retail A Share assets. Retail B Shares of the
Tax-Exempt Bond Fund pay distribution (12b-1) and shareholder service fees at an
annual rate of up to 0.80% of the Fund's Retail B Share assets. Galaxy has
adopted a plan under Rule 12b-1 that allows the Tax-Exempt Bond Fund to pay fees
from its Retail B Share assets for selling and distributing Retail B Shares and
for services provided to shareholders. Because 12b-1 fees are paid on an ongoing
basis, over time they increase the cost of your investment and may cost more
than paying other sales charges.

CONVERTING RETAIL B SHARES TO RETAIL A SHARES

Six years after you buy Retail B Shares of the Tax-Exempt Bond Fund, they will
automatically convert to Retail A Shares of the Fund. This allows you to benefit
from the lower annual expenses of Retail A Shares.

CHOOSING BETWEEN RETAIL A SHARES AND RETAIL B SHARES

In deciding whether to buy Retail A Shares or Retail B Shares of the Tax-Exempt
Bond Fund, you should consider how long you plan to hold the shares. Over time,
the higher fees on Retail B Shares may equal or exceed the initial sales charge
and fees for Retail A Shares. Retail A Shares may be a better choice if you
qualify to have the sales charge reduced or eliminated or if you plan to sell
your shares within one or two years. Consult your financial professional for
help in choosing the appropriate share class.

BUYING, SELLING AND EXCHANGING SHARES

You can buy and sell Retail A Shares and Retail B Shares of the Funds on any day
that the Funds are open for business, which is any day that the New York Stock
Exchange is open. Retail A Shares and Retail B Shares have different prices. The
price at which you buy shares is the NAV next determined after your order is
accepted, plus any applicable sales charge. The price at which you sell shares
is the NAV next determined, less any applicable CDSC in the case of Retail B
Shares of the Tax-Exempt Bond Fund. NAV is determined on each day the New York
Stock Exchange is open for trading at the close of regular trading that day
(usually 4:00 p.m. Eastern time). If market prices are readily available for
securities owned by the Fund, they're valued at those prices. If market prices
are not readily available for some securities, they are valued at fair value
under the supervision of Galaxy's Board of Trustees.

-32-
<PAGE>

[Sidenote:]
MINIMUM INVESTMENT AMOUNTS

The minimum initial investment to open a Fund account is:
- - $2,500 for regular accounts
- - $100 for college savings accounts.

There is generally no minimum initial investment if you participate in the
Automatic Investment Program. You generally can make additional investments for
as little as $100. See GALAXY INVESTOR PROGRAMS below for information on other
minimums for initial and additional investments.

Usually, you must keep at least $250 in your account. If your account falls
below $250 because you sell or exchange shares, Galaxy may redeem your shares
and close your account. Galaxy will give you 60 days' notice in writing before
closing your account.

HOW TO BUY SHARES

BUYING BY MAIL

Complete a purchase application and mail it, together with a check payable to
each Fund in which you want to invest, to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If your check is returned because of insufficient funds, Galaxy will cancel your
order.

-33-
<PAGE>

BUYING BY WIRE

Fleet National Bank
75 State Street
Boston, MA 02109
ABA #0110-0013-8
DDA #79673-5702
Ref: The Galaxy Fund
(Account number)
(Account registration)

Your financial institution may charge you a fee for sending funds by wire.

CUSTOMERS OF FINANCIAL INSTITUTIONS

DISCOUNT PLANS

You may have the sales charges on purchases of Retail A Shares reduced or waived
completely through the discount plans described below:

-34-
<PAGE>

- - GROUP SALES: If you belong to a qualified group with 50,000 or more
members, you can buy Retail A Shares at a reduced sales charge, based on
the number of qualified group members.

HOW TO SELL SHARES

You can sell your shares in several ways: by mail, by telephone, by wire, or
through your financial institution.

SELLING BY MAIL

Send your request in writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

Additional documents may be required for certain types of shareholders, such as
corporations, partnerships, executors, trustees, administrators or guardians.

[Sidenote:]
SIGNATURE GUARANTEES

-35-
<PAGE>

SELLING BY PHONE

SELLING BY WIRE

The sale proceeds must be paid to the same bank and account you named on your
application or in your written instructions.

CUSTOMERS OF FINANCIAL INSTITUTIONS

HOW TO EXCHANGE SHARES

You may exchange Retail B Shares of the Tax-Exempt Bond Fund for Retail B Shares
of any other Galaxy Fund. You won't pay a CDSC when you exchange your Retail B
Shares. However, when you sell the Retail B Shares you acquired in the exchange,
you'll pay a contingent deferred sales charge based on the date you bought the
Retail B Shares which you exchanged.

-36-
<PAGE>

To exchange shares:

- - call Galaxy's distributor or use the InvestConnect voice response line at
1-877-BUY-GALAXY (1-877-289-4252)

- - send your request in writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

- - ask your financial institution.

OTHER TRANSACTION POLICIES

Galaxy may refuse any order to buy shares. Galaxy doesn't issue a certificate
when you buy shares but it does keep a record of shares issued to investors.

Galaxy normally pays you cash when you sell your shares, but it has the right to
deliver securities owned by a Fund instead of cash. When you sell these
securities, you'll pay brokerage charges.

-37-
<PAGE>

If any shares that you're selling are part of an investment you've paid for with
a personal check, Galaxy will delay sending your sales proceeds until the check
clears, which can take up to 15 days.

-38-
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS. The Funds generally declare
dividends from net investment income daily and pay them monthly. They normally
distribute net capital gains annually. It's expected that the Funds' annual
distributions will be mainly income dividends. Dividends and distributions are
paid in cash unless you indicate in the account application or in a letter to
Galaxy that you want to have dividends and distributions reinvested in
additional shares.

FEDERAL TAXES. It is expected that the Funds will distribute dividends derived
from interest earned on exempt securities, and these "exempt-interest
dividends" will be exempt income for shareholders for federal income tax
purposes. However, distributions, if any, derived from net capital gains of
each Fund will generally be taxable to you as capital gains. Dividends, if any,
derived from short-term capital gain or taxable interest income will be taxable
to you as ordinary income. You will be notified annually of the tax status of
distributions to you.

Interest on indebtedness incurred by a shareholder to purchase or carry shares
of a Fund generally will not be deductible for federal income tax purposes.

You should note that a portion of the exempt-interest dividends paid by each
Fund may constitute an item of tax preference for purposes of determining
federal alternative minimum tax liability. Exempt-interest dividends will also
be considered along with other adjusted gross income in determining whether any
Social Security or railroad retirement payments received by you are subject to
federal income taxes.

STATE AND LOCAL TAXES. Each state-specific Fund anticipates that the dividends
that it pays that are attributable to interest earned by the Fund will also be
exempt from state and local personal income taxes in that state. Dividends paid
by the Tax-Exempt Bond Fund that are attributable to interest earned by the
Fund may be taxable to shareholders under state or local law.

MISCELLANEOUS. The foregoing is only a summary of certain tax considerations
under current law, which may be subject to change in the future. You should
consult your tax adviser for further information regarding federal, state
and/or local tax consequences relevant to your specific situation.

-39-
<PAGE>

GALAXY INVESTOR PROGRAMS

AUTOMATIC INVESTMENT PROGRAM

PAYROLL DEDUCTION PROGRAM

COLLEGE INVESTMENT PROGRAM

DIRECT DEPOSIT PROGRAM

SYSTEMATIC WITHDRAWAL PLAN

You can make regular withdrawals from your investment account every month, every
quarter, every six months or once a year. You need a minimum account balance of
$10,000 to participate in the plan. No CDSC will be charged on withdrawals of
Retail B Shares of the Tax-Exempt Bond Fund made through the plan that don't
annually exceed 12% of your account's value.

You may cancel your participation in any of these programs, other than the
Direct Deposit Program, by writing to Galaxy at:

-40-
<PAGE>

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

Please allow at least five days for the cancellation to be processed.

-41-
<PAGE>

HOW TO REACH GALAXY

THROUGH YOUR FINANCIAL INSTITUTION

Your financial institution can help you buy, sell or exchange shares and can
answer questions about your account.

GALAXY SHAREHOLDER SERVICES

Call Galaxy's distributor at 1-877-BUY-GALAXY (1-877-289-4252), Monday through
Friday, 8 a.m. to 6 p.m. (Eastern time) for help from a Galaxy representative.

INVESTCONNECT

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

If you live outside the United States, contact Galaxy by calling 1-508-855-5237.

THE INTERNET

Please visit Galaxy's website at: www.galaxyfunds.com

-42-
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables shown below will help you understand the
financial performance for the Funds' Retail A and Retail B Shares for the past
five years (or the period since a particular Fund began operations or a
particular class of shares was first offered). Certain information reflects the
financial performance of a single Retail A Share or Retail B Share. The total
returns in the tables represent the rate that an investor would have earned (or
lost) on an investment in Retail A Shares and/or Retail B Shares of each Fund,
assuming all dividends and distributions were reinvested. This information has
been audited by [___________________], independent accountants, whose reports,
along with the Funds' financial statements, are included in the Funds' Annual
Report and [______________________________] into the SAI.

-43-
<PAGE>

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

<TABLE>
<CAPTION>
Year Ended October 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- --------------- --------------- ---- ----
Retail Retail Retail Retail Retail Retail Retail Retail
A B A B A B A A
Shares Shares Shares Shares Shares Shares(1) Shares Shares
------ ------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . $ 10.78 $ 10.78 $ 10.78 $ 10.94 $ 9.99 $ 11.12
------- ------- ------- ------- ------- -------
Income from Investment Operations:

Net investment income(2) . . . . . . . . . . . . . . . . . 0.50 0.43 0.50 0.27 0.52 0.53
Net realized and unrealized gain
(loss) on investments. . . . . . . . . . . . . . . . . . 0.29 0.29 --- (0.16) 0.79 (1.04)
------- ------- ------- ------- ------- -------
Total from Investment Operations . . . . . . . . . . . 0.79 0.72 0.50 0.11 1.31 (0.51)
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . . . . . . . . . . . . (0.50) (0.43) (0.50) (0.27) (0.52) (0.53)
Dividends from net realized capital gains. . . . . . . . . (0.01) (0.01) --- --- --- ---
Dividends in excess of net realized
capital gains. . . . . . . . . . . . . . . . . . . . . . --- --- --- --- --- (0.09)
------- ------- ------- ------- ------- -------
Total Dividends. . . . . . . . . . . . . . . . . . . . (0.51) (0.44) (0.50) (0.27) (0.52) (0.62)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset
value. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.28 0.28 --- (0.16) 0.79 (1.13)
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . . $ 11.06 $ 11.06 $ 10.78 $ 10.78 $ 10.78 $ 9.99
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
Total Return(3). . . . . . . . . . . . . . . . . . . . . . . 7.49% 6.83% 4.77% 1.08%(4) 13.40% (4.75)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . $25,465 $ 1,690 $28,339 $ 787 $31,609 $35,911
Ratio to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 4.60% 3.95% 4.68% 4.08%(5) 4.99% 5.01%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 0.95% 1.60% 0.93% 1.57%(5) 0.91% 0.80%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . . . . 1.18% 1.83% 1.18% 1.77%(5) 1.24% 1.03%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . 78% 78% 15% 15% 11% 17%
</TABLE>

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

(1) The Fund began offering Retail B Shares on March 4, 1996.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 was $___, $0.47, $0.48,
$0.48 and $0.50, respectively. Net investment income per share before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for Retail B Shares for the years ended October 31, 1998 and 1997 and the
period ended October 31, 1996 was $___, $0.40 and $0.25, respectively.
(3) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.
(4) Not annualized.
(5) Annualized.

-44-
<PAGE>

NEW JERSEY MUNICIPAL BOND FUND
(FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD)

<TABLE>
<CAPTION>
PERIOD
ENDED
OCTOBER 31, 1998(1)
----------------
RETAIL A SHARES
---------------
<S> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . .

Income from Investment Operations:
Net investment income(2) . . . . . . . . . . . . . . . . .
Net realized and unrealized (loss) on investments. . . . .
Total from Investment Operations . . . . . . . . . . . .

Less Dividends:
Dividends from net investment income . . . . . . . . . . .
Dividends from net realized capital gains. . . . . . . . .
Total Dividends. . . . . . . . . . . . . . . . . . . . .

Net (decrease) in net asset value. . . . . . . . . . . . . .
Net Asset Value, End of Period . . . . . . . . . . . . . . .

Total Return(3). . . . . . . . . . . . . . . . . . . . . . .

Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . .
Ratio to average net assets:
Net investment income including reimbursement/waiver . . .
Operating expenses including reimbursement/waiver. . . . .
Operating expenses excluding reimbursement/waiver. . . . .
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . .
</TABLE>
- -------------------------

(1) The Fund commenced operations on April 3, 1998.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for Retail A Shares for the period
ended October 31, 1998 was $________.
(3) Calculation does not include the effect of any sales charge for Retail A
Shares.
(4) Not annualized.
(5) Annualized.

-45-
<PAGE>

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

Dividends from net investment
income . . . . . . . . . . . . . . . . . . . . . . . . . . (0.49) (0.48) (0.49) (0.49)
Dividends from net realized capital gains. . . . . . . . . -- -- -- --
------- ------- ------- -------
Total Dividends. . . . . . . . . . . . . . . . . . . . . . (0.49) (0.48) (0.49) (0.49)
------- ------- ------- -------
Net increase (decrease) in net asset
value. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.34 (0.03) 0.89 (1.15)
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . . $ 11.09 $ 10.75 $ 10.78 $ 9.89
------- ------- ------- -------
------- ------- ------- -------
Total Return(2). . . . . . . . . . . . . . . . . . . . . . . 7.93% 4.31% 14.03% (6.14)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . $38,434 $40,154 $42,870 $42,451
Ratio to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 4.52% 4.50% 4.73% 4.64%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 0.94% 0.95% 0.92% 0.87%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . . . . 1.26% 1.35% 1.31% 1.10%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . 61% 12% 5% 18%
</TABLE>

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

(1) Net investment income per share for Retail A Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $___,
$0.45, $0.44, $0.44 and $0.46, respectively.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares.

-46-
<PAGE>

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

<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Retail Retail Retail Retail Retail
A Shares A Shares A Shares A Shares A Shares
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . $ 10.14 $ 10.13 $ 9.22 $ 10.32
------- ------- ------- -------
Income from Investment Operations:
Net investment income(1) . . . . . . . . . . . . . . . . . 0.45 0.42 0.44 0.46
Net realized and unrealized gain
(loss) on investments. . . . . . . . . . . . . . . . . . . 0.33 0.01 0.91 (1.10)
------- ------- ------- -------
Total from Investment Operations . . . . . . . . . . . . 0.78 0.43 1.35 (0.64)
------- ------- ------- -------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . . . . . . . . . . . . (0.45) (0.42) (0.44) (0.46)
Dividends from net realized capital gains. . . . . . . . . --- --- --- ---
------- ------- ------- -------
Total Dividends. . . . . . . . . . . . . . . . . . . . . (0.45) (0.42) (0.44) (0.46)
------- ------- ------- -------
Net increase (decrease) in net asset
value. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.33 (0.01) 0.91 (1.10)
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . . $ 10.47 $ 10.14 $ 10.13 $ 9.22
------- ------- ------- -------
------- ------- ------- -------
Total Return(2). . . . . . . . . . . . . . . . . . . . . . . 7.86% 4.32% 14.94% (6.39)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . $23,355 $23,244 $18,066 $18,229
Ratio to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 4.30% 4.13% 4.53% 4.66%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 0.70% 0.70% 0.68% 0.25%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . . . . 1.31% 1.38% 1.48% 1.42%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . 42% 3% 7% 4%
</TABLE>

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

(1) Net investment income per share for Retail A Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $___,
$0.38, $0.35, $0.37 and $0.34, respectively.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares.

-47-
<PAGE>

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

<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Retail Retail Retail Retail Retail
A Shares A Shares A Shares A Shares A Shares
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . $ 9.94 $ 9.98 $ 9.12 $ 10.24
------- ------- ------- -------
Income from Investment Operations:
Net investment income(1) . . . . . . . . . . . . . . . . . 0.45 0.43 0.44 0.47
Net realized and unrealized gain
(loss) on investments. . . . . . . . . . . . . . . . . . . 0.32 (0.04) 0.86 (1.12)
------- ------- ------- -------
Total from Investment Operations . . . . . . . . . . . . 0.77 0.39 1.30 (0.65)
------- ------- ------- -------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . . . . . . . . . . . . (0.46) (0.43) (0.44) (0.47)
Dividends from net realized capital gains. . . . . . . . . --- --- --- ---
------- ------- ------- -------
Total Dividends. . . . . . . . . . . . . . . . . . . . (0.46) (0.43) (0.44) (0.47)
------- ------- ------- -------
Net increase (decrease) in net asset
value. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.31 (0.04) 0.86 (1.12)
------- ------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . . . . $ 10.25 $ 9.94 $ 9.98 $ 9.12
------- ------- ------- -------
------- ------- ------- -------
Total Return(2). . . . . . . . . . . . . . . . . . . . . . . 7.92% 4.05% 14.52% (6.46)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . $33,318 $26,275 $16,113 $15,966
Ratio to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 4.52% 4.42% 4.56% 4.89%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 0.63% 0.66% 0.70% 0.33%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . . . . 1.20% 1.32% 1.58% 1.43%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . 48% 16% 19% 11%
</TABLE>

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

(1) Net investment income per share for Retail A Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $___,
$0.39, $0.37, $0.36 and $0.37, respectively.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares.

-48-
<PAGE>

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

<TABLE>
<CAPTION>
Year Ended October 31,
----------------------------------------------------------------
1998 1997 1996 Period Ended
-------- -------- -------- October 31, 1995(1)
Retail Retail Retail -------------------
A Shares A Shares A Shares Retail A Shares
-------- -------- -------- ---------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . $ 10.65 $ 10.67 $ 10.00
-------- -------- --------
Income From Investment Operations:
Net investment income(2) . . . . . . . . . . . . . . . . . 0.48 0.51 0.44
Net realized and unrealized gain
(loss) on investments . . . . . . . . . . . . . . . . . . 0.32 (0.03) 0.67
-------- -------- --------
Total From Investment Operations . . . . . . . . . . . . 0.80 0.54 1.11
-------- -------- --------
Less Dividends:
Dividends from net investment
Income . . . . . . . . . . . . . . . . . . . . . . . . . (0.50) (0.51) (0.44)
Dividends from net realized capital gains. . . . . . . . . (0.04) (0.05) ---
-------- -------- --------
Total Dividends. . . . . . . . . . . . . . . . . . . . . (0.54) (0.56) (0.44)
-------- -------- --------
Net increase (decrease) in net asset
Value. . . . . . . . . . . . . . . . . . . . . . . . . . . 0.26 (0.02) 0.67
-------- -------- --------
Net Asset Value, End of Period . . . . . . . . . . . . . . . $ 10.91 $ 10.65 $ 10.67
-------- -------- --------
-------- -------- --------
Total Return(3). . . . . . . . . . . . . . . . . . . . . . . 7.78% 5.22% 11.29%(4)
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . $ 17,134 $ 14,900 $ 10,850
Ratio to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 4.50% 4.78% 5.13%(5)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . . . . . . . 0.83% 0.77% 0.40%(5)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . . . . . . . 1.34% 1.34% 2.25%(5)
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . 19% 13% 34%(5)
</TABLE>

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

(1) The Fund commenced operations on December 20, 1994.
(2) Net investment income per share for Retail A Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997 and 1996 and for the period
ended October 31, 1995 was $___, $0.43, $0.45 and $0.28, respectively.
(3) Calculation does not include the effect of any sales charge for Retail A
Shares.
(4) Not annualized.
(5) Annualized.

-49-
<PAGE>

[Back Cover Page]

Where to find more information

You'll find more information about the Funds in the following documents:

You can get a free copy of these documents, request other information about the
Funds and make shareholder inquiries by calling Galaxy at 1-877-BUY-GALAXY
(1-877-289-4252) or writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If you buy your shares through a financial institution, you may contact your
institution for more information.

You can write to the Securities and Exchange Commission (SEC) Public Reference
Section and ask them to mail you information about the Funds, including the SAI.
They'll charge you a fee for this service. You can also visit the Public
Reference Room and copy the documents while you're there. For information about
the operation of the Public Reference Room, call the SEC.

Public Reference Section of the SEC
Washington, DC 20549-6009.
1-800-SEC-0330

Reports and other information about the Funds are also available on the SEC's
website at http://www.sec.gov.

Galaxy's Investment Company Act File No. is 811-4636.

PROGAL TXBND

-50-
<PAGE>

[Front cover page]

The Galaxy Fund

Prospectus
February 28, 1999

Trust Shares

<PAGE>

Contents

Information about the Funds
Galaxy Tax-Exempt Bond Fund. . . . . . . . . . . . . . . . . . . . . . .
Galaxy New Jersey Municipal Bond Fund. . . . . . . . . . . . . . . . . .
Galaxy New York Municipal Bond Fund. . . . . . . . . . . . . . . . . . .
Galaxy Connecticut Municipal Bond Fund . . . . . . . . . . . . . . . . .
Galaxy Massachusetts Municipal Bond Fund . . . . . . . . . . . . . . . .
Galaxy Rhode Island Municipal Bond Fund. . . . . . . . . . . . . . . . .
Additional information about risk. . . . . . . . . . . . . . . . . . . .

Fund management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to invest in the Funds . . . . . . . . . . . . . . . . . . . . . . . .
Buying and selling shares. . . . . . . . . . . . . . . . . . . . . . . .
How to buy shares . . . . . . . . . . . . . . . . . . . . . . . . . .
How to sell shares. . . . . . . . . . . . . . . . . . . . . . . . . .
Other transaction policies. . . . . . . . . . . . . . . . . . . . . .

Dividends, distributions and taxes . . . . . . . . . . . . . . . . . . . .

Financial highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .

<PAGE>

INFORMATION ABOUT THE FUNDS

Beginning on the next page, you'll find the following important information
about each of the Galaxy Tax-Exempt Bond Funds:

[Sidenote:]
TAX-EQUIVALENT YIELD

WHICH FUND IS RIGHT FOR YOU?

THE FUNDS' INVESTMENT ADVISER

Fleet Investment Advisors Inc., which is referred to in this prospectus as THE
ADVISER, is the investment adviser for all of these Funds. The Adviser was
established in 1984 and has its main

<PAGE>

[Sidenote:]
An investment in the Funds isn't a Fleet Bank deposit and it isn't insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

-2-

<PAGE>

Galaxy Tax-Exempt Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks to provide shareholders with as high a level of current interest
income free of federal income tax as is consistent with preservation of capital.

THE FUND'S MAIN INVESTMENT STRATEGIES

[Sidenote:]
TYPES OF MUNICIPAL SECURITIES

-3-

<PAGE>

The Fund's average weighted maturity will vary from time to time depending on
current economic and market conditions and the Adviser's assessment of probable
changes in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

-4-
<PAGE>

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1 year 5 years Since inception
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (12/30/91)
- -----------------------------------------------------------------------------
Lehman Brothers
Municipal Bond
Index --% --% --% (since 12/30/91)
- -----------------------------------------------------------------------------
</TABLE>

For current yield information, please call 1-877-BUY-GALAXY (1-877-289-4252).

[Sidenote:]
The Lehman Brothers Municipal Bond Index is an unmanaged index which tracks the
performance of municipal bonds.

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

<TABLE>
<CAPTION>
Annual Fund operating expenses (fees deducted from the Fund's assets)
- -----------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --% --%*
- -----------------------------------------------------------------------------
</TABLE>

-5-

<PAGE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares $-- $-- $-- $--
- -----------------------------------------------------------------------------
</TABLE>

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-6-

<PAGE>

Galaxy New Jersey Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund's average weighted maturity will vary from time to time depending on
current economic and market conditions and the Adviser's assessment of probable
changes in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and by swings in
investment markets. You could lose money if the Fund's investments fall in
value.

-7-
<PAGE>

In addition, the Fund also carries the following risks:

HOW THE FUND HAS PERFORMED

The Fund doesn't have a long-term performance record since it has been in
operation for less than one calendar year. For current yield information, call
1-877-BUY-GALAXY (1-877-289-4252).

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

-8-
<PAGE>

<TABLE>
<CAPTION>
Annual Fund operating expenses (fees deducted from the Fund's assets)
- -----------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --%* --%*
- -----------------------------------------------------------------------------
</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares $-- $-- $-- $--
- -----------------------------------------------------------------------------
</TABLE>

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-9-

<PAGE>

New York Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund's average weighted maturity will vary from time to time depending on
current economic and market conditions and the Adviser's assessment of probable
changes in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

- - INTEREST RATE RISK: The prices of debt securities, including municipal
securities, tend to move in the opposite direction to interest rates. When
rates are rising, the prices of debt securities

-10-
<PAGE>

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

-11-

<PAGE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1 year 5 years Since inception
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (12/31/91)
- -----------------------------------------------------------------------------
Lehman Brothers
Municipal Bond
Index --% --% --% (since 12/31/91)
- -----------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

EXAMPLE

-12-

<PAGE>

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-13-

<PAGE>

Connecticut Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

THE FUND'S MAIN INVESTMENT STRATEGIES

Nearly all of the Fund's investments will be of investment grade quality. These
are securities which have one of the top four ratings assigned by Standard &
Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or
unrated securities determined by the Adviser to be of comparable quality. Under
normal market conditions, the Fund will invest at least 65% of its total assets
in securities rated in one of the three highest rating categories assigned by
S&P or Moody's, or in unrated securities determined by the Adviser to be of
comparable quality.

The Fund's average weighted maturity will vary from time to time depending on
current market conditions and the Adviser's assessment of probable changes in
interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

-14-
<PAGE>

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998

-15-
<PAGE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1 year 5 years Since inception
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (3/16/93)
- -----------------------------------------------------------------------------
Lehman Brothers
Municipal Bond
Index --% --% --% (since 3/16/93)
- -----------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-16-

<PAGE>

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-17-

<PAGE>

Massachusetts Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

THE FUND'S MAIN INVESTMENT STRATEGIES

Nearly all of the Fund's investments will be of investment grade quality. These
are securities which have one of the top four ratings assigned by Standard &
Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or
unrated securities determined by the Adviser to be of comparable quality. Under
normal market conditions, the Fund will invest at least 65% of its total assets
in securities rated in one of the three highest rating categories assigned by
S&P or Moody's, or in unrated securities determined by the Adviser to be of
comparable quality.

The Fund's average weighted maturity will vary from time to time depending on
current economic and market conditions and the Adviser's assessment of probable
changes in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

- - INTEREST RATE RISK: The prices of debt securities, including municipal
securities, tend to move in the opposite direction to interest rates. When
rates are rising, the prices of debt securities

-18-

<PAGE>

tend to fall. When rates are falling, the prices of debt securities tend
to rise. Generally, the longer the time until maturity, the more sensitive
the price of a debt security is to interest rate changes.
- - CREDIT RISK: The value of debt securities, including municipal securities,
also depends on the ability of issuers to make principal and interest
payments. If an issuer can't meet its payment obligations or if its credit
rating is lowered, the value of its debt securities will fall. The ability
of a state or local government issuer to make payments can be affected by
many factors, including economic conditions, the flow of tax revenues and
changes in the level of federal, state or local aid. Some municipal
obligations are payable only from limited revenue sources or private
entities.
- - PREPAYMENT RISK: Changes in interest rates may cause certain municipal
securities held by the Fund to be paid off much sooner or later than
expected, which could adversely affect the Fund's value.
- - LACK OF DIVERSIFICATION: The Fund is not diversified, which means that it
can invest a large percentage of its assets in a small number of issuers.
As a result, a change in the value of any one investment held by the Fund
may affect the overall value of the Fund more than it would affect a
diversified fund which holds more investments.
- - SINGLE STATE RISK: Because the Fund invests primarily in Massachusetts
municipal securities, it is likely to be especially susceptible to
economic, political and regulatory events that affect Massachusetts.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

-19-

<PAGE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1 year 5 years Since inception
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --% (3/12/93)
- -----------------------------------------------------------------------------
Lehman Brothers
Municipal Bond
Index --% --% --% (since 3/12/93)
- -----------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

- -----------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- -----------------------------------------------------------------------------
Trust Shares $-- $-- $-- $--
- -----------------------------------------------------------------------------

-20-

<PAGE>

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-21-

<PAGE>

Rhode Island Municipal Bond Fund

THE FUND'S INVESTMENT OBJECTIVE

THE FUND'S MAIN INVESTMENT STRATEGIES

Nearly all of the Fund's investments will be of investment grade quality. These
are securities which have one of the top four ratings assigned by Standard &
Poor's Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's), or
unrated securities as determined by the Adviser to be of comparable quality.
Under normal market conditions, the Fund will invest at least 65% of its total
assets in securities rated in one of the three highest rating categories
assigned by S&P or Moody's, or in unrated securities determined by the Adviser
to be of comparable quality.

The Fund's average weighted maturity will vary from time to time depending on
economic and market conditions and the Adviser's assessment of probable changes
in interest rates.

THE MAIN RISKS OF INVESTING IN THE FUND

All mutual funds are affected by changes in the economy and swings in investment
markets. You could lose money if the Fund's investments fall in value.

In addition, the Fund also carries the following risks:

-22-

<PAGE>

longer the time until maturity, the more sensitive the price of a debt
security is to interest rate changes.
- - CREDIT RISK: The value of debt securities, including municipal securities,
also depends on the ability of issuers to make principal and interest
payments. If an issuer can't meet its payment obligations or if its credit
rating is lowered, the value of its debt securities will fall. The ability
of a state or local government issuer to make payments can be affected by
many factors, including economic conditions, the flow of tax revenues and
changes in the level of federal, state or local aid. Some municipal
obligations are payable only from limited revenue sources or private
entities.
- - PREPAYMENT RISK: Changes in interest rates may cause certain municipal
securities held by the Fund to be paid off much sooner or later than
expected, which could adversely affect the Fund's value.
- - LACK OF DIVERSIFICATION: The Fund is not diversified, which means that it
can invest a large percentage of its assets in a small number of issuers.
As a result, a change in the value of any one investment held by the Fund
may affect the overall value of the Fund more than it would affect a
diversified fund which holds more investments.
- - SINGLE STATE RISK: Because the Fund invests primarily in Rhode Island
municipal securities, it is likely to be especially susceptible to
economic, political and regulatory events that affect Rhode Island.

HOW THE FUND HAS PERFORMED

As of the date of this prospectus, the Fund had not offered Trust Shares to
investors. The returns below represent the returns for Retail A Shares of the
Fund which are offered in a separate prospectus. Retail A Shares and Trust
Shares of the Fund have returns that are substantially the same because they
represent interests in the same portfolio securities and differ only to the
extent that they bear separate expenses. Unlike Trust Shares, Retail A Shares
of the Fund are also subject to a front-end sales charge on purchases and, in
certain cases, to a contingent deferred sales charge at the time shares are
sold.

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares has varied from year
to year, thereby giving some indication of the risk of investing in the Fund.
The figures don't include any sales charges that investors pay when buying or
selling Retail A Shares of the Fund. If sales charges were included, the
returns would be lower.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

-23-

<PAGE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
1 year Since inception
- -----------------------------------------------------------------------------
<S> <C> <C>
Retail A Shares --% --% (12/20/94)
- -----------------------------------------------------------------------------
Lehman Brothers
Municipal Bond Index --% --% (since 12/20/94)
- -----------------------------------------------------------------------------
</TABLE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-24-

<PAGE>

[Sidenote:]
THE PORTFOLIO MANAGER

The Adviser's Tax-Exempt Investment Policy Committee is responsible for the
day-to-day management of the Fund's investment portfolio.

-25-

<PAGE>

ADDITIONAL INFORMATION ABOUT RISK

The main risks associated with an investment in each of the Galaxy Tax-Exempt
Bond Funds have been described above. The following supplements that
discussion.

-26-
<PAGE>

FUND MANAGEMENT

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

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FUND MANAGEMENT FEE AS A % OF NET ASSETS
- ------------------------------------------------------------------------------
<S> <C>
Tax-Exempt Bond --%
- ------------------------------------------------------------------------------
New Jersey Municipal Bond --%
- ------------------------------------------------------------------------------
New York Municipal Bond --%
- ------------------------------------------------------------------------------
Connecticut Municipal Bond --%
- ------------------------------------------------------------------------------
Massachusetts Municipal Bond --%
- ------------------------------------------------------------------------------
Rhode Island Municipal Bond --%
- ------------------------------------------------------------------------------
</TABLE>

-27-

<PAGE>

HOW TO INVEST IN THE FUNDS

BUYING AND SELLING SHARES

Trust Shares of the Funds are available for purchase by investors maintaining a
qualified account at a bank or trust institution, including subsidiaries of
Fleet Financial Group, Inc. Qualified accounts include discretionary investment
management accounts, custodial accounts and agency accounts. Your institution
can provide more information about which types of accounts are eligible.

You can buy and sell Trust Shares of the Funds on any business day. A business
day is any day that Galaxy's distributor, Galaxy's custodian and your
institution are open for business.

[Sidenote:]
NET ASSET VALUE

HOW TO BUY SHARES

You can buy Trust Shares by following the procedures established by your
financial institution. Your financial institution is responsible for sending
your order to Galaxy's distributor and wiring payment to Galaxy's custodian. The
institution holds the shares in your name and receives all confirmations of
purchases and sales.

-28-

<PAGE>

[Sidenote:]
INVESTMENT MINIMUMS

Galaxy does not have any minimum investment requirements for initial or
additional investments in Trust Shares but financial institutions may do so.
They may also require you to maintain a minimum account balance.

HOW TO SELL SHARES

You can sell Trust Shares by following the procedures established by your
financial institution. Your financial institution is responsible for sending
your order to Galaxy's distributor and for crediting your account with the
proceeds. Galaxy doesn't charge for wiring the proceeds, but your financial
institution may do so. Contact your financial institution for more information.

OTHER TRANSACTION POLICIES

If Galaxy doesn't receive full payment for your order to buy shares by 4:00 p.m.
on the next business day, Galaxy won't accept your order. Galaxy will advise
your institution if this happens.

Galaxy may refuse any order to buy shares. Galaxy doesn't issue a certificate
when you buy shares but it does keep a record of shares issued to investors.

Sales proceeds are normally wired to your institution on the next business day
but Galaxy reserves the right to send sales proceeds within seven business days
if sending proceeds earlier could adversely affect a Fund.

Galaxy may ask for any information it might reasonably need to make sure that
you've authorized a sale of shares.

Galaxy may close any account after 60 days' written notice if the value of the
account drops below $250 as a result of selling shares.

-29-

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

Interest on indebtedness incurred by a shareholder to purchase or carry shares
of a Fund generally will not be deductible for federal income tax purposes.

-30-

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables shown below will help you understand the
financial performance for the Funds' Trust Shares for the past five years (or
the period since a particular Fund began operations). As of the date of this
Prospectus, Trust Shares of the Rhode Island Municipal Bond Fund had not been
offered to investors. The financial highlights table shown below with respect
to the Rhode Island Municipal Bond Fund reflects the financial performance of
the Fund's Retail A Shares and is intended to provide you with a long-term
perspective as to the Fund's financial history. Certain information in the
financial highlights tables reflects the financial performance of a single Trust
Share or, in the case of the Rhode Island Municipal Bond Fund, a single Retail A
Share. The total returns in the tables represent the rate that an investor
would have earned (or lost) on an investment in Trust Shares (Retail A Shares in
the case of the Rhode Island Municipal Bond Fund) of each Fund, assuming all
dividends and distributions were reinvested. This information has been audited
by [___________________], independent accountants, whose reports, along with the
Funds' financial statements, are included in the Funds' Annual Report and
[______________________________] into the SAI.

-31-
<PAGE>

Tax-Exempt Bond Fund
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Trust Shares
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . $10.78 $10.78 $9.99 $11.12
-------- -------- ------- -------
Income from Investment Operations:
Net investment income(1). . . . . . . . . . . . . . 0.53 0.53 0.54 0.53
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . . 0.29 -- 0.79 (1.04)
-------- -------- ------- -------
Total from Investment Operations. . . . . . . . 0.82 0.53 1.33 (0.51)
-------- -------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . (0.53) (0.53) (0.54) (0.53)
Dividends from net realized capital gains. . . . . . (0.01) -- -- --
Dividends in excess of net realized capital gains. . -- -- -- (0.09)
-------- -------- ------- -------
Total Dividends . . . . . . . . . . . . . . . . (0.54) (0.53) (0.54) (0.62)
-------- -------- ------- -------
Net increase (decrease) in net asset value . . . . . . 0.28 -- 0.79 (1.13)
-------- -------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . $11.06 $10.78 $10.78 $9.99
-------- -------- ------- -------
-------- -------- ------- -------
Total Return . . . . . . . . . . . . . . . . . . . . . 7.75% 5.03% 13.62% (4.75)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . $122,218 $103,163 $91,740 $91,647
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . . . . . . . . 4.85% 4.91% 5.18% 5.01%
Operating expenses including
reimbursement/waiver. . . . . . . . . . . . . . . 0.70% 0.70% 0.72% 0.78%
Operating expenses excluding
reimbursement/waiver. . . . . . . . . . . . . . . 0.96% 0.95% 0.97% 1.00%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . 78% 15% 11% 17%
</TABLE>

- ---------------------
(1) Net investment income per share for Trust Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $____,
$0.51, $0.51, $0.51 and $0.50, respectively.

-32-

<PAGE>

New Jersey Municipal Bond Fund
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Period ended
October 31, 1998(1)
-------------------
Trust Shares
------------
<S> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . .

Income from Investment Operations:
Net investment income(2) . . . . . . . . . . . . . . . . . .
Net realized and unrealized (loss) on investments. . . . . .
Total from Investment Operations. . . . . . . . . . . . .

Less Dividends:
Dividends from net investment income . . . . . . . . . . . .
Dividends from net realized capital gains. . . . . . . . . .
Total Dividends . . . . . . . . . . . . . . . . . . . . .

Net increase (decrease) in net asset value . . . . . . . . . .

Net Asset Value, End of Period . . . . . . . . . . . . . . . .

Total Return . . . . . . . . . . . . . . . . . . . . . . . . .

Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . . . . .
Ratios to average net assets:
Net investment income including reimbursement/waiver . . . .
Operating expenses including reimbursement/waiver. . . . . .
Operating expenses excluding reimbursement/waiver. . . . . .
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . .
</TABLE>

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

(1) The Fund commenced operations on April 3, 1998.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and the Fund's administrator for Trust Shares for the period ended
October 31, 1998 was $___________.
(3) Not annualized.
(4) Annualized.

-33-
<PAGE>

New York Municipal Bond Fund
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Trust Shares
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . $10.75 $10.78 $9.89 $11.04
-------- -------- ------- -------
Income from Investment Operations:
Net investment income(1) . . . . . . . . . . . . . . 0.52 0.51 0.51 0.49
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . . 0.34 (0.03) 0.89 (1.15)
-------- -------- ------- -------
Total from Investment Operations. . . . . . . . 0.86 0.48 1.40 (0.66)
-------- -------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . (0.52) (0.51) (0.51) (0.49)
Dividends from net realized capital gains. . . . . . -- -- -- --
-------- -------- ------- -------
Total Dividends . . . . . . . . . . . . . . . . . (0.52) (0.51) (0.51) (0.49)
-------- -------- ------- -------
Net increase (decrease) in net asset value . . . . . . 0.34 (0.03) 0.89 (1.15)
-------- -------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . $11.09 $10.75 $10.78 $9.89
-------- -------- ------- -------
-------- -------- ------- -------
Total Return . . . . . . . . . . . . . . . . . . . . . 8.17% 4.55% 14.23% (6.14)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . $27,562 $23,762 $23,077 $24,209
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . . . . . . . . 4.75% 4.75% 4.91% 4.64%
Operating expenses including
reimbursement/waiver. . . . . . . . . . . . . . . 0.71% 0.70% 0.74% 0.87%
Operating expenses excluding
reimbursement/waiver. . . . . . . . . . . . . . . 1.02% 1.10% 1.07% 1.08%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . 61% 12% 5% 18%
</TABLE>

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

-34-

<PAGE>

Connecticut Municipal Bond Fund
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Trust Shares
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period. . . . . . . $10.14 $10.13 $9.22 $10.32
-------- -------- ------- -------
Income from Investment Operations:
Net investment income(1). . . . . . . . . . . . 0.47 0.44 0.46 0.46
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . 0.33 0.01 0.91 (1.10)
-------- -------- ------- -------
Total from Investment Operations . . . . . . 0.80 0.45 1.37 (0.64)
-------- -------- ------- -------
Less Dividends:
Dividends from net investment income. . . . . . (0.47) (0.44) (0.46) (0.46)
Dividends from net realized capital gains . . . -- -- -- --
-------- -------- ------- -------
Total Dividends. . . . . . . . . . . . . . . (0.47) (0.44) (0.46) (0.46)
-------- -------- ------- -------
Net increase (decrease) in net asset value. . . . 0.33 0.01 0.91 (1.10)
-------- -------- ------- -------
Net Asset Value, End of Period. . . . . . . . . . $10.47 $10.14 $10.13 $9.22
-------- -------- ------- -------
-------- -------- ------- -------
Total Return. . . . . . . . . . . . . . . . . . . 8.06% 4.54% 15.21% (6.37)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . $9,866 $6,348 $4,083 $4,419
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . 4.51% 4.34% 4.76% 4.66%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . 0.49% 0.49% 0.45% 0.23%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . 1.10% 1.17% 1.24% 1.41%
Portfolio Turnover Rate . . . . . . . . . . . . . 42% 3% 7% 4%
</TABLE>

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

-35-
<PAGE>

Massachusetts Municipal Bond Fund
(For a share outstanding throughout each period)

<TABLE>
<CAPTION>
Year Ended October 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Trust Shares
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . $ 9.94 $ 9.98 $9.12 $10.24
-------- -------- ------- -------
Income from Investment Operations:
Net investment income(1) . . . . . . . . . . . . . . 0.46 0.46 0.45 0.48
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . . . 0.32 (0.04) 0.86 (1.12)
-------- -------- ------- -------
Total from Investment Operations. . . . . . . . . 0.78 0.42 1.31 (0.64)
-------- -------- ------- -------
Less Dividends:
Dividends from net investment income . . . . . . . . (0.47) (0.46) (0.45) (0.48)
Dividends from net realized capital gains. . . . . . -- -- -- --
-------- -------- ------- -------
Total Dividends . . . . . . . . . . . . . . . . . (0.47) (0.46) (0.45) (0.48)
-------- -------- ------- -------
Net increase (decrease) in net asset value . . . . . . 0.31 (0.04) 0.86 (1.12)
-------- -------- ------- -------
Net Asset Value, End of Period . . . . . . . . . . . . $10.25 $ 9.94 $9.98 $9.12
-------- -------- ------- -------
-------- -------- ------- -------
Total Return . . . . . . . . . . . . . . . . . . . . . 8.06% 4.27% 14.72% (6.46)%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . . . . . . . $13,986 $11,047 $7,607 $5,617
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . . . . . . . . 4.57% 4.60% 4.73% 4.89%
Operating expenses including
reimbursement/waiver. . . . . . . . . . . . . . . 0.44% 0.48% 0.52% 0.33%
Operating expenses excluding
reimbursement/waiver. . . . . . . . . . . . . . . 1.01% 1.14% 1.31% 1.41%
Portfolio Turnover Rate. . . . . . . . . . . . . . . . 48% 16% 19% 11%
</TABLE>

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

-36-

<PAGE>

Rhode Island Municipal Bond Fund
(For a share outstanding throughout the period)

<TABLE>
<CAPTION>
Year Ended October 31, Period Ended
1998 1997 1996 October 31, 1995(1)
---- ---- ---- -------------------
Retail A Shares
--------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period. . . . . . $10.65 $10.67 $10.00
-------- -------- -------
Income from Investment Operations:
Net investment income(2). . . . . . . . . . . 0.48 0.51 0.44
Net realized and unrealized gain (loss)
on investments. . . . . . . . . . . . . . . . 0.32 0.03 0.67
-------- -------- -------
Total from Investment Operations. . . . . 0.80 0.54 1.11
-------- -------- -------
Less Dividends:
Dividends from net investment income. . . . . (0.50) (0.51) (0.44)
Dividends from net realized capital gains . . (0.04) (0.05) --
-------- -------- -------
Total Dividends. . . . . . . . . . . . . . (0.54) (0.56) (0.44)
-------- -------- -------
Net increase (decrease) in net asset value. . . 0.26 (0.02) 0.67
-------- -------- -------
Net Asset Value, End of Period. . . . . . . . . $10.91 $10.65 $10.67
-------- -------- -------
-------- -------- -------
Total Return. . . . . . . . . . . . . . . . . . 7.78% 5.22% 11.29%(3)
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . $17,13(4) $14,900 $10,850
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . 4.50% 4.78% 5.13%(4)
Operating expenses including
reimbursement/waiver . . . . . . . . . . . 0.83% 0.77% 0.40%(4)
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . 1.34% 1.34% 2.25%(4)
Portfolio Turnover Rate . . . . . . . . . . . . 19% 13% 34%(3)
</TABLE>

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

(1) The Fund commenced operations on December 30, 1994.
(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for the fiscal years ended October
31, 1998, 1997 and 1996 and for the period ended October 31, 1995 was
$____, $0.43, $0.45, and $0.28, respectively.
(3) Not annualized.
(4) Annualized.

-37-

<PAGE>

[Back Cover Page]

Where to find more information

You'll find more information about the Funds in the following documents:

You can get a free copy of these documents, request other information about the
Funds and make shareholder inquiries by calling Galaxy at 1-877-BUY-GALAXY
(1-877-289-4252) or writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If you buy your shares through a financial institution, you may contact your
institution for more information.

You can write to the Securities and Exchange Commission (SEC) Public Reference
Section and ask them to mail you information about the Funds, including the SAI.
They'll charge you a fee for this service. You can also visit the Public
Reference Room and copy the documents while you're there. For information about
the operation of the Public Reference Room, call the SEC.

Public Reference Section of the SEC
Washington, DC 20549-6009.
1-800-SEC-0330

Reports and other information about the Funds are also available on the SEC's
website at http://www.sec.gov.

Galaxy's Investment Company Act File No. is 811-4636.

PROGAL TRTXBND

-38-
<PAGE>

[Front cover page]

The Galaxy Fund

Prospectus
February 28, 1999

Galaxy Money Market Fund
Galaxy Government Fund
Galaxy U.S. Treasury Fund
Galaxy Tax-Exempt Fund
Galaxy Connecticut Municipal Money Market Fund
Galaxy Massachusetts Municipal Money Market Fund

Retail A Shares and Retail B Shares

<PAGE>

Contents

Information about the Funds
Galaxy Money Market Fund . . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Government Fund . . . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy U.S. Treasury Fund. . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Tax-Exempt Fund . . . . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Connecticut Municipal Money Market Fund . . . . . . . . . . . . . .
Galaxy Massachusetts Municipal Money Market Fund . . . . . . . . . . . . .
Additional information about risk. . . . . . . . . . . . . . . . . . . . .

How to invest in the Funds
About sales charges. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buying, selling and exchanging shares. . . . . . . . . . . . . . . . . . .
How to buy shares. . . . . . . . . . . . . . . . . . . . . . . . . . . .
How to sell shares . . . . . . . . . . . . . . . . . . . . . . . . . . .
How to exchange shares . . . . . . . . . . . . . . . . . . . . . . . . .
Other transaction policies . . . . . . . . . . . . . . . . . . . . . . .

Dividends, distributions and taxes . . . . . . . . . . . . . . . . . . . . .

Galaxy investor programs
Retirement plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

How to reach Galaxy. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . .

<PAGE>

INFORMATION ABOUT THE FUNDS

This prospectus describes the Galaxy Money Market Funds. The Funds invest
primarily in short-term debt obligations, commonly known as money market
instruments, that are determined by the Funds' investment adviser to carry very
little risk. Money market instruments purchased by the Funds must meet strict
requirements as to investment quality, maturity and diversification. The Funds
generally don't invest in securities with maturities of more than 397 days and
the average maturity of all securities held by a particular Fund must be 90 days
or less. Each Fund tries to maintain its share price at $1.00 to protect your
investment from loss.

Beginning on the next page, you'll find the following important information
about each Galaxy Money Market Fund:

- - The Fund's investment objective (sometimes called the Fund's goal) and the
main investment strategies used by the Fund's investment adviser in trying
to achieve that objective.
- - The main risks associated with an investment in the Fund.
- - The Fund's past performance measured on both a year-by-year and long-term
basis.
The fees and expenses that you will pay as an investor in the Fund.

[Sidenote:]
The maturity of a security is the date when the issuer must repay the security's
entire principal amount to an investor, such as a Fund.

WHICH FUND IS RIGHT FOR YOU?

Not all mutual funds are right for all investors. Your investment goals and
tolerance for risk will determine which fund is right for you.

The table below provides information as to which type of investor might want to
invest in each of the Galaxy Money Market Funds. It's meant as a general guide
only. TAX-EXEMPT FUNDS ARE GENERALLY NOT APPROPRIATE INVESTMENTS FOR
TAX-DEFERRED RETIREMENT ACCOUNTS, SUCH AS IRAS, BECAUSE THEIR RETURNS BEFORE
TAXES ARE GENERALLY LOWER THAN THOSE OF TAXABLE FUNDS. Consult your investment
professional for help in deciding which Fund is right for you.

<PAGE>

- --------------------------------------------------------------------------------
GALAXY FUND FOR INVESTORS WHO WANT...
- --------------------------------------------------------------------------------
Galaxy Money Market Fund a flexible and convenient way to
manage cash while earning money market
returns
- --------------------------------------------------------------------------------
Galaxy Government Fund a way to earn money market returns
with the extra margin of safety
associated with U.S. Government
obligations
- --------------------------------------------------------------------------------
Galaxy U.S. Treasury Fund a way to earn money market returns
from U.S. Treasury obligations that
are generally free from state and
local taxes
- --------------------------------------------------------------------------------
Galaxy Tax-Exempt Fund a way to earn money market returns
that are free from federal income tax
- --------------------------------------------------------------------------------
Galaxy Connecticut Municipal Money a way to earn money market returns
Market Fund that are free from both regular
federal income tax and the Connecticut
state income tax on individuals,
trusts and estates
- --------------------------------------------------------------------------------
Galaxy Massachusetts Municipal Money a way to earn money market returns
Market Fund that are free from both regular
federal income tax and Massachusetts
personal income tax
- --------------------------------------------------------------------------------

THE FUNDS' INVESTMENT ADVISER

[Sidenote:]
An investment in the Funds isn't a Fleet Bank deposit and it isn't insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Funds seek to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Funds.

-2-
<PAGE>

Galaxy Money Market Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks as high a level of current income as is consistent with liquidity
and stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests in a diversified portfolio of money market instruments,
including commercial paper, notes and bonds issued by U.S. corporations,
obligations issued by the U.S. Government and its agencies and
instrumentalities, and obligations issued by U.S. and foreign banks, such as
certificates of deposit. The Fund also invests in repurchase agreements backed
by U.S. Government obligations.

[Sidenote:]

Repurchase agreements are transactions in which a Fund buys securities from a
seller (usually a bank or broker-dealer) who agrees to buy them back from the
Fund on a certain date and at a certain price.

The Fund will only buy a security if it has the highest short-term rating from
at least two nationally recognized statistical rating organizations, or one such
rating if only one organization has rated the security. If the security is not
rated, it must be determined by the Adviser to be of comparable credit quality.

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

- - INTEREST RATE RISK: The yield paid by the Fund will vary with changes in
short-term interest rates.
- - CREDIT RISK: Although credit risk is very low because the Fund only invests
in high quality obligations, if an issuer fails to pay interest or repay
principal, the value of your investment could decline.
- - REPURCHASE AGREEMENTS: Repurchase agreements carry the risk that the other
party may not fulfill its obligations under the agreement. This could cause
the value of your investment to decline.

-3-
<PAGE>

- - SHARE PRICE: There's no guarantee the Fund will be able to preserve the
value of your investment at $1.00 per share.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares of the Fund has
varied from year to year, thereby giving some indication of the risk of
investing in the Fund. The returns for Retail B Shares of the Fund were
different than the figures shown because each class of shares has different
expenses. The figures don't include any sales charges that investors may pay
when selling Retail B Shares of the Money Market Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges.

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
1 year 5 years 10 years Since inception
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% --% --% --% (11/17/86)
- -----------------------------------------------------------------------------------
Retail B Shares --% -- -- --% (3/6/97)
- -----------------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

-4-
<PAGE>

FEES AND EXPENSES OF THE FUND

The Fund offers both Retail A Shares and Retail B Shares. There are no sales
charges (sometimes called front-end loads) when you buy Retail A Shares or
Retail B Shares of the Funds. However, if you buy Retail B Shares of the Fund,
you may have to pay a contingent deferred sales charge (sometimes called a
back-end load or CDSC) when you sell your shares.

The following tables show the fees and expenses you pay when you own shares of
the Fund.

Shareholder fees (fees you pay directly)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Maximum deferred sales
Maximum sales charge charge (load) shown as a
(load) on purchases shown % of the offering price
as a % of the offering or share price,
price whichever is less
- --------------------------------------------------------------------------------
<S> <C> <C>
Retail A Shares None None
- --------------------------------------------------------------------------------
Retail B Shares None 5.00%(1)
- --------------------------------------------------------------------------------
</TABLE>

(1) This amount applies if you sell your shares in the first year after purchase
and gradually declines to 1% in the sixth year after purchase. After six years
Retail B Shares automatically convert to Retail A Shares. See "How to invest in
the Funds - About sales charges."

Annual Fund operating expenses (fees deducted from the Fund's assets)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Distribution and Total Fund
Management service (12b-1) Other operating
fees fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%* None --% --%*
- ------------------------------------------------------------------------------
Retail B Shares --%* --% --% --%*
- ------------------------------------------------------------------------------
</TABLE>

EXAMPLE

This example helps you compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The example assumes:

-5-
<PAGE>

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares $-- $-- $-- $--
- --------------------------------------------------------------------------------
Retail B Shares $-- $-- $-- $--
- --------------------------------------------------------------------------------
If you hold Retail B Shares, you would pay the following expenses if you
didn't sell your shares:
- --------------------------------------------------------------------------------
$-- $-- $-- $--
- --------------------------------------------------------------------------------
</TABLE>

-6-
<PAGE>

Galaxy Government Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks as high a level of current income as is consistent with liquidity
and stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests primarily in U.S. Government obligations, including U.S.
Treasury obligations and obligations of U.S. Government agencies and
instrumentalities. The Fund also invests in repurchase agreements backed by
these obligations.

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

- - INTEREST RATE RISK: The yield paid by the Fund will vary with changes in
short-term interest rates.
- - CREDIT RISK: Although U.S. Government securities have historically
involved little credit risk, if an issuer fails to pay interest or repay
principal, the value of your investment could decline.
- - REPURCHASE AGREEMENTS: Repurchase agreements carry the risk that the other
party may not fulfill its obligations under the agreement. This could cause
the value of your investment to decline.
- - SHARE PRICE: There's no guarantee the Fund will be able to preserve the
value of your investment at $1.00 per share.

HOW THE FUND HAS PERFORMED

-7-
<PAGE>

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares of the Fund has
varied from year to year, thereby giving some indication of the risk of
investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1 year 5 years 10 years Since inception
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% --% --% --% (11/17/86)
- ------------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

FEES AND EXPENSES OF THE FUND

There are no sales charges when you buy or sell Retail A Shares of the Fund. The
following table shows the fees and expenses you pay when you own shares of the
Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --%* None --% --%*
- ------------------------------------------------------------------------------
</TABLE>

-8-
<PAGE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-9-
<PAGE>

Galaxy U.S. Treasury Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks current income with liquidity and stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund invests primarily in securities issued or guaranteed by the U.S.
Treasury and certain U.S. Government agencies and instrumentalities that provide
income that is generally not subject to state income tax.

[Sidenote:]
U.S. Treasury obligations are among the safest of all investments because they
are backed by the "full faith and credit" of the U.S. Government.

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

- - INTEREST RATE RISK: The yield paid by the Fund will vary with changes in
short-term interest rates.
- - CREDIT RISK: Although U.S. Government securities, particularly U.S.
Treasury securities, have historically involved little credit risk, if an
issuer fails to pay interest or repay principal, the value of your
investment could decline.
- - SHARE PRICE: There's no guarantee the Fund will be able to preserve the
value of your investment at $1.00 per share.

HOW THE FUND HAS PERFORMED

-10-
<PAGE>

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares of the Fund has
varied from year to year, thereby giving some indication of the risk of
investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1 year 5 years Since inception
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (1/22/91)
- ----------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

FEES AND EXPENSES OF THE FUND

There are no sales charges when you buy or sell Retail A Shares of the Fund. The
following table shows the fees and expenses you pay when you own shares of the
Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% None --% --%
- ------------------------------------------------------------------------------
</TABLE>

EXAMPLE

-11-
<PAGE>

- - you sell all your shares at the end of the periods shown
- - your investment has a 5% return each year
- - the Fund's operating expenses remain the same.

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-12-
<PAGE>

Galaxy Tax-Exempt Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks as high a level of current interest income exempt from federal
income tax as is consistent with stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in municipal securities,
which are securities issued by state and local governments and other political
or public bodies or agencies and that pay interest which is exempt from regular
federal income tax. Under normal conditions, the Fund will invest no more than
20% of its assets in taxable obligations, such as U.S. Government obligations,
money market instruments and repurchase agreements.

The Fund will only buy a security if it has one of the two highest short-term
ratings from at least two nationally recognized statistical rating
organizations, or one such rating if only one organization has rated the
security. If the security is not rated, it must be determined by the Adviser to
be of comparable credit quality.

[Sidenote:]
MUNICIPAL SECURITIES

State and local governments issue municipal securities to raise money to finance
public works, to repay outstanding obligations, to raise funds for general
operating expenses and to make loans to other public institutions. Some
municipal securities, known as private activity bonds, are issued to finance
projects for private companies. Municipal securities, which can be issued as
bonds, notes or commercial paper, usually have fixed interest rates, although
some have interest rates that change from time to time.

-13-
<PAGE>

[Sidenote:]
TYPES OF MUNICIPAL SECURITIES

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

- - INTEREST RATE RISK: The yield paid by the Fund will vary with changes in
short-term interest rates.
- - CREDIT RISK: Although credit risk is very low because the Fund only invests
in high quality obligations, if an issuer fails to pay interest or repay
principal, the value of your investment could decline. The ability of a
state or local government issuer to make payments can be affected by many
factors, including economic conditions, the flow of tax revenues and
changes in the level of federal, state or local aid.
- - SHARE PRICE: There's no guarantee the Fund will be able to preserve the
value of your investment at $1.00 per share.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Retail A Shares of the Fund has
varied from year to year, thereby giving some indication of the risk of
investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-14-
<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
1 year 5 years 10 years Since inception
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% --% --% --% (6/23/88)
- ----------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

FEES AND EXPENSES OF THE FUND

There are no sales charges when you buy or sell Retail A Shares of the Fund. The
following table shows the fees and expenses you pay when you own shares of the
Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retail A Shares --% None --% --%
- ------------------------------------------------------------------------------
</TABLE>

EXAMPLE

This example helps you compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The example assumes:

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-15-
<PAGE>

Galaxy Connecticut Municipal Money Market Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks 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'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in municipal securities
that pay interest which is exempt from federal regular income tax, and at least
65% of its assets in Connecticut municipal securities, which are securities
issued by or on behalf of the State of Connecticut and other government issuers
and that pay interest which is exempt from both federal regular income tax and
the Connecticut state income tax on individuals, trusts and estates. Under
normal conditions, the Fund will invest no more than 20% of its assets in
taxable obligations, such as U.S. Government obligations, money market
instruments and repurchase agreements.

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

- - INTEREST RATE RISK: The yield paid by the Fund will vary with changes in
short-term interest rates.
- - CREDIT RISK: Although credit risk is very low because the Fund only invests
in high quality obligations, if an issuer fails to pay interest or repay
principal, the value of your investment could decline. The ability of a
state or local government issuer to make payments can be affected by many
factors, including economic conditions, the flow of tax revenues and
changes in the level of federal, state or local aid.

-16-
<PAGE>

- - LACK OF DIVERSIFICATION: The Fund is not diversified, which means that it
can invest a large percentage of its assets in a small number of issuers.
As a result, a change in the value of any one investment held by the Fund
may affect the overall value of the Fund more than it would affect a
diversified fund which holds more investments.
- - SINGLE STATE RISK: Since the Fund invests primarily in Connecticut
municipal securities, it is likely to be especially susceptible to
economic, political and regulatory events that affect Connecticut.
- - SHARE PRICE: There's no guarantee the Fund will be able to preserve the
value of your investment at $1.00 per share.

HOW THE FUND HAS PERFORMED

The Fund began operations on October 4, 1993 as a separate portfolio (the
Predecessor Fund) of The Shawmut Funds. 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 classes of shares, Investment Shares
and Trust Shares. In connection with the reorganization, shareholders of the
Predecessor Fund exchanged their Investment Shares and Trust Shares for Retail A
Shares of the Fund. The return for periods prior to December 4, 1995 are for
Investment Shares of the Predecessor Fund.

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of the Fund has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998, after taking into account any sales charges on Investment
Shares of the Predecessor Fund.

-17-
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1 year 5 years Since inception
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (10/04/93)
- ----------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

FEES AND EXPENSES OF THE FUND

There are no sales charges when you buy or sell Retail A Shares of the Fund. The
following table shows the fees and expenses you pay when you own shares of the
Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-18-
<PAGE>

Galaxy Massachusetts Municipal Money Market Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks 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'S MAIN INVESTMENT STRATEGIES

The Fund normally invests at least 80% of its assets in municipal securities
that pay interest which is exempt from federal regular income tax, and at least
65% of its assets in Massachusetts municipal securities, which are securities
issued by or on behalf of the Commonwealth of Massachusetts and other government
issuers and that pay interest which is exempt from both federal regular income
tax and Massachusetts personal income tax. Under normal conditions, the Fund
will invest no more than 20% of its assets in taxable obligations, such as U.S.
Government obligations, money market instruments and commercial paper.

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

- - INTEREST RATE RISK: The yield paid by the Fund will vary with changes in
short-term interest rates.
- - CREDIT RISK: Although credit risk is very low because the Fund only invests
in high quality obligations, if an issuer fails to pay interest or repay
principal, the value of your investment could decline. The ability of a
state or local government issuer to make payments can be affected by many
factors, including economic conditions, the flow of tax revenues and
changes in the level of federal, state or local aid.

-19-
<PAGE>

- - LACK OF DIVERSIFICATION: The Fund is not diversified, which means that it
can invest a large percentage of its assets in a small number of issuers.
As a result, a change in the value of any one investment held by the Fund
may affect the overall value of the Fund more than it would affect a
diversified fund which holds more investments.
- - SINGLE STATE RISK: Since the Fund invests primarily in Massachusetts
municipal securities, it is likely to be especially susceptible to
economic, political and regulatory events that affect Massachusetts.
- - SHARE PRICE: There's no guarantee the Fund will be able to preserve the
value of your investment at $1.00 per share.

HOW THE FUND HAS PERFORMED

The Fund began operations on October 5, 1993 as a separate portfolio (the
Predecessor Fund) of The Shawmut Funds. 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 a single class of shares. In connection
with the reorganization, shareholders of the Predecessor Fund exchanged their
shares for Retail A Shares of the Fund. The return for periods prior to
December 4, 1995 are for shares of the Predecessor Fund.

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of the Fund has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

-20-
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
1 year 5 years Since inception
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Retail A Shares --% --% --% (10/05/93)
- ----------------------------------------------------------------------------
</TABLE>

For information on the Fund's current 7- day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

FEES AND EXPENSES OF THE FUND

There are no sales charges when you buy or sell Retail A Shares of the Fund. The
following table shows the fees and expenses you pay when you own shares of the
Fund.

Annual Fund operating expenses (fees deducted from the Fund's assets)

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-21-

<PAGE>

ADDITIONAL INFORMATION ABOUT RISK

The main risks associated with an investment in each of the Galaxy Money Market
Funds have been described above. The following supplements that discussion.

- - SECURITIES LENDING: To obtain interest income, the Money Market Fund and
Government Fund each may lend its portfolio securities to broker-dealers,
banks or institutional borrowers in return for collateral equal in value to
at least the current price of the securities loaned. There is the risk
that, when lending portfolio securities, the borrower may not return the
securities to the Fund on a timely basis. Therefore, the Fund may lose the
opportunity to sell the securities at an attractive price. In addition, in
the event that the borrower of the securities would file for bankruptcy or
become insolvent, the Fund might have to wait for court action before it
gets the securities back.

- - TEMPORARY DEFENSIVE POSITIONS: Each Fund may temporarily hold investments
that aren't part of its main investment strategy during unfavorable market
conditions. These investments may include cash (which will not earn any
income) and, in the case of the Tax-Exempt Fund, Connecticut Municipal
Money Market Fund and Massachusetts Municipal Money Market Fund, short-term
taxable investments, such as money market instruments and debt securities
issued or guaranteed by the U.S. Government or its agencies, in excess of
20% of each Fund's assets. This strategy could prevent a Fund from
achieving its investment objective.

-22-
<PAGE>

FUND MANAGEMENT

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

The management fees paid to the Adviser by the Funds during the last fiscal year
are set forth below.

FUND MANAGEMENT FEE AS A % OF NET ASSETS
<S> <C>
Money Market --%
Government --%
U.S. Treasury --%
Tax-Exempt --%
Connecticut Municipal Money Market --%
Massachusetts Municipal Money Market --%
</TABLE>

-23-
<PAGE>

HOW TO INVEST IN THE FUNDS

All of the Funds offer Retail A Shares. The Money Market Fund also offers Retail
B Shares.

ABOUT SALES CHARGES

There are no sales charges (sometimes called front-end loads) when you buy
either Retail A Shares or Retail B Shares of a Fund. If you buy Retail B Shares
of the Money Market Fund, you may have to pay a contingent deferred sales charge
(sometimes called a back-end load or CDSC) if you sell your shares within six
years of buying them. The following table shows the schedule of CDSC charges:

IF YOU SELL YOUR SHARES YOU'LL PAY A CDSC OF
<S> <C>
during the first year 5.00%
during the second year 4.00%
during the third year 3.00%
during the fourth year 3.00%
during the fifth year 2.00%
during the sixth year 1.00%
after the sixth year None
</TABLE>

There's no CDSC when Retail B Shares of the Money Market Fund are sold because
of the death or disability of a shareholder and in certain other circumstances
such as exchanges. Ask your investment professional or Galaxy's distributor, or
consult the SAI, for other instances in which the CDSC is waived. To contact
Galaxy's distributor, call 1-877-BUY-GALAXY (1-877-289-4252).

-24-
<PAGE>

DISTRIBUTION AND SHAREHOLDER SERVICE FEES

Retail A Shares of the Funds pay shareholder service fees at an annual rate of
up to 0.10% of each Fund's Retail A Share assets. Retail B Shares of the Money
Market Fund pay distribution (12b-1) and shareholder service fees at an annual
rate of up to 0.75% of the Fund's Retail B Share assets. Galaxy has adopted a
plan under Rule 12b-1 that allows the Money Market Fund to pay fees from its
Retail B Share assets for selling and distributing Retail B Shares and for
providing services to shareholders. Because 12b-1 fees are paid on an ongoing
basis, over time they increase the cost of your investment and may cost more
than paying other sales charges.

[Sidenote:]

Retail B Shares of the Money Market Fund have higher operating expenses than
Retail A Shares of the Fund and may not be appropriate for investors who do not
plan to exchange Retail B Shares for Retail B Shares of another Galaxy Fund.

CONVERTING RETAIL B SHARES TO RETAIL A SHARES

Six years after you buy Retail B Shares of the Money Market Fund, they will
automatically convert to Retail A Shares of the Fund. This allows you to benefit
from the lower annual expenses of Retail A Shares.

BUYING, SELLING AND EXCHANGING SHARES

If your order to buy shares is received and accepted by Galaxy's distributor by
11:00 a.m. (Eastern time) on a business day, the price you pay will be the net
asset value (NAV) per share next determined (and you'll receive that day's
dividend) if Galaxy's custodian receives the purchase price in immediately
available funds by 11:00 a.m. that day. If your order to purchase shares is
received and accepted by Galaxy's distributor after 11:00 a.m. (Eastern time)
but before 4:00 p.m. (Eastern time) on a business day, the price you pay will
be the NAV next determined (and you'll begin receiving dividends the next day)
if Galaxy's custodian receives the purchase price in immediately available
funds by 4:00 p.m. on the day of your order. The price at which you sell shares
is the NAV next determined, less any applicable CDSC in the case of Retail B
Shares of the Money Market Fund. NAV is determined on each day the New York
Stock Exchange is open for trading as of 11:00 a.m. (Eastern time) and at the
close of regular trading (usually 4:00 p.m. Eastern time). The Funds' assets
are valued at amortized cost, which is approximately equal to market value.

[Sidenote:]
NET ASSET VALUE

-25-
<PAGE>

[Sidenote:]
MINIMUM INVESTMENT AMOUNTS

HOW TO BUY SHARES

BUYING BY MAIL

Complete a purchase application and mail it, together with a check payable to
each Fund in which you want to invest, to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

To make additional investments, send your check to the address above along with
one of the following:
- - the detachable slip that's included with your Galaxy statement or your
confirmation of a prior transaction
- - a letter stating the amount of your investment, the name of the Fund you
want to invest in, and your account number.

If your check is returned because of insufficient funds, we'll cancel your
order.

-26-
<PAGE>

BUYING BY WIRE

Fleet National Bank
75 State Street
Boston, MA 02109
ABA #0110-0013-8
DDA #79673-5702
Ref: The Galaxy Fund
(Account number)
(Account registration)

Your financial institution may charge you a fee for sending funds by wire.

CUSTOMERS OF FINANCIAL INSTITUTIONS

HOW TO SELL SHARES

You can sell your shares in several ways: by mail, by telephone, by wire, or
through your financial institution.

SELLING BY MAIL

Send your request in writing to:

-27-
<PAGE>

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

Additional documents may be required for certain types of shareholders, such as
corporations, partnerships, executors, trustees, administrators or guardians.

[Sidenote:]
SIGNATURE GUARANTEES

When selling your shares by mail or by phone, you must have your signature
guaranteed if:
- - you're selling shares worth more than $50,000
- - you want us to send your money to an address other than the address on your
account, unless your money is transferred to a successor custodian
- - you want us to send your money to the address on your account that's
changed within the last 30 days, or
- - you want us to make the check payable to someone else.

SELLING BY PHONE

SELLING BY WIRE

-28-
<PAGE>

in writing (with a signature guarantee). Your sale proceeds must be more than
$1,000. Galaxy's distributor deducts a $5 fee from your sale proceeds for each
wire redemption.

The sale proceeds must be paid to the same bank and account you named on your
application or in your written instructions.

CUSTOMERS OF FINANCIAL INSTITUTIONS

HOW TO EXCHANGE SHARES

You may exchange Retail A Shares of a Fund having a value of at least $100
for Retail A Shares of any other Galaxy Fund or for shares of any other Fund
that's managed by the Adviser or any of its affiliates in which you have an
existing account. Unless you qualify for a waiver, you'll have to pay a sales
charge when you exchange Retail A Shares of a Fund for Retail A Shares of
another Galaxy Fund that imposes a sales charge on purchases.

You may exchange Retail B Shares of the Money Market Fund for Retail B Shares of
any other Galaxy Fund. You won't pay a contingent deferred sales charge when you
exchange your Retail B Shares. However, when you sell the Retail B Shares you
acquired in the exchange, you'll pay a contingent deferred sales charge based on
the date you bought the Retail B Shares which you exchanged.

To exchange shares:

- - call Galaxy's distributor or use the InvestConnect voice response line at
1-877-BUY-GALAXY (1-877-289-4252)

- - send your request in writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

- - ask your financial institution.

-29-
<PAGE>

Galaxy doesn't charge any fee for making exchanges but your financial
institution might do so. You are generally limited to three exchanges per year.
You must exchange at least $100 worth of Retail A Shares. Galaxy may refuse any
exchange request and may change or cancel the exchange privilege by giving 60
days' advance notice to shareholders.

OTHER TRANSACTION POLICIES

Galaxy may refuse any order to buy shares. Galaxy doesn't issue a certificate
when you buy shares but it does keep a record of shares issued to investors.

Galaxy normally pays you cash when you sell your shares, but it has the right to
deliver securities owned by a Fund instead of cash. When you sell these
securities, you'll pay brokerage charges.

If any shares that you're selling are part of an investment you've paid for with
a personal check, Galaxy will delay sending your sales proceeds until the check
clears, which can take up to 15 days.

-30-
<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

Each Fund declares dividends from net investment income daily and pays them
within five business days after the end of each month. Although the Funds do not
expect to realize net long-term capital gains, any capital gains realized will
be distributed at least annually. Dividends and distributions are paid in cash
unless you indicate in the account application or in a letter to Galaxy that you
want to have dividends and distributions reinvested in additional shares.

MONEY MARKET, GOVERNMENT AND U.S. TREASURY FUNDS

Distributions by these Funds will generally be taxable to shareholders. Each of
these Funds expects that all, or substantially all, of its distributions will
consist of ordinary income. You will be subject to income tax on these
distributions regardless of whether they are paid in cash or reinvested in
additional shares. The one major exception to these tax principles is that
distributions on shares held in an IRA (or other tax-qualified plan) will not
be currently taxable.

TAX-EXEMPT, CONNECTICUT MUNICIPAL MONEY MARKET AND MASSACHUSETTS MUNICIPAL MONEY
MARKET FUNDS

Distributions by these Funds will generally consist of dividends derived from
interest earned on exempt securities, and these "exempt-interest dividends"
will be exempt income for shareholders for federal income tax purposes. It is
possible, depending upon a Fund's investments, that a portion of the Fund's
distributions could be taxable to shareholders as ordinary income or capital
gains, but none of these Funds expects that this will be the case.

Interest on indebtedness incurred by a shareholder to purchase or carry shares
of these Funds generally will not be deductible for federal income tax purposes.

You should note that a portion of the exempt-interest dividends paid by one or
more of these Funds may constitute an item of tax preference for purposes of
determining federal alternative minimum tax liability. Exempt-interest
dividends will also be considered along with other adjusted gross income in
determining whether any Social Security or railroad retirement payments
received by you are subject to federal income taxes.

CONNECTICUT MUNICIPAL MONEY MARKET FUND

This Fund intends to comply with certain state tax requirements so that its
income and dividends will be exempt form the Connecticut state income tax on
individuals, trust and estates ("CSIT"). Dividends, if any, derived from
interest on securities other than Connecticut municipal securities will be
subject to the CSIT.

MASSACHUSETTS MUNICIPAL MONEY MARKET FUND

This Fund intends to comply with certain state tax requirements so that its
income and dividends will be exempt from the Massachusetts personal income tax.
Dividends, if any, derived from interest on long-term capital gains, on
securities other than Massachusetts municipal securities, or from any
short-term capital gains, will be subject to Massachusetts personal income tax.

-31-
<PAGE>

ALL FUNDS

Taxable dividends paid in January may be taxable as if they had been paid the
previous December. Each year you'll receive in the mail federal tax information
on distributions paid by the Funds.

OTHER STATE AND LOCAL TAX MATTERS

Generally, shareholders may also be subject to state and local taxes on
distributions and redemptions. State income taxes may not apply however to the
portions of each Fund's distributions, if any, that are attributable to
interest on U.S. Government securities or on securities of the particular
state.

-32-
<PAGE>

GALAXY INVESTOR PROGRAMS

RETIREMENT PLANS

Retail A Shares and Retail B Shares of the Funds are available for purchase in
connection with any of the following retirement plans:

- - Individual Retirement Arrangements (IRAs), including Traditional, Roth,
Rollover and Education IRAs.
- - Simplified Employee Pension Plans (SEPs).
- - Keogh money purchase and profit sharing plans.
- - Salary reduction retirement plans set up by employers for their employees,
which are qualified under Section 401(k) and 403(b) of the
Internal Revenue Code.
- - SIMPLE IRA plans which are qualified under Section 408(p).

For information about eligibility requirements and other matters concerning
these plans and to obtain an application, call Galaxy's distributor at
1-877-BUY-GALAXY (1-877-289-4252).

OTHER PROGRAMS

AUTOMATIC INVESTMENT PROGRAM

PAYROLL DEDUCTION PROGRAM

-33-
<PAGE>

COLLEGE INVESTMENT PROGRAM

CHECKWRITING

You can sign up for Galaxy's checkwriting privilege by completing the signature
card that accompanies the account application or by writing or calling Galaxy's
distributor at 1-877-BUY-GALAXY (1-877-289-4252) to obtain a signature card.
There is no limit on the number of checks you can write each month, although
each check must be in an amount of at least $250. Galaxy may impose a fee for
use of the checkwriting privilege. Please note that you can't write a check to
close your account.

DIRECT DEPOSIT PROGRAM

SYSTEMATIC WITHDRAWAL PLAN

You can make regular withdrawals from your investment account every month, every
quarter, every six months or once a year. You need a minimum account balance of
$10,000 to participate in the plan. No CDSC will be charged on withdrawals of
Retail B Shares of the Money Market Fund made through the plan that don't
annually exceed 12% of your account's value.

You may cancel your participation in any of these programs, other than the
Direct Deposit Program, by writing to Galaxy at:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

Please allow at least five days for the cancellation to be processed.

-34-
<PAGE>

HOW TO REACH GALAXY

THROUGH YOUR FINANCIAL INSTITUTION

Your financial institution can help you buy, sell or exchange shares and can
answer questions about your account.

GALAXY SHAREHOLDER SERVICES

Call Galaxy's distributor at 1-877-BUY-GALAXY (1-877-289-4252), Monday through
Friday, 8 a.m. to 6 p.m. (Eastern time) for help from a Galaxy representative.

INVESTCONNECT

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

If you live outside the United States, contact Galaxy by calling 1-508-855-5237.

THE INTERNET

Please visit Galaxy's website at: www.galaxyfunds.com

-35-
<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables shown below will help you understand the
financial performance for the Funds' Retail A Shares and Retail B Shares for the
past five years (or the period since a particular Fund began operations or a
particular class of shares was first offered). Certain information reflects the
financial performance of a single Retail A Share or Retail B Share. The total
returns in the tables represent the rate that an investor would have earned (or
lost) on an investment in Retail A Shares and/or Retail B Shares of each Fund,
assuming all dividends and distributions were reinvested. This information has
been audited by [____________________], independent accountants, whose report,
along with the Funds' financial statements, are included in the Funds' Annual
Report and [__________________________________] into the SAI.

-36-
<PAGE>

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------------- ---------------------- -------- -------- ---------
RETAIL A RETAIL B RETAIL A RETAIL B RETAIL A RETAIL A
SHARES SHARES SHARES SHARES(2) SHARES SHARES SHARES(1)
------ ------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period. . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- ---------- -------- --------
Income from Investment Operations:
Net investment income(3) . . . . . . . . 0.05 0.03 0.05 0.05 0.03
Net realized and unrealized gain
(loss) on investments. . . . . . . . . -- -- -- -- --
---------- -------- ---------- -------- --------
Total from Investment Operations . . . 0.05 0.03 0.05 0.05 0.03
---------- -------- ---------- -------- --------
Less Dividends: (0.05) (0.03) (0.05) (0.05) (0.03)
Dividends from net investment income . .
Dividends from net realized capital
gains. . . . . . . . . . . . . . . . . -- -- -- -- --
---------- -------- ---------- -------- --------
Total Dividends. . . . . . . . . . . . (0.05) (0.03) (0.05) (0.05) (0.03)
---------- -------- ---------- -------- --------
Net increase (decrease) in net
asset value. . . . . . . . . . . . . . . -- -- -- -- --
---------- -------- ---------- -------- --------
Net Asset Value, End of Period. . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- ---------- -------- --------
---------- -------- ---------- -------- --------
Total Return(4) . . . . . . . . . . . . . . 4.93% 2.66%(5) 4.78% 5.23% 3.35%
Ratios/Supplemental Data:
Net Assets, End of Period (000's). . . . $1,877,889 $ 749 $1,159,312 $580,762 $797,399
Ratios to average net assets:
Net investment income including
reimbursement/ waiver. . . . . . . . . 4.85% 4.27%(6) 4.67% 5.12% 3.38%
Operating expenses including
reimbursement/waiver . . . . . . . . . 0.69% 1.38%(6) 0.77% 0.74% 0.64%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . 0.73% 1.42%(6) 0.80% 0.76% 0.64%
</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 began offering Retail B Shares on March 6, 1997.

(3) Net investment income per share for Retail A Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $_____,
$0.05, $0.05, $0.05 and $0.03, respectively. Net investment income per
share for Retail B Shares before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for the year ended October 31, 1998
and the period ended October 31, 1997 was $ _____ and $0.03, respectively.

(4) Total return for the year ended October 31, 1994 includes the effect of the
voluntary capital contribution of $1.6 million from the Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.35%. Calculation does not include the effect of any sales charge
for Retail B Shares.

(5) Not annualized.

(6) Annualized.

-37-
<PAGE>

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
RETAIL A RETAIL A RETAIL A RETAIL A
SHARES SHARES SHARES SHARES SHARES(1)
------ ------ ------ ------ --------
<S> <C> <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 0.05 0.03
Net realized and unrealized gain (loss) on
investments. . . . . . . . . . . . . . . . . -- -- -- --
-------- -------- -------- --------
Total from Investment Operations . . . . . . 0.05 0.05 0.05 0.03
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income. . . . . . (0.05) (0.05) (0.05) (0.03)
Dividends from net realized capital gains . . . -- -- -- --
-------- -------- -------- --------
Total Dividends. . . . . . . . . . . . . . . (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- --------
Net increase (decrease) in net asset value. . . . -- -- -- --
-------- -------- -------- --------
Net Asset Value, End of Period. . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
-------- -------- -------- --------
Total Return(3) . . . . . . . . . . . . . . . . . 4.85% 4.72% 5.20% 3.49%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . $350,513 $326,411 $320,795 $759,106
Ratios to average net assets:
Net investment income including
reimbursement/waiver . . . . . . . . . . . . 4.74% 4.62% 5.11% 3.36%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . 0.71% 0.75% 0.73% 0.54%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . 0.72% 0.76% 0.74% 0.54%
</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) Net investment income per share for Retail A Shares before reimbursement
/waiver of fees by the Adviser and/or the Fund's administrator for the
years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $______, $0.05,
$0.05, $0.05 and $0.03, respectively.

(3) Total return for the year ended October 31, 1994 includes the effect of the
voluntary capital contribution of $2.3 million from the Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.49%.

-38-
<PAGE>

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
RETAIL A RETAIL A RETAIL A RETAIL A
SHARES SHARES SHARES SHARES SHARES(1)
------ ------ ------ ------ ---------
<S> <C> <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 0.05 0.03
Net realized and unrealized gain (loss)
on investments . . . . . . . . . . . . . . . -- -- -- --
-------- -------- -------- --------
Total from Investment Operations . . . . . . 0.05 0.05 0.05 0.03
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income. . . . . . (0.05) (0.05) (0.05) (0.03)
Dividends from net realized capital gains . . . -- -- -- --
-------- -------- -------- --------
Total Dividends. . . . . . . . . . . . . . . (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- --------
Net increase (decrease) in net asset value. . . . -- -- -- --
-------- -------- -------- --------

Net Asset Value, End of Period. . . . . . . . . . $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
-------- -------- -------- --------
Total Return(3) . . . . . . . . . . . . . . . . . 4.67% 4.63% 4.99% 3.30%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . $585,969 $443,230 $318,621 $466,993
Ratios to average net assets:
Net investment income including
reimbursement/ waiver. . . . . . . . . . . . 4.58% 4.53% 4.90% 3.24%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . 0.69% 0.69% 0.73% 0.56%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . 0.70% 0.69% 0.73% 0.56%
</TABLE>

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

(2) Net investment income per share for Retail A Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $_____,
$0.05, $0.05, $0.05 and $0.03, respectively.

(3) Total return for the year ended October 31, 1994 includes the effect of the
voluntary capital contribution of $1 million from the Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.30%.

-39-
<PAGE>

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

Less Dividends:
Dividends from net investment income. . . . . . (0.03) (0.03) (0.03) (0.02)
Dividends from net realized capital gains . . . -- -- -- --
-------- -------- -------- --------
Total Dividends . . . . . . . . . . . . . . . (0.03) (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. . . . . . . . . . . . . . . . . . . 2.95% 2.82% 3.16% 2.24%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . $151,907 $117,548 $127,056 $271,050
Ratios to average net assets:
Net investment income including
reimbursement/waiver. . . . . . . . . . . . . 2.92% 2.78% 3.12% 2.12%
Operating expenses including
reimbursement/waiver. . . . . . . . . . . . . 0.68% 0.68% 0.68% 0.58%
Operating expenses excluding
reimbursement/waiver. . . . . . . . . . . . . 0.69% 0.69% 0.71% 0.58%
</TABLE>

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

(2) Net investment income per share for Retail A Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996, 1995 and 1994 was $_____,
$0.03, $0.03, $0.03 and $0.02, respectively.

-40-
<PAGE>

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------------------------------------------------
1998 1997 1996(1) 1995 1994
---- ---- ------ ---- ----
<S> <C> <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). . . . . . . . . . . . . . . . . . . 0.03 0.03 0.03 0.02
Net realized and unrealized gain (loss) on investments. . . . -- -- -- --
-------- -------- -------- --------
Total from Investment Operations. . . . . . . . . . . . . . 0.03 0.03 0.03 0.02
-------- -------- -------- --------
Less Dividends:
Dividends from net investment income. . . . . . . . . . . . . (0.03) (0.03) (0.03) (0.02)
Dividends from net realized gains . . . . . . . . . . . . . . -- -- -- --
-------- -------- -------- --------
Total Dividends . . . . . . . . . . . . . . . . . . . . . . (0.03) (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(3) . . . . . . . . . . . . . . . . . . . . . . . . 2.94% 2.83% 2.94% 1.83%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) . . . . . . . . . . . . . . $137,095 $110,544 $ 71,472 $ 80,663
Ratios to average net assets:
Net investment income including reimbursement/waiver. . . . . 2.91% 2.79% 2.88% 1.99%
Operating expenses including reimbursement/waiver . . . . . . 0.60% 0.64% 0.82% 0.78%
Operating expenses excluding reimbursement/waiver . . . . . . 0.65% 0.73% 1.29% 1.50%
</TABLE>

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

(1) The Fund commenced operations on October 4, 1993 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds. 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.

(2) Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or other parties for the fiscal years ended October 31, 1998,
1997 and 1996 was $_____, $0.03 and $0.03, respectively. Net investment
income per share before reimbursement/waiver of fees by other parties for
the fiscal years ended October 31, 1995 and 1994 was $0.03 and $0.01,
respectively (unaudited).

(3) Calculation does not include the effect any sales charge for Investment
Shares of the Predecessor Fund.

-41-
<PAGE>

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------
1998 1997 1996(1) 1995 1994
---- ---- ------- ---- ----
<S> <C> <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) . . . . . . 0.03 0.03 0.03 0.02
Net realized and unrealized
gain (loss) on investments . . . . -- -- -- --
------- ------- ------- -------
Total from Investment
Operations . . . . . . . . . . . 0.03 0.03 0.03 0.02
------- ------- ------- -------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . (0.03) (0.03) (0.03) (0.02)
Dividends from net realized
capital gains. . . . . . . . . . . -- -- -- --
------- ------- ------- -------
Total Dividends. . . . . . . . . . (0.03) (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 . . . . . . . . . . . . . 2.92% 2.83% 3.21% 1.99%
Ratios/Supplemental Data:
Net Assets, End of Period
(000's) . . . . . . . . . . . . . . $80,966 $47,066 $40,326 $31,516
Ratios to average net assets:
Net investment income
including reimbursement/
waiver . . . . . . . . . . . . . . 2.90% 2.78% 3.16% 2.00%
Operating expenses including
reimbursement/waiver . . . . . . . 0.61% 0.62% 0.57% 0.53%
Operating expenses excluding
reimbursement/waiver . . . . . . . 0.69% 0.83% 1.06% 1.21%
</TABLE>

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

(1) The Fund commenced operations on October 5, 1993 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds. 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.

-42-
<PAGE>

[Back Cover Page]

Where to find more information

You'll find more information about the Funds in the following documents:

You can get a free copy of these documents, request other information about the
Funds and make shareholder inquiries by calling Galaxy at 1-877-BUY-GALAXY
(1-877-289-4252) or by writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If you buy your shares through a financial institution, you may contact your
institution for more information.

Public Reference Section of the SEC
Washington, DC 20549-6009.
1-800-SEC-0330

Reports and other information about the Funds are also available on the SEC's
website at http://www.sec.gov.

Galaxy's Investment Company Act File No. is 811-4636.

PROGALMM

-43-
<PAGE>

[Front cover page]

The Galaxy Fund

Prospectus
February 28, 1999

Galaxy Money Market Fund
Galaxy Government Fund
Galaxy Institutional Government Money Market Fund
Galaxy U.S. Treasury Fund
Galaxy Tax-Exempt Fund

Trust Shares

<PAGE>

Contents

Information about the Funds

Galaxy Money Market Fund. . . . . . . . . . . . . . . . . . . . . . .
Galaxy Government Fund. . . . . . . . . . . . . . . . . . . . . . . .
Galaxy Institutional Government Money Market Fund . . . . . . . . . .
Galaxy U.S. Treasury Fund . . . . . . . . . . . . . . . . . . . . . .
Galaxy Tax-Exempt Fund. . . . . . . . . . . . . . . . . . . . . . . .
Additional information about risk . . . . . . . . . . . . . . . . . .

How to invest in the Funds
Buying, selling and exchanging shares. . . . . . . . . . . . . . . . . .
How to buy shares . . . . . . . . . . . . . . . . . . . . . . . . . .
How to sell shares. . . . . . . . . . . . . . . . . . . . . . . . . .
How to exchange shares - Institutional Government Money Market
Fund only . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other transaction policies. . . . . . . . . . . . . . . . . . . . . .

Dividends, distributions and taxes . . . . . . . . . . . . . . . . . . . .

Financial highlights . . . . . . . . . . . . . . . . . . . . . . . . . . .

<PAGE>

INFORMATION ABOUT THE FUNDS

Beginning on the next page, you'll find the following important information
about each Galaxy Money Market Fund:

- - The Fund's investment objective (sometimes called the Fund's goal) and the
main investment strategies used by the Fund's investment adviser in trying
to achieve that objective.
- - The main risks associated with an investment in the Fund.
- - The Fund's past performance measured on both a year-by-year and long-term
basis.
- - The fees and expenses that you will pay as an investor in the Fund.

[Sidenote:]
The maturity of a security is the date when the issuer must repay the security's
entire principal amount to an investor, such as a Fund.

WHICH FUND IS RIGHT FOR YOU?

Not all mutual funds are right for all investors. Your investment goals and
tolerance for risk will determine which fund is right for you.

The table below provides information as to which type of investor might want to
invest in each of the Galaxy Money Market Funds. It's meant as a general guide
only. TAX-EXEMPT FUNDS ARE GENERALLY NOT APPROPRIATE INVESTMENTS FOR
TAX-DEFERRED RETIREMENT ACCOUNTS, SUCH AS IRAS, BECAUSE THEIR RETURNS BEFORE
TAXES ARE GENERALLY LOWER THAN THOSE OF TAXABLE FUNDS. Consult your financial
institution or plan administrator for help in deciding which Fund is right for
you.

<PAGE>

- -------------------------------------------------------------------------------
GALAXY FUND MAY BE BEST SUITED FOR...
- -------------------------------------------------------------------------------
Galaxy Money Market Fund investors who want a flexible and
convenient way to manage cash while
earning money market returns
- -------------------------------------------------------------------------------
Galaxy Government Fund investors who want a way to earn money
market returns with the extra margin
of safety associated with U.S.
Government obligations
- -------------------------------------------------------------------------------
Galaxy Institutional Government Money institutional investors who want a way
Market Fund to earn money market returns with the
extra margin of safety associated with
U.S. Government obligations
- -------------------------------------------------------------------------------
Galaxy U.S. Treasury Fund investors who want a way to earn money
market returns from U.S. Treasury
obligations that are generally free
from state and local taxes
- -------------------------------------------------------------------------------
Galaxy Tax-Exempt Fund investors who want a way to earn money
market returns that are free from
federal income tax
- -------------------------------------------------------------------------------

THE FUNDS' INVESTMENT ADVISER

-2-

<PAGE>

Galaxy Money Market Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks as high a level of current income as is consistent with liquidity
and stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

[Sidenote:]

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

-3-

<PAGE>

- - SHARE PRICE: There's no guarantee the Fund will be able to preserve the
value of your investment at $1.00 per share.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares of the Fund has varied
from year to year, thereby giving some indication of the risk of investing in
the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1 year Since inception
- ------------------------------------------------------------------------------
<S> <C> <C>
- ------------------------------------------------------------------------------
Trust Shares --% --% (11/1/94)
- ------------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

-4-
<PAGE>

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

<TABLE>
<CAPTION>
Annual Fund operating expenses (fees deducted from the Fund's assets)
- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --% --%*
- ------------------------------------------------------------------------------
</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1 year 3 years 5 years 10 years
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares $-- $-- $-- $--
- ------------------------------------------------------------------------------
</TABLE>

-5-

<PAGE>

Galaxy Government Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks as high a level of current income as is consistent with liquidity
and stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

HOW THE FUND HAS PERFORMED

-6-
<PAGE>

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares of the Fund has varied
from year to year, thereby giving some indication of the risk of investing in
the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1 year Since inception
- ------------------------------------------------------------------------------
<S> <C> <C>
Trust Shares --% --% (11/1/94)
- ------------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

<TABLE>
<CAPTION>
Annual Fund operating expenses (fees deducted from the Fund's assets)
- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --% --%*
- ------------------------------------------------------------------------------
</TABLE>

-7-

<PAGE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-8-

<PAGE>

Galaxy Institutional Government Money Market Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks current income with liquidity and stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares has varied from year to
year, thereby giving some indication of the risk of investing in the Fund.

-9-

<PAGE>

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Since inception
1 year 5 Years (4/15/93)
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Trust Shares --% --% --%
- ------------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

<TABLE>
<CAPTION>
Annual Fund operating expenses (fees deducted from the Fund's assets)
- ------------------------------------------------------------------------------
Total Fund
Distribution Other operating
Management fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --%* None --%* --%*
- ------------------------------------------------------------------------------
</TABLE>

The Adviser is waiving a portion of the Management fees so that such fees are
expected to be ___%. The Fund's administrator is waiving a portion of the
administration fees so that Other expenses are expected to be ___%. Total Fund
operating expenses after these waivers are expected to be ___%. These fee
waivers may be revised or discontinued at any time.

EXAMPLE

This example helps you compare the cost of investing in the Fund with the cost
of investing in other mutual funds. The example assumes:

-10-

<PAGE>

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares $-- $-- $-- $--
- ------------------------------------------------------------------------------
</TABLE>

-11-

<PAGE>

Galaxy U.S. Treasury Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks current income with liquidity and stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

[Sidenote:]
U.S. Treasury obligations are among the safest of all investments because they
are backed by the "full faith and credit" of the U.S. Government.

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

HOW THE FUND HAS PERFORMED

-12-

<PAGE>

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares of the Fund has varied
from year to year, thereby giving some indication of the risk of investing in
the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1 year Since inception
- ------------------------------------------------------------------------------
<S> <C> <C>
Trust Shares --% --% (11/1/94)
- ------------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.

<TABLE>
<CAPTION>
Annual Fund operating expenses (fees deducted from the Fund's assets)
- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% None --% --%
- ------------------------------------------------------------------------------
</TABLE>

EXAMPLE

-13-

<PAGE>

- - your investment has a 5% return each year
- - the Fund's operating expenses remain the same.

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-14-

<PAGE>

Galaxy Tax-Exempt Fund

THE FUND'S INVESTMENT OBJECTIVE

The Fund seeks as high a level of current interest income exempt from federal
income tax as is consistent with stability of principal.

THE FUND'S MAIN INVESTMENT STRATEGIES

[Sidenote:]
MUNICIPAL SECURITIES

-15-

<PAGE>

[Sidenote:]
TYPES OF MUNICIPAL SECURITIES

THE MAIN RISKS OF INVESTING IN THE FUND

While money market funds are considered to be among the safest of all
investments, they are not risk free. Here are the main risks associated with an
investment in the Fund:

- - INTEREST RATE RISK: The yield paid by the Fund will vary with changes in
short-term interest rates.
- - CREDIT RISK: Although credit risk is very low because the Fund only invests
in high quality obligations, if an issuer fails to pay interest or repay
principal, the value of your investment could decline. The ability of a
state or local government issuer to make payments can be affected by many
factors, including economic conditions, the flow of tax revenues and
changes in the level of federal, state or local aid.
- - SHARE PRICE: There's no guarantee the Fund will be able to preserve the
value of your investment at $1.00 per share.

HOW THE FUND HAS PERFORMED

YEAR-BY-YEAR RETURNS

The bar chart shows how the performance of Trust Shares of the Fund has varied
from year to year, thereby giving some indication of the risk of investing in
the Fund.

[bar chart goes here]

Best quarter: --% for the quarter ending Month, Day, Year
Worst quarter: --% for the quarter ending Month, Day, Year

-16-

<PAGE>

AVERAGE ANNUAL TOTAL RETURNS

The table shows the Fund's average annual total returns for the periods ended
December 31, 1998.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
1 year Since inception
- ------------------------------------------------------------------------------
<S> <C> <C>
Trust Shares --% --% (11/1/94)
- ------------------------------------------------------------------------------
</TABLE>

To obtain the Fund's current 7-day yield, please call 1-877-BUY-GALAXY
(1-877-289-4252).

FEES AND EXPENSES OF THE FUND

The following table shows the fees and expenses you pay when you own shares of
the Fund.
<TABLE>
<CAPTION>
Annual Fund operating expenses (fees deducted from the Fund's assets)
- ------------------------------------------------------------------------------
Total Fund
Management Distribution Other operating
fees (12b-1) fees expenses expenses
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Shares --% None --% --%
- ------------------------------------------------------------------------------
</TABLE>

EXAMPLE

Although your actual costs may be higher or lower depending on the amount you
invest and the Fund's actual rate of return, based on these assumptions your
costs would be:

-17-
<PAGE>

ADDITIONAL INFORMATION ABOUT RISK

The main risks associated with an investment in each of the Galaxy Money Market
Funds have been described above. The following supplements that discussion.

- - TEMPORARY DEFENSIVE POSITIONS: Each Fund may temporarily hold investments
that aren't part of its main investment strategy during unfavorable market
conditions. These investments may include cash (which will not earn any
income) and, in the case of the Tax-Exempt Fund, short-term taxable
investments, such as money market instruments and debt securities issued or
guaranteed by the U.S. Government or its agencies, in excess of 20% of the
Fund's assets. This strategy could prevent a Fund from achieving its
investment objective.

-18-

<PAGE>

FUND MANAGEMENT

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

The management fees paid to the Adviser by the Funds during the last fiscal year
are set forth below.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
FUND MANAGEMENT FEE AS A % OF NET ASSETS
- ------------------------------------------------------------------------------
<S> <C>
Money Market --%
- ------------------------------------------------------------------------------
Government --%
- ------------------------------------------------------------------------------
Institutional Government Money Market --%
- ------------------------------------------------------------------------------
U.S. Treasury --%
- ------------------------------------------------------------------------------
Tax-Exempt --%
- ------------------------------------------------------------------------------
</TABLE>

SUB-ACCOUNT SERVICES: Affiliates of the Adviser and certain other parties
may receive fees from Galaxy's transfer agent for providing certain
sub-accounting and administrative services to participant sub-accounts with
respect to Trust Shares of the Funds (other than the Tax-Exempt Fund) held by
defined contribution plans. The transfer agency fees payable by Trust Shares of
the Funds have been increased by an amount equal to these fees, so that the
holders of Trust Shares indirectly bear these fees.

-19-

<PAGE>

HOW TO INVEST IN THE FUNDS

BUYING AND SELLING SHARES

Trust Shares of the Funds (other than the Institutional Government Money Market
Fund) are available for purchase by the following types of investors:

- - investors maintaining a qualified account at a bank or trust institution,
including subsidiaries of Fleet Financial Group, Inc.

- - participants in employer-sponsored defined contribution plans

Trust Shares of the Institutional Government Money Market Fund are available for
purchase by financial institutions, such as banks, savings and loan associations
and broker-dealers, including financial institutions affiliated with the
Adviser, that are purchasing shares of the Fund on behalf of their customers.

If your order to buy shares is received and accepted by Galaxy's distributor by
11:00 a.m. (Eastern time) on a business day, the price you pay will be the net
asset value (NAV) per share next determined (and you'll receive that day's
dividend) if Galaxy's custodian receives the purchase price in immediately
available funds by 11:00 a.m. that day. If your order to purchase shares is
received and accepted by Galaxy's distributor after 11:00 a.m. (Eastern time)
but before 4:00 p.m. (Eastern time) on a business day, the price you pay will be
the NAV next determined (and you'll begin receiving dividends the next day) if
Galaxy's custodian receives the purchase price in immediately available funds by
4:00 p.m. on the day of your order. The price at which you sell shares is the
NAV per share next determined after receipt of your order. NAV is determined on
each day the New York Stock Exchange is open for trading as of 11:00 a.m.
(Eastern time) and at the close of regular trading that day (usually 4:00 p.m.
Eastern time). The Funds' assets are valued at amortized cost, which is
approximately equal to market value.

[Sidenote:]
NET ASSET VALUE

-20-

<PAGE>

HOW TO BUY SHARES

[Sidenote:]
INVESTMENT MINIMUMS
Except for the Institutional Government Money Market Fund, Galaxy does not have
any minimum investment requirements for initial or additional investments in
Trust Shares but financial institutions and employer-sponsored plans may do so.
They may also require you to maintain a minimum account balance.

The minimum initial aggregate investment by a financial institution purchasing
shares of the Institutional Government Money Market Fund on behalf of its
customers is $2,000,000. There is no minimum investment requirement for
additional purchases.

HOW TO SELL SHARES

OTHER TRANSACTION POLICIES

Galaxy may refuse any order to buy shares. Galaxy doesn't issue a certificate
when you buy shares but it does keep a record of shares issued to investors.

Galaxy may ask for any information it might reasonably need to make sure that
you've authorized a sale of shares.

-21-

<PAGE>

With respect to the Institutional Government Money Market Fund, Galaxy requires
that a financial institution maintain an average account balance of $2,000,000.
If the balance in the account falls below $2,000,000, Galaxy may rquire the
financial institution to sell all shares in the account. With respect to the
other Funds, Galaxy may close any account after 60 days' written notice if the
value of the account drops below $250 as a result of selling shares.

HOW TO EXCHANGE SHARES - INSTITUTIONAL GOVERNMENT MONEY MARKET FUND ONLY

If you are a customer of a financial institution, you may exchange Trust Shares
of the Institutional Government Money Market Fund having a value of at least
$100 for Retail A Shares of any other Galaxy Fund or for shares of any other
Fund that's managed by the Adviser or any of its affiliates in which you have an
existing account. Unless you qualify for a waiver, you'll have to pay a sales
charge when you exchange your Trust Shares of the Institutional Government Money
Market Fund for Retail A Shares of another Galaxy Fund that imposes a sales
charge on purchases.

To exchange shares:

- - call Galaxy's distributor or use the InvestConnect voice response line at
1-877-BUY-GALAXY (1-877-289-4252)

- - send your request in writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

- - ask your financial institution.

-22-

<PAGE>

DIVIDENDS, DISTRIBUTIONS AND TAXES

MONEY MARKET, GOVERNMENT, INSTITUTIONAL GOVERNMENT MONEY MARKET AND U.S.
TREASURY FUNDS

TAX-EXEMPT FUND

Distributions by this Fund will generally consist of dividends derived from
interest earned on exempt securities, and these "exempt-interest dividends"
will be exempt income for shareholders for federal income tax purposes. It is
possible, depending upon the Fund's investments, that a portion of the Fund's
distributions could be taxable to shareholders as ordinary income or capital
gains, but the Fund does not expect that this will be the case.

Interest on indebtedness incurred by a shareholder to purchase or carry shares
of this Fund generally will not be deductible for federal income tax purposes.

You should note that a portion of the exempt-interest dividends paid by this
Fund may constitute an item of tax preference for purposes of determining
federal alternative minimum tax liability. Exempt-interest dividends will also
be considered along with other adjusted gross income in determining whether any
Social Security or railroad retirement payments received by you are subject to
federal income taxes.

ALL FUNDS

Taxable dividends paid in January may be taxable as if they had been paid the
previous December. Each year you'll receive in the mail federal tax information
on distributions paid by the Funds.

STATE AND LOCAL TAXES

-23-

<PAGE>

FINANCIAL HIGHLIGHTS

The financial highlights tables shown below will help you understand the
financial performance for the Funds' Trust Shares for the past five years (or
the period since Trust Shares were first offered). Certain information reflects
the financial performance of a single Trust Share. The total returns in the
tables represent the rate that an investor would have earned (or lost) on an
investment in Trust Shares of each Fund, assuming all dividends and
distributions were reinvested. This information has been audited by
[____________________], independent accountants, whose report, along with the
Funds' financial statements, are included in the Funds' Annual Report and
[__________________________________] into the SAI.

-24-
<PAGE>

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995(1)
---- ---- ---- ----
TRUST SHARES
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period . . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00
---------- -------- --------
Income from Investment Operations:
Net investment income(2). . . . . . . . . . . 0.05 0.05 0.05
Net realized and unrealized
gain (loss) on investments . . . . . . . . . - - -
---------- -------- --------
Total from Investment
Operations . . . . . . . . . . . . . . . . 0.05 0.05 0.05
---------- -------- --------
Less Dividends:
Dividends from net
investment income. . . . . . . . . . . . . . (0.05) (0.05) (0.05)
Dividends from net
realized capital
gains. . . . . . . . . . . . . . . . . . . . - - -
---------- -------- --------
Total Dividends . . . . . . . . . . . . . . (0.05) (0.05) (0.05)
---------- -------- --------
Net increase (decrease)
in net asset value. . . . . . . . . . . . . . - - -
---------- -------- --------
Net Asset Value,
End of Period . . . . . . . . . . . . . . . . $ 1.00 $ 1.00 $ 1.00
---------- -------- --------
---------- -------- --------
Total Return(3). . . . . . . . . . . . . . . . 5.13% 5.00% 5.43%
Ratios/Supplemental Data:
Net Assets,
End of Period (000's) . . . . . . . . . . . . $1,138,185 $924,222 $334,054
Ratios to average net assets:
Net investment income
including reimbursement/
waiver . . . . . . . . . . . . . . . . . . . 5.04% 4.89% 5.30%
Operating expenses including
reimbursement/waiver . . . . . . . . . . . . 0.50% 0.55% 0.55%
Operating expenses excluding
reimbursement/waiver . . . . . . . . . . . . 0.54% 0.58% 0.56%
</TABLE>

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

1 Prior to November 1, 1994, the Fund offered a single class of shares. As
of such date, the existing class of shares was designated as Retail Shares
(now designated Retail A Shares) and the Fund began issuing a second class
of shares designated as Trust Shares.
2 Net investment income per share for Trust Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996 and 1995 was $______,
$0.05 and $0.05 and $0.05, respectively.
3 Total return for the year ended October 31, 1994 includes the effect of the
voluntary capital contribution of $1.6 million from the Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.35%.

-25-
<PAGE>

GOVERNMENT FUND
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995(1)
---- ---- ---- ----
TRUST SHARES
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period. . . . . . . . . . . . . . . . . $1.00 $1.00 $1.00
---------- -------- --------
Income from Investment
Operations:
Net investment income(2) . . . . . . . . . 0.05 0.05 0.05
Net realized and
unrealized gain (loss)
on investments . . . . . . . . . . . . . -- -- --
---------- -------- --------
Total from Investment
Operations. . . . . . . . . . . . . . . 0.05 0.05 0.05
---------- -------- --------
Less Dividends:
Dividends from net
investment income. . . . . . . . . . . . (0.05) (0.05) (0.05)
Dividends from net
realized capital gains . . . . . . . . . -- -- --
---------- -------- --------
Total Dividends . . . . . . . . . . . . (0.05) (0.05) (0.05)
---------- -------- --------
Net increase (decrease)
in net asset value . . . . . . . . . . . . -- -- --
---------- -------- --------
Net Asset Value, End
of Period. . . . . . . . . . . . . . . . . $1.00 $1.00 $1.00
---------- -------- --------
---------- -------- --------
Total Return(3). . . . . . . . . . . . . . . 5.06% 4.95% 5.39%
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . . . . . . . . . . $630,859 $733,759 $678,679
Ratios to average net assets:
Net investment income
including reimbursement/
waiver . . . . . . . . . . . . . . . . . 4.94% 4.85% 5.27%
Operating expenses
including reimbursement/
waiver.. . . . . . . . . . . . . . . . . 0.51% 0.52% 0.53%
Operating expenses
excluding reimbursement/
waiver.. . . . . . . . . . . . . . . . . 0.52% 0.53% 0.54%
</TABLE>

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

1 Prior to November 1, 1994, the Fund offered a single class of shares. As
of such date, the existing class of shares was designated as Retail Shares
(now designated Retail A Shares) and the Fund began issuing a second class
of shares designated as Trust Shares.
2 Net investment income per share for Trust Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996 and 1995 was $______,
$0.05, $0.05 and $0.05, respectively.
3 Total return for the year ended October 31, 1994 includes the effect of the
voluntary capital contribution of $2.3 million from the Adviser in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.49%.

-26-

<PAGE>

INSTITUTIONAL GOVERNMENT MONEY MARKET FUND(1)

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <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 0.05 0.04
Net realized and
unrealized gain (loss)
on investments . . . . . . . . . . . . . -- -- -- --
---------- -------- -------- -------
Total from Investment
Operations. . . . . . . . . . . . . . . 0.05 0.05 0.05 0.04
---------- -------- -------- -------
Less Dividends:
Dividends from net
investment income. . . . . . . . . . . . (0.05) (0.05) (0.05) (0.04)
Dividends from net
realized capital gains . . . . . . . . . -- -- -- --
---------- -------- -------- -------
Total Dividends . . . . . . . . . . . . (0.05) (0.05) (0.05) (0.04)
---------- -------- -------- -------
Net increase (decrease)
in net asset value . . . . . . . . . . . . -- -- -- --
---------- -------- -------- -------
Net Asset Value, End
of Period. . . . . . . . . . . . . . . . . $1.00 $1.00 $1.00 $1.00
---------- -------- -------- -------
---------- -------- -------- -------
Total Return . . . . . . . . . . . . . . . . 5.09% 5.12% 5.53% 3.56%
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . . . . . . . . . . $175,141 $500,927 $506,692 $326,225
Ratios to average net assets:
Net investment income
including reimbursement/waiver. . . . . 4.94% 5.00% 5.38% 3.63%
Operating expenses
including reimbursement/waiver.. . . . 0.19% 0.19% 0.17% 0.17%
Operating expenses
excluding reimbursement/waiver.. . . . 0.33% 0.33% 0.33% 0.39%
</TABLE>

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

1 The Fund was formerly known as the Institutional Treasury Money Market
Fund.
2 Net investment income per share before reimbursement/waiver of fees by the
Adviser and/or the Fund's administrator for the years ended October
31, 1998, 1997, 1996, 1995 and 1994 was $_____, $0.05, $0.05, $0.05 and
$0.04, respectively.

-27-

<PAGE>

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995(1)
---- ---- ---- ----
TRUST SHARES
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period . . . . $1.00 $1.00 $1.00
---------- -------- --------
Income from Investment Operations:
Net investment income(2) . . . . . . . . . . 0.05 0.05 0.05
Net realized and unrealized gain
(loss) on investments . . . . . . . . . . -- -- --
---------- -------- --------
Total from Investment Operations . . . . 0.05 0.05 0.05
---------- -------- --------
Less Dividends:
Dividends from net investment
income . . . . . . . . . . . . . . . . . (0.05) (0.05) (0.05)
Dividends from net realized
capital gains. . . . . . . . . . . . . . -- -- --
---------- -------- --------
Total Dividends. . . . . . . . . . . . . (0.05) (0.05) (0.05)
---------- -------- --------
Net increase (decrease) in net
asset value. . . . . . . . . . . . . . . . -- -- --
---------- -------- --------
Net Asset Value, End of Period . . . . . . . $1.00 $1.00 $1.00
---------- -------- --------
---------- -------- --------
Total Return . . . . . . . . . . . . . . . . 4.85% 4.80% 5.18%
Ratios/Supplemental Data:

Net Assets, End of Period (000's). . . . . . $393,175 $354,331 $271,036
Ratios to average net assets:

Net investment income including
reimbursement/waiver . . . . . . . . . . 4.75% 4.69% 5.06%

Operating expenses including
reimbursement/waiver . . . . . . . . . . 0.52% 0.53% 0.55%

Operating expenses excluding
reimbursement/waiver . . . . . . . . . . 0.53% 0.53% 0.55%
</TABLE>

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

-28-

<PAGE>

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

<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995(1)
---- ---- ---- ----
TRUST SHARES
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning
of Period. . . . . . . . . . . . . . . . . $1.00 $1.00 $1.00
---------- -------- --------
Income from Investment Operations:
Net investment income(2) . . . . . . . . . 0.03 0.03 0.03
Net realized and
unrealized gain (loss)
on investments . . . . . . . . . . . . . . -- -- --
---------- -------- --------
Total from Investment
Operations. . . . . . . . . . . . . . . 0.03 0.03 0.03
---------- -------- --------
Less Dividends:
Dividends from net
investment income. . . . . . . . . . . . (0.03) (0.03) (0.03)
Dividends from net
realized capital gains . . . . . . . . . -- -- --
---------- -------- --------
Total Dividends . . . . . . . . . . . . (0.03) (0.03) (0.03)
---------- -------- --------
Net increase (decrease)
in net asset value . . . . . . . . . . . . -- -- --
---------- -------- --------
Net Asset Value, End
of Period. . . . . . . . . . . . . . . . . $1.00 $1.00 $1.00
---------- -------- --------
---------- -------- --------
Total Return . . . . . . . . . . . . . . . . 3.10% 2.97% 3.29%
Ratios/Supplemental Data:
Net Assets, End of
Period (000's) . . . . . . . . . . . . . . $169,316 $184,307 $180,706
Ratios to average net assets:
Net investment income
including reimbursement/waiver . . . . . 3.05% 2.92% 3.24%
Operating expenses
including reimbursement/waiver.. . . . . 0.53% 0.54% 0.55%
Operating expenses
excluding reimbursement/waiver.. . . . . 0.53% 0.54% 0.56%
</TABLE>

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

2 Net investment income per share for Trust Shares before
reimbursement/waiver of fees by the Adviser and/or the Fund's administrator
for the years ended October 31, 1998, 1997, 1996 and 1995 was $_____,
$0.03, $0.03 and $0.03, respectively.

-29-

<PAGE>

[Back Cover Page]

Where to find more information

You'll find more information about the Funds in the following documents:

You can get a free copy of these documents, request other information about the
Funds and make shareholder inquiries by calling Galaxy at 1-877-BUY-GALAXY
(1-877-289-4252) or by writing to:

The Galaxy Fund
P.O. Box 5108
4400 Computer Drive
Westborough, MA 01581-9896

If you buy your shares through a financial institution, you may contact your
institution for more information.

Public Reference Section of the SEC
Washington, DC 20549-6009.
1-800-SEC-0330

Reports and other information about the Funds are also available on the SEC's
website at http://www.sec.gov.

Galaxy's Investment Company Act File No. is 811-4636.

PROGALTRMM

-31-

<PAGE>
THE GALAXY FUND
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 28, 1999
GALAXY ASSET ALLOCATION FUND
GALAXY EQUITY INCOME FUND
GALAXY GROWTH AND INCOME FUND
GALAXY STRATEGIC EQUITY FUND
GALAXY EQUITY VALUE FUND
GALAXY EQUITY GROWTH FUND
GALAXY INTERNATIONAL EQUITY FUND
GALAXY SMALL CAP VALUE FUND
GALAXY SMALL COMPANY EQUITY FUND
RETAIL A SHARES, RETAIL B SHARES AND
TRUST SHARES

This Statement of Additional Information is not a prospectus. The
prospectuses for the Funds as listed below, as they may be supplemented or
revised from time to time (the "Prospectuses"), as well as the Funds' Annual
Report to Shareholders dated October 31, 1998 (the "Annual Report"), may be
obtained, without charge, by writing:

The Galaxy Fund
c/o First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581-5108

or by calling 1-877-BUY-GALAXY (1-877-289-4252).

CURRENT PROSPECTUSES

- Prospectus for Retail A Shares and Retail B Shares of the Funds dated
February 28, 1999

- Prospectus for Trust Shares of the Funds dated February 28, 1999

The financial statements included in the Annual Report and the report
thereon of [________________________], The Galaxy Funds' independent
accountants, are [_______________________] into this Statement of Additional
Information.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION....................................................... 1
DESCRIPTION OF GALAXY AND ITS SHARES...................................... 1
INVESTMENT STRATEGIES, POLICIES AND RISKS................................. 3
Asset Allocation Fund................................................... 4
Equity Income Fund...................................................... 4
Growth and Income Fund.................................................. 4
Strategic Equity Fund................................................... 5
Equity Value Fund....................................................... 5
Equity Growth Fund...................................................... 5
International Equity Fund............................................... 6
Small Cap Value Fund.................................................... 6
Small Company Equity Fund............................................... 7
Special Risk Considerations............................................. 7
Foreign Securities...................................................... 7
European Currency Unification........................................... 8
Other Investment Policies and Risk Considerations....................... 8
Ratings................................................................. 8
U.S. Government Obligations and Money Market Instruments................ 9
Variable and Floating Rate Obligations.................................. 10
Repurchase and Reverse Repurchase Agreements............................ 10
Securities Lending...................................................... 11
Investment Company Securities........................................... 11
REITs................................................................... 12
Derivative Securities................................................... 12
American, European and Global Depository Receipts....................... 19
Asset-Backed Securities--Asset Allocation Fund.......................... 19
Mortgage-Backed Securities--Asset Allocation Fund....................... 20
Mortgage Dollar Rolls--Asset Allocation Fund............................ 21
Convertible Securities.................................................. 21
When-Issued and Delayed Settlement Transactions--Growth and Income,
Strategic Equity, International Equity and Small Cap Value Funds...... 22
Restricted and Illiquid Securities...................................... 23
Portfolio Securities Generally.......................................... 23
Portfolio Turnover...................................................... 24
INVESTMENT LIMITATIONS.................................................... 24
VALUATION OF PORTFOLIO SECURITIES......................................... 28
Valuation of the Asset Allocation, Equity Income, Growth and Income,
Strategic Equity, Equity Value, Equity Growth, Small Cap Value and
Small Company Equity Funds............................................ 28
Valuation of the International Equity Fund.............................. 28
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................ 29
Purchases of Retail A Shares and Retail B Shares........................ 29
</TABLE>

i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General................................................................. 29
Customers of Institutions............................................... 30
Other Purchase Information.............................................. 30
Applicable Sales Charge--Retail A Shares................................ 30
Computation of Offering Price--Retail A Shares.......................... 32
Quantity Discounts...................................................... 32
Applicable Sales Charge--Retail B Shares................................ 34
Characteristics of Retail A Shares and Retail B Shares.................. 35
Factors to Consider When Selecting Retail A Shares or Retail B Shares... 36
Purchases of Trust Shares............................................... 37
Redemption of Retail A Shares, Retail B Shares and Trust Shares......... 37
INVESTOR PROGRAMS--RETAIL A SHARES AND RETAIL B SHARES.................... 37
Exchange Privilege...................................................... 37
Retirement Plans........................................................ 38
Automatic Investment Program and Systematic Withdrawal Plan............. 39
Payroll Deduction Program............................................... 39
College Investment Program.............................................. 39
Direct Deposit Program.................................................. 39
TAXES..................................................................... 40
Taxation of Certain Financial Instruments............................... 40
TRUSTEES AND OFFICERS..................................................... 41
Shareholder and Trustee Liability....................................... 43
INVESTMENT ADVISER AND SUB-ADVISER........................................ 44
Authority to Act as Investment Adviser.................................. 46
ADMINISTRATOR............................................................. 46
CUSTODIAN AND TRANSFER AGENT.............................................. 48
EXPENSES.................................................................. 49
PORTFOLIO TRANSACTIONS.................................................... 49
SHAREHOLDER SERVICES PLAN................................................. 51
DISTRIBUTION AND SERVICES PLAN............................................ 53
DISTRIBUTOR............................................................... 55
AUDITORS.................................................................. 57
COUNSEL................................................................... 57
PERFORMANCE AND YIELD INFORMATION......................................... 57
Performance Reporting................................................... 60
MISCELLANEOUS............................................................. 61
FINANCIAL STATEMENTS...................................................... 62
APPENDIX A................................................................ A-1
APPENDIX B................................................................ B-1
</TABLE>

ii
<PAGE>
GENERAL INFORMATION

This Statement of Additional Information should be read in conjunction with
a current Prospectus. This Statement of Additional Information relates to the
Prospectuses for Trust Shares, Retail A Shares and Retail B Shares of the nine
Funds listed on the cover page. Each Fund also offers A Prime Shares and B Prime
Shares, which are described in a separate statement of additional information
and related prospectus. This Statement of Additional Information is incorporated
by reference in its entirety into the Prospectuses. No investment in shares of
the Funds should be made without reading a Prospectus.

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.

DESCRIPTION OF GALAXY AND ITS SHARES

The Galaxy Fund ("Galaxy") is an open-end management investment company
currently offering shares of beneficial interest in twenty-nine 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 Government Money Market Fund, Prime Reserves,
Government Reserves, Tax-Exempt Reserves, 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, Strategic Equity
Fund, Short-Term Bond Fund, Intermediate Government Income Fund, High Quality
Bond Fund, Corporate Bond Fund, Tax-Exempt Bond Fund, New Jersey Municipal Bond
Fund, New York Municipal Bond Fund, Connecticut Municipal Bond Fund,
Massachusetts Municipal Bond Fund and Rhode Island Municipal Bond Fund. Galaxy
is also authorized to issue shares of beneficial interest in an additional
investment portfolio, the MidCap Equity Fund. As of the date of this Statement
of Additional Information, however, the MidCap Equity Fund had not commenced
investment operations.

The Growth and Income and Small Cap Value Funds commenced operations on
December 14, 1992 as separate investment portfolios (the "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.

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Class H--Series 4 shares (A Prime Shares) and Class H--Series 5 shares (B Prime
Shares), each series representing interests in the Equity Growth Fund; Class
I--Series 1 shares (Trust Shares), Class I--Series 2 shares (Retail A Shares),
Class I--Series 3 shares (Retail B Shares), Class I--Series 4 shares (A Prime
Shares) and Class I--Series 5 shares (B Prime Shares), each series representing
interests in the Equity Income Fund; Class K--Series 1 shares (Trust Shares),
Class K--Series 2 shares (Retail A Shares), Class K--Series 3 shares (Retail B
Shares), Class K--Series 4 shares (A Prime Shares) and Class K--Series 5 shares
(B Prime 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), Class N--Series 3 shares (Retail B Shares), Class N--Series 4 shares
(A Prime Shares) and Class N--Series 5 shares (B Prime 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), Class U--Series 3
shares (Retail B Shares), Class U--Series 4 shares (A Prime Shares) and Class
U--Series 5 shares (B Prime Shares), each series representing interests in the
Growth and Income Fund; Class X--Series 1 shares (Trust Shares), Class X--Series
2 shares (Retail A Shares), Class X--Series 3 shares (Retail B Shares), Class
X--Series 4 shares (A Prime Shares) and Class X--Series 5 shares (B Prime
Shares), each series representing interests in the Small Cap Value Fund; and
Class AA--Series 1 shares (Trust Shares), Class AA--Series 2 shares (Retail A
Shares), Class AA--Series 3 shares (Retail B Shares), Class AA--Series 4 shares
(A Prime Shares) and Class AA--Series 5 shares (B Prime Shares), each series
representing interests in the Strategic Equity Fund. Each Fund is classified as
a diversified company under the Investment Company Act of 1940, as amended (the
"1940 Act").

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.

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.
Each series of shares (i.e., Retail A Shares, Retail B Shares, Trust Shares, A
Prime Shares and B Prime Shares) bear pro rata the same expenses and are
entitled equally to a Fund's dividends and distributions except as follows. Each
series will bear the expenses of any distribution and/or shareholder servicing
plans applicable to such series. For example, as described below, holders of
Retail A Shares will bear the expenses of the Shareholder Services Plan for
Retail A Shares and Trust Shares (which is currently applicable only to Retail A
Shares) and holders of Retail B Shares will bear the expenses of the
Distribution and Services Plan for Retail B Shares. In addition, each series may
incur differing transfer agency fees and may have differing sales charges.
Standardized yield and total return quotations are computed separately for each
series of shares. The differences in expenses paid by the respective series will
affect their performance. See "Shareholder Services Plan" and "Distribution and
Services Plan" below.

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 each series of a Fund would be solely responsible for the Fund's
payments under any distribution and/or shareholder servicing plan applicable to
such series.

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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 an investment objective or a
fundamental investment policy would be effectively acted upon with respect to a
Fund only if approved by a majority of the outstanding shares of such Fund
(irrespective of series designation). However, the Rule also provides that the
ratification of the appointment of independent public accountants, the approval
of principal underwriting contracts, and the election of trustees may be
effectively acted upon by shareholders of Galaxy voting without regard to class
or series.

Shareholders are entitled to one vote for each full share held, and 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.
Voting rights are not cumulative and, accordingly, the holders of more than 50%
in the aggregate of Galaxy's outstanding shares may elect all of the trustees,
irrespective of the votes of other shareholders.

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. 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.

INVESTMENT STRATEGIES, POLICIES AND RISKS

Fleet Investment Advisors Inc. ("Fleet"), the Funds' investment adviser,
and, with respect to the International Equity Fund, Oechsle International
Advisors, LLC ("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 as described in its Prospectuses may
not be changed without

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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. The following investment strategies, policies and risks
supplement those set forth in the Funds' Prospectuses.

ASSET ALLOCATION FUND

The Asset Allocation Fund may 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 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--Foreign Securities" and "Other Investment Policies
and Risk Considerations--American, European and Global Depository Receipts"
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
purchase put options and call options and 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 for
information regarding additional investment policies of the Asset Allocation
Fund.

EQUITY INCOME FUND

In addition to common stocks, the Equity Income Fund may also invest in
securities convertible into common stock that offer income potential. See "Other
Investment Policies and Risk Considerations--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 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--Foreign Securities" and "Other
Investment Policies and Risk Considerations--American, European and Global
Depository Receipts" below. The Fund may also purchase put options and call
options and write covered call options. See "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 Income Fund.

GROWTH AND INCOME FUND

Under normal market conditions, the Growth and Income Fund will invest at
least 65% of its total assets in common stocks, preferred stocks, common stock
warrants and securities convertible into common stock. 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--Derivative
Securities" below.

The Fund may invest up to 20% of its total assets 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,

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<PAGE>
EDRs and Global Depository Receipts ("GDRs"). 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 to be substantial. See "Special Risk
Considerations--Foreign Securities" and "Other Investment Policies and Risk
Considerations--American, European and Global Depository Receipts" below.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Growth and Income
Fund.

STRATEGIC EQUITY FUND

Under normal market and economic conditions, the Strategic Equity Fund will
invest at least 65% of its total assets in equity securities, including common
stocks, preferred stocks, securities convertible into common stock, rights and
warrants. The Fund may invest up to 20% of its total assets in foreign
securities, either directly or indirectly through ADRs, EDRs and GDRs. See
"Special Risk Considerations--Foreign Securities" and "Other Investment Policies
and Risk Considerations--American, European and Global Depository Receipts"
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--Derivative Securities" below.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Strategic Equity
Fund.

EQUITY VALUE FUND

Under normal market and economic conditions, the Equity Value Fund invests
at least 75% of its total assets in common stock, preferred stock (including
convertible 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. See "Other Investment Policies and Risk
Considerations--Convertible Securities" below.

The Fund may also invest up to 20% of its total assets in foreign
securities, either directly or indirectly through 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--Foreign Securities" and "Other
Investment Policies and Risk Considerations--American, European and Global
Depository Receipts" below. The Fund may also write covered call options. See
"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

Convertible securities purchased by the Equity Growth Fund may include both
debt securities and preferred stock. 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 and Risk Considerations--Convertible
Securities" below. The Fund may also invest in common stock warrants.

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--Foreign Securities"
and "Other Investment Policies and Risk Considerations--American, European and
Global Depository

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<PAGE>
Receipts" below. The Fund may also purchase put options and call options and
write covered call options. See "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 Growth Fund.

INTERNATIONAL EQUITY FUND

The International Equity Fund invests at least 75% of its total assets in
equity securities of foreign issuers. 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.

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 and Risk Considerations--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 below under "Other
Investment Policies and Risk Considerations--Investment Company Securities."

In addition to temporary defensive periods as described in the Prospectuses,
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.

Subject to applicable securities regulations, the Fund may, for the purpose
of hedging its portfolio, purchase and write covered call options on specific
portfolio securities and may purchase and write put and call options on foreign
stock indexes listed on foreign and domestic stock exchanges. In addition, the
Fund may invest up to 100% of its total assets in securities of foreign issuers
in the form of ADRs, EDRs or GDRs as described under "Other Investment Policies
and Risk Considerations--American, European and Global Depository Receipts."
Furthermore, the Fund may purchase and sell securities on a when-issued basis.

See "Other Investment Policies and Risk Considerations" below regarding
additional investment policies of the International Equity Fund.

SMALL CAP VALUE FUND

In addition to common stocks, the Small Cap Value 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--Derivative
Securities" below.

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The Fund may invest up to 20% of its total assets 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, EDRs and GDRs. Securities of a
foreign issuer may present greater risks in the form of nationalization,
confiscation, domestic marketability, or other national or international
restrictions. As a matter of practice, the Fund will not invest in the
securities of a foreign issuer if any such risk appears to Fleet to be
substantial. See "Special Risk Considerations--Foreign Securities" and "Other
Investment Policies and Risk Considerations--American, European and Global
Depository Receipts" below.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Small Cap Value
Fund.

SMALL COMPANY EQUITY FUND

In addition to common stocks, the Small Company Equity Fund may invest in
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 that have market
capitalizations of $1.5 billion or less. 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--Foreign Securities" and "Other
Investment Policies and Risk Considerations--American, European and Global
Depository Receipts" below.

The Fund may purchase put options and call options 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--Derivative Securities" below.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Small Company Equity
Fund.

SPECIAL RISK CONSIDERATIONS

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.

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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.

EUROPEAN CURRENCY UNIFICATION

Many European countries have adopted a single European currency, the euro.
On January 1, 1999, the euro became legal tender for all countries participating
in the Economic and Monetary Union ("EMU"). A new European Central Bank has been
created to manage the monetary policy of the new unified region. On the same
date, the exchange rates were irrevocably fixed between the EMU member
countries. National currencies will continue to circulate until they are
replaced by euro coins and bank notes by the middle of 2002.

This change is likely to significantly impact the European capital markets
in which the International Equity Fund invests and may result in the Fund facing
additional risks in pursuing its investment objective. These risks, which
include, but are not limited to, uncertainty as to the proper tax treatment of
the currency conversion, volatility of currency exchange rates as a result of
the conversion, uncertainty as to capital market reaction, conversion costs that
may affect issuer profitability and creditworthiness, and lack of participation
by some European countries, may increase the volatility of the Fund's net asset
value per share.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

Investment methods described in the Prospectuses and this Statement of
Additional Information 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.

RATINGS

All debt obligations, including convertible bonds, purchased by the Asset
Allocation, Equity Income, Strategic Equity, Equity Value, Equity Growth and
Small Company Equity Funds 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 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
rated 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 Growth and Income and Small Cap Value Funds may purchase convertible
bonds rated "Ba" or higher by Moody's or "BB" or higher by S&P or Fitch IBCA,
Inc. ("Fitch IBCA"), 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 Growth and Income and Small Cap Value
Funds must be rated in one of the top two rating categories by a nationally
recognized statistical rating agency, such as Moody's, S&P or Fitch IBCA.

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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 other "money market" instruments, including bank
obligations and commercial paper.

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

U.S. Treasury securities 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 Federal Home Loan
Mortgage Corporation, are supported only by the credit of the instrumentality.
No assurance can be given that the U.S. Government would provide financial
support to U.S. Government-sponsored instrumentalities if it is not obligated to
do so by law. Some of these instruments may be variable or floating rate
instruments.

Bank obligations include bankers' acceptances, negotiable certificates of
deposit and non-negotiable time deposits issued for a definite period of time
and earning a specified return by a U.S. bank which is a member of the Federal
Reserve System or is insured by the Federal Deposit Insurance Corporation
("FDIC"), or by a savings and loan association or savings bank which is insured
by the FDIC. With respect to each Fund other than the Growth and Income and
Small Cap Value 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 to the obligations of financial institutions having more
than $1 billion in total assets at the time of purchase. 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 Strategic
Equity Fund, Growth and Income Fund and Small Cap Value Fund) of a Fund's net
assets. Investments by the Funds in non-negotiable time deposits are limited to
no more than 5% of each Fund's total assets at the time of purchase.

Domestic and foreign banks are subject to extensive but different government
regulation which may limit the amount and types of their loans and the interest
rates that may be charged. In addition, the profitability of the banking
industry is largely dependent upon the availability and cost of funds to finance
lending operations and the quality of underlying bank assets.

Investments in obligations of foreign branches of U.S. banks and U.S.
branches of foreign banks may subject 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 foreign governmental restrictions which might adversely affect the
payment of principal and interest on such obligations. In addition, foreign
branches of U.S. bank 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

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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.

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" below.

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 the Prospectuses
and this Statement of Additional Information. If such an instrument is not
rated, Fleet or Oechsle, 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. Long-term
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.

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 (15% with respect to the Strategic
Equity Fund) described below in Investment Limitation No. 3 under "Investment
Limitations" with respect to the Asset Allocation, Equity Income, Strategic
Equity, Equity Value, Equity Growth, International Equity and Small Company
Equity Funds, and to the 15% limit described below in Investment Limitation No.
23 under "Investment Limitations" with respect to the Growth and Income and
Small Cap Value Funds.

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<PAGE>
seller filed for bankruptcy or became insolvent, disposition of such securities
by the Fund might be delayed pending court action.

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 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 1940 Act.

Each Fund may also borrow funds for temporary purposes by selling portfolio
securities to financial institutions such as banks and broker/dealers and
agreeing to repurchase them at a mutually specified date and price ("reverse
repurchase agreements"). Reverse repurchase agreements involve the risk that the
market value of the securities sold by a Fund may decline below the repurchase
price. The Funds would pay interest on amounts obtained pursuant to a reverse
repurchase agreement. Whenever a Fund enters into a reverse repurchase
agreement, it will place in a segregated custodial account liquid assets such as
cash or liquid portfolio 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.

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. 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. Loans will generally be
short-term (except in the case of the Growth and Income and Small Cap Value
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 Asset Allocation, Equity Income, Equity Value, Equity Growth,
International Equity and Small Company Equity 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 Growth and Income, Strategic Equity and Small Cap Value 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 Growth and Income,
Strategic Equity and Small Cap Value 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
Growth and Income, Strategic Equity and Small Cap Value Funds, 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

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<PAGE>
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 a REIT's
investments. In addition, equity REITs may be affected by changes in the value
of the underlying property owned by the REITs, 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 of 1986, as amended (the "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 a REIT's
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 any investments in 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.

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, foreign currency exchange contracts and
certain asset-backed and mortgage-backed securities.

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 and/or Oechsle'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

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<PAGE>
their investments in derivative securities. Further discussion of particular
types of derivative securities follows.

PUT AND CALL OPTIONS--ASSET ALLOCATION, EQUITY INCOME, EQUITY GROWTH AND
SMALL COMPANY EQUITY FUNDS. The Asset Allocation, Equity Income, Equity Growth
and Small Company Equity Funds may purchase put options and call options on
securities and securities indices. A put option gives the buyer the right to
sell, and the writer the obligation to buy, the underlying security at the
stated exercise price at any time prior to the expiration of the option. A call
option gives the buyer the right to buy the underlying security at the stated
exercise price at any time prior to the expiration of the option. Options
involving securities indices provide the holder with the right to make or
receive a cash settlement upon exercise of the option based on movements in the
relevant index. Such options must be listed on a national securities exchange
and issued by the Options Clearing Corporation. Such options may relate to
particular securities or to various stock indexes, except that a Fund may not
write covered call options on an index. A Fund may not purchase options unless
immediately after any such transaction the aggregate amount of premiums paid for
put or call options does not exceed 5% of its total assets. Purchasing options
is a specialized investment technique that may entail the risk of a complete
loss of the amounts paid as premiums to the writer of the option.

In order to close out put or call option positions, a Fund will be required
to enter into a "closing purchase transaction"--the purchase of a put or call
option (depending upon the position being closed out) on the same security with
the same exercise price and expiration date as the option that it previously
wrote. When a portfolio security subject to a call option is sold, a Fund will
effect a closing purchase transaction to close out any existing call option on
that security. If a Fund is unable to effect a closing purchase transaction, it
will not be able to sell the underlying security until the option expires or a
Fund delivers the underlying security upon exercise.

In contrast to an option on a particular security, an option on an index
provides the holder with the right to make or receive a cash settlement upon
exercise of the option. The amount of this settlement will be equal to the
difference between the closing price of the index at the time of exercise and
the exercise price of the option expressed in dollars, times a specified
multiple.

When a Fund purchases a put or call option, the premium paid by it is
recorded as an asset of the Fund. The amount of this asset will be subsequently
marked-to-market to reflect the current value of the option purchased. The
current value of the traded option is the last sale price or, in the absence of
a sale, the average of the closing bid and asked prices. If an option purchased
by a Fund expires unexercised, the Fund realizes a loss equal to the premium
paid. If a Fund enters into a closing sale transaction on an option purchased by
it, the Fund will realize a gain if the premium received by the Fund on the
closing transaction is more than the premium paid to purchase the option, or a
loss if it is less.

There are several risks associated with transactions in options on
securities. For example, there are significant differences between the
securities and options markets which could result in an imperfect correlation
between the markets, causing a given transaction not to achieve its objectives.
In addition, a liquid secondary market for particular options, whether traded
over-the-counter or on a national securities exchange may be absent for reasons
which include the following: there may be insufficient trading interest in
certain options; restrictions may be imposed by an exchange on opening
transactions, closing transactions or both; trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; unusual or unforeseen circumstances may
interrupt normal operations on an exchange; the facilities of an exchange or the
Options Clearing Corporation may not at all times be adequate to handle current
trading volume; or one or more exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that exchange (or in that class or series of options) would cease to
exist, although outstanding options that had been issued by the Options Clearing
Corporation as a result of trades on that exchange would continue to be

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<PAGE>
exercisable in accordance with their terms. A Fund will likely be unable to
control losses by closing its position where a liquid secondary market does not
exist. Moreover, regardless of how much the market price of the underlying
security increases or decreases, the option buyer's risk is limited to the
amount of the original investment for the purchase of the option. However,
options may be more volatile than their underlying securities, and therefore, on
a percentage basis, an investment in options may be subject to greater
fluc-tuation than an investment in the underlying securities.

A decision as to whether, when and how to use options involves the exercise
of skill and judgment, and even a well-conceived transaction may be unsuccessful
to some degree because of market behavior or unexpected events.

COVERED CALL OPTIONS--ASSET ALLOCATION, EQUITY INCOME, EQUITY VALUE, EQUITY
GROWTH, INTERNATIONAL EQUITY AND SMALL COMPANY EQUITY FUNDS. To further
increase return on their portfolio securities, in accordance with their
respective investment objectives and policies, the Asset Allocation, Equity
Income, Equity Value, Equity Growth, International Equity and Small Company
Equity 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 Asset Allocation, Equity Income,
Equity Value, Equity Growth, International Equity and Small Company Equity 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. A 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 will normally be written on underlying securities as to
which Fleet and/or Oechsle does not anticipate significant short-term capital
appreciation.

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, 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 and/or Oechsle 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.

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<PAGE>
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.

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.

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 Fleet's and/or 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 other liquid assets in an amount equal to the
market value of the option, and will maintain the account while the option is
open.

OPTIONS AND FUTURES CONTRACTS--GROWTH AND INCOME, STRATEGIC EQUITY AND SMALL
CAP VALUE FUNDS. The Growth and Income, Strategic Equity and Small Cap Value
Funds may buy and sell options and futures contracts to manage their exposure to
changing interest rates, security prices and currency exchange rates.

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<PAGE>
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.

The Funds will not hedge more than 20% of their respective total assets by
selling futures, buying puts, and writing calls under normal conditions. The
Funds will not buy futures or write puts whose underlying value exceeds 20% of
their respective total assets, and will not buy calls with a value exceeding 5%
of their respective total assets.

STOCK INDEX FUTURES, SWAP AGREEMENTS, INDEXED SECURITIES AND OPTIONS--GROWTH
AND INCOME, STRATEGIC EQUITY AND SMALL CAP VALUE FUNDS. The Growth and Income,
Strategic Equity and Small Cap Value Funds may utilize stock index futures
contracts, options, swap agreements, indexed securities, and options on futures
contracts for the purposes of managing cash flows into and out of their
respective portfolios and potentially reducing transaction costs, 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, liquid assets of the Fund equal to the value
of the swap agreement will be segregated by that Fund. The Funds may not use
stock index futures contracts and options for speculative purposes.

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.

As a means of reducing fluctuations in the net asset value of shares of the
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 a Fund, 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 a Fund
the right to make delivery of stock at a specified price, a put option on a
stock index gives the Fund, as holder, the right to receive an amount of cash
upon exercise of the option.

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<PAGE>
The Funds may also write covered call options. As the writer of a call
option, a Fund has the obligation upon exercise of the option during the option
period to deliver the underlying security upon payment of the exercise price.

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

In general, option contracts are closed out prior to their expiration. A
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 liquid portfolio 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.

None of the Growth and Income, Strategic Equity or Small Cap Value Funds
will enter into futures contracts if, immediately thereafter, the sum of its
initial margin deposits on open contracts exceed 5% of the market value of its
total assets. Further, a 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, a
Fund may not enter into stock index futures contracts and options to the extent
that the value of such contracts would exceed 20% of the Fund's total net assets
and may not purchase put options to the extent that more than 5% of the value of
the Fund's total assets would be invested in premiums on open put option
positions.

The Growth and Income, Strategic Equity and Small Cap Value 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.

As one way of managing their exposure to different types of investments, the
Growth and Income, Strategic Equity and Small Cap Value 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

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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 of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an agreed
upon level, while the seller of an interest rate floor is obligated to make
payments to the extent that a specified interest 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 a Fund's investment exposure from one
type of investment to another. For example, if a 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 a Fund's
investments and its share price and yield.

Swap agreements are sophisticated hedging instruments that typically involve
a small investment of cash relative to the magnitude of risks assumed. As a
result, swaps can be highly volatile and may have a considerable impact on the
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 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 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, which may be any fixed
number of days from the date of the contract, and at a specified price.
Typically, the other party to a currency exchange contract will be a commercial
bank or other financial institution.

Forward foreign currency exchange contracts also allow a Fund to hedge the
currency risk of portfolio securities denominated in a foreign currency. This
technique permits the assessment of the merits of a security to be considered
separately from the currency risk. By separating the asset and the currency
decision, it is possible to focus on the opportunities presented by the security
apart from the currency risk. Although forward foreign currency exchange
contracts are of short duration, generally between one and twelve months, such
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

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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.

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

The Funds may enter into foreign currency hedging transactions in an attempt
to protect against changes in foreign currency exchange rates between the trade
and settlement dates of specific securities transactions or changes in foreign
currency exchange rates that would adversely affect a portfolio position or an
anticipated portfolio position. Since consideration of the prospect for currency
parities will be incorporated into a Fund's long-term investment decisions, the
Funds will not routinely enter into foreign currency hedging transactions with
respect to portfolio security transactions; however, it is important to have the
flexibility to enter into foreign currency hedging transactions when it is
determined that the transactions would be in 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.

AMERICAN, EUROPEAN AND GLOBAL DEPOSITORY RECEIPTS

Each Fund may invest in ADRs and EDRs. The Growth and Income, Strategic
Equity, International Equity and Small Cap Value Funds 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 Securities."

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

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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.

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.

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
Fund, should it invest in mortgage-backed securities, may be affected by
reinvestment of prepayments at higher or lower rates than the original
investment.

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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--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.

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 the 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.

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.

Convertible bonds and convertible preferred stocks 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

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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 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. 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
shares will assist the Fund in achieving its investment objective. Otherwise, a
Fund will hold or trade the convertible securities. In selecting convertible
securities for a Fund, 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 Growth and Income and Small Cap Value Funds may invest in convertible
bonds rated "BB" or higher by S&P or Fitch IBCA, or "Ba" or higher by Moody's at
the time of investment. Securities rated "BB" by S&P or Fitch IBCA 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
higher-rated, lower-yielding bonds. Fleet will attempt to reduce the risks
described above through diversification of each Fund's 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 its 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 of S&P, Moody's
and Fitch IBCA is contained in Appendix A to this Statement of Additional
Information.

WHEN-ISSUED AND DELAYED SETTLEMENT TRANSACTIONS--GROWTH AND INCOME, STRATEGIC
EQUITY, INTERNATIONAL EQUITY AND SMALL CAP VALUE FUNDS

The Growth and Income, Strategic Equity, International Equity and Small Cap
Value Funds may purchase eligible securities on a "when-issued" basis. The
Growth and Income, Strategic Equity and Small Cap Value 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

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<PAGE>
purchase similar securities at later dates. The Funds may realize short-term
profits or losses upon the sale of such commitments.

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.

RESTRICTED AND ILLIQUID SECURITIES

Each Fund may invest in commercial paper issued in reliance on the exemption
from registration afforded by Section 4(2) of the Securities Act of 1933, as
amended (the "1933 Act"). Section 4(2) commercial paper is restricted as to
disposition under federal securities law and is generally sold to institutional
investors, such as the 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 Funds through or with
the assistance of the issuer or investment dealers who make a market in Section
4(2) commercial paper, thus providing liquidity. The 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 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 Fleet), as liquid and not
subject to the investment limitation applicable to illiquid securities. In
addition, because Section 4(2) commercial paper is liquid, the Funds do not
intend to subject such paper to the limitation applicable to restricted
securities.

Rule 144A under the 1933 Act 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 (15% with respect to the Growth and
Income, Small Cap Value and Strategic Equity Funds) on purchases of illiquid
instruments described under "Investment Limitations" below, 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.

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 may determine that it is
appropriate for the Fund to 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 ("SEC").

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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 in the realization of
substantial net capital gains; distributions derived from such gains will be
treated as ordinary income for federal income tax purposes.

INVESTMENT LIMITATIONS

In addition to each Fund's investment objective as stated in its
Prospectuses, 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").

The Asset Allocation, Equity Income, Strategic Equity, Equity Value, Equity
Growth, International Equity and Small Company Equity Funds may not:

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

2. Borrow money or issue senior securities, except 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 Asset Allocation, Equity Income, Strategic Equity, Equity Growth,
International Equity and Small Company Equity 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 Asset Allocation, Equity
Income, Strategic Equity, Equity Growth, International Equity and Small
Company Equity 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, Asset Allocation and Strategic
Equity 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% (15% with respect to the Strategic Equity Fund)
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.

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<PAGE>
5. 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. 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.

7. 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.

8. 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 (i) the Asset Allocation, Equity Income,
Equity Value, Equity Growth, International Equity and Small Company Equity
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, and (ii) the Strategic Equity Fund may
engage in transactions involving financial futures contracts or options on
financial futures contracts.

9. Invest in or sell put options, call options, straddles, spreads, or
any combination thereof; provided, however, that each of the Asset
Allocation, Equity Income, Equity Value, Equity Growth, International Equity
and Small Company Equity Funds 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 (i)
the Asset Allocation, Equity Income, Equity Growth, International Equity and
Small Company Equity Funds may purchase put and call options to the extent
permitted by their investment objectives and policies, and (ii) the
Strategic Equity Fund may buy and sell options, including without limit
buying or writing puts and calls, based on any type of security, index or
currency, including options on foreign exchanges and options not traded on
exchanges.

10. Invest in companies for the purpose of exercising management or
control.

11. 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; and further provided, that the Strategic
Equity Fund may from time to time, on a temporary basis, invest exclusively
in one other investment company similar to the Fund.

The Growth and Income and Small Cap Value Funds may not:

12. 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.

13. 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.

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14. Sell any securities short or purchase any securities on margin, but
each Fund may obtain such short-term credits as may be necessary for the
clearance of purchases and sales of portfolio securities. A deposit or
payment by a 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.

15. 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 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.

16. 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
its total assets at the time of purchase. For purposes of this limitation,
the following will not be deemed to be pledges of a 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.

17. 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.

18. Purchase or sell commodities, commodity contracts, or commodity
futures contracts except to the extent that a Fund may engage in
transactions involving financial futures contracts or options on financial
futures contracts.

19. 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.

20. Lend any of its assets except that a Fund may lend portfolio
securities up to one-third the value of its total assets. This limitation
shall not prevent a 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.

21. With respect to securities comprising 75% of the value of its total
assets, purchase securities issued by any one issuer (other than cash, cash
items, or securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase agreements
collateralized by such securities) if, as a result, more than 5% of the
value of its total assets would be invested in the securities of that
issuer. A Fund will not acquire more than 10% of the outstanding voting
securities of any one issuer.

22. 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, a 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.

26
<PAGE>
The following investment policies with respect to the Growth and Income and
Small Cap Value Funds may be changed by Galaxy's Board of Trustees without
shareholder approval. Shareholders will be notified before any material change
in these limitations become effective:

23. The 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).

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

The 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 a Fund in
shares of another investment company would be subject to such duplicate
expenses.

25. Neither 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.

26. Neither Fund may purchase or sell interests in oil, gas, or mineral
exploration or development programs or leases; except that the Funds may
purchase the securities of issuers which invest in or sponsor such programs.

27. Neither 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.

28. Neither Fund may write call options on securities, unless the
securities are held in the Fund's portfolio or unless the Fund is entitled
to them in deliverable form without further payment or after segregating
cash in the amount of any further payment. Neither Fund may write call
options in excess of 5% of the value of its total assets.

29. Neither 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.

30. Neither 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.

31. Neither 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.

32. Neither Fund may invest in companies for the purpose of exercising
management or control.

33. Neither 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.

27
<PAGE>
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 Asset Allocation, Equity Income, Strategic Equity, Equity Growth,
International Equity and Small Company Equity 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 Growth and Income and Small Cap Value 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.

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 generally will not constitute a violation of the
limitation.

VALUATION OF PORTFOLIO SECURITIES

VALUATION OF THE ASSET ALLOCATION, EQUITY INCOME, GROWTH AND INCOME,
STRATEGIC EQUITY, EQUITY VALUE, EQUITY GROWTH, SMALL CAP VALUE AND SMALL COMPANY
EQUITY FUNDS

In determining market value, the assets in the Asset Allocation, Equity
Income, Growth and Income, Strategic Equity, Equity Value, Equity Growth, Small
Cap Value and Small Company Equity 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 these Funds.

VALUATION OF THE INTERNATIONAL EQUITY FUND

In determining market value, 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

28
<PAGE>
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 may 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
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.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

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,
Westborough, Massachusetts 01581. FD Distributors has agreed to use appropriate
efforts to solicit all purchase orders.

This Statement of Additional Information provides additional purchase and
redemption information for Trust Shares, Retail A Shares and Retail B Shares of
the Funds. Purchase and redemption information for A Prime Shares and B Prime
Shares of the Funds is provided in a separate prospectus and statement of
additional information.

PURCHASES OF RETAIL A SHARES AND RETAIL B SHARES

GENERAL

Investments in Retail A Shares of the Funds are subject to a front-end sales
charge. Investments in Retail B Shares of the 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 A Shares and Retail B Shares (collectively,
"Retail Shares") of the Funds. Retail Shares 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. Retail Shares may
also be purchased by FIS 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. Purchases 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.

Galaxy has authorized certain brokers to accept purchase, exchange and
redemption orders on behalf of Galaxy with respect to Retail A Shares of the
Funds. Such brokers are authorized to designate other intermediaries to accept
purchase, exchange and redemption orders on behalf of Galaxy. Galaxy will be

29
<PAGE>
deemed to have received a purchase, exchange or redemption order when such an
authorized broker or designated intermediary accepts the order. Orders for the
purchase, exchange or redemption of Retail A Shares of the Funds accepted by any
such authorized broker or designated intermediary will be effected at the Funds'
respective net asset values per share next determined after acceptance of such
order and will not be subject to the front-end sales charge with respect to
Retail A Shares described in the applicable Prospectus and in this Statement of
Additional Information.

CUSTOMERS OF INSTITUTIONS

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

OTHER PURCHASE INFORMATION

On a Business Day when the New York Stock Exchange (the "Exchange") closes
early due to a partial holiday or otherwise, Galaxy will advance the time at
which purchase orders must be received in order to be processed on that Business
Day.

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 as described in the applicable Prospectus. A deferred sales charge
of up to 1.00% is assessed on certain redemptions of Retail A Shares that are
purchased with no initial sales charge as part of an investment of $500,000 or
more. A portion of the front-end sales charge may be reallowed to broker-dealers
as follows:

<TABLE>
<CAPTION>
REALLOWANCE TO
DEALERS
-----------------
AS A % OF
OFFERING PRICE
AMOUNT OF TRANSACTION PER SHARE
- -------------------------------------------------------------------- -----------------
<S> <C>
Less than $50,000................................................... 3.25
$50,000 but less than $100,000...................................... 3.00
$100,000 but less than $250,000..................................... 2.50
$250,000 but less than $500,000..................................... 2.00
$500,000 and over................................................... 0.00
</TABLE>

The appropriate reallowance to dealers will be paid by FD Distributors to
broker-dealer organizations which have entered into 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. In addition to the sales
charge waivers described in the

30
<PAGE>
applicable Prospectus, no sales charge is assessed on purchases of Retail A
Shares of the Funds by the following categories of investors or in the following
types of transactions:

- purchases by directors, officers and employees 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 current and retired members of Galaxy's Board of Trustees and
members of their immediate families;

- purchases by officers, directors, employees and retirees of Fleet
Financial Group, Inc. and any of its affiliates and members of their
immediate families;

- purchases by officers, directors, employees and retirees of First Data
Corporation and any of its affiliates and members of their immediate
families;

- purchases by persons who are also plan participants in any employee
benefit plan which is the record or beneficial holder of Trust Shares of
the Funds or any of the other portfolios offered by Galaxy;

- purchases by institutional investors, including but not limited to bank
trust departments and registered investment advisers;

- purchases by clients of investment advisers or financial planners who
place trades for their own accounts if such accounts are linked to the
master accounts of such investment advisers or financial planners on the
books of the broker-dealer through whom Retail A Shares are purchased;

- purchases by institutional clients of broker-dealers, including retirement
and deferred compensation plans and the trusts used to fund these plans,
which place trades through an omnibus account maintained with Galaxy by
the broker-dealer; and

- purchases prior to July 1, 1999 by former deposit customers of financial
institutions (other than registered broker-dealers) acquired by Fleet
Financial Group, Inc. in February 1998.

31
<PAGE>
COMPUTATION OF OFFERING PRICE--RETAIL A SHARES

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, 1998 and the maximum front-end sales charge of
3.75%, is as follows:

<TABLE>
<CAPTION>
ASSET EQUITY
ALLOCATION FUND INCOME FUND
--------------- --------------
<S> <C> <C>
Net Assets....................................................................... $ [_____] $ [_____]
Outstanding Shares............................................................... [_____] [_____]
Net Asset Value Per Share........................................................ $ [_____] $ [_____]
Sales Charge (3.75% of the offering price)....................................... $ [_____] $ [_____]
Offering Price to Public......................................................... $ [_____] $ [_____]
</TABLE>

<TABLE>
<CAPTION>
GROWTH AND STRATEGIC
INCOME FUND EQUITY FUND
--------------- --------------
<S> <C> <C>
Net Assets....................................................................... $ [_____] $ [_____]
Outstanding Shares............................................................... [_____] [_____]
Net Asset Value Per Share........................................................ $ [_____] $ [_____]
Sales Charge (3.75% of the offering price)....................................... $ [_____] $ [_____]
Offering Price to Public......................................................... $ [_____] $ [_____]
</TABLE>

<TABLE>
<CAPTION>
EQUITY EQUITY
VALUE FUND GROWTH FUND
--------------- --------------
<S> <C> <C>
Net Assets....................................................................... $ [_____] $ [_____]
Outstanding Shares............................................................... [_____] [_____]
Net Asset Value Per Share........................................................ $ [_____] $ [_____]
Sales Charge (3.75% of the offering price)....................................... $ [_____] $ [_____]
Offering Price to Public......................................................... $ [_____] $ [_____]
</TABLE>

<TABLE>
<CAPTION>
INTERNATIONAL SMALL CAP
EQUITY FUND VALUE FUND
--------------- --------------
<S> <C> <C>
Net Assets....................................................................... $ [_____] $ [_____]
Outstanding Shares............................................................... [_____] [_____]
Net Asset Value Per Share........................................................ $ [_____] $ [_____]
Sales Charge (3.75% of the offering price)....................................... $ [_____] $ [_____]
Offering Price to Public......................................................... $ [_____] $ [_____]
</TABLE>

<TABLE>
<CAPTION>
SMALL COMPANY
EQUITY FUND
--------------
<S> <C>
Net Assets........................................................................................ $ [_____]
Outstanding Shares................................................................................ [_____]
Net Asset Value Per Share......................................................................... $ [_____]
Sales Charge (3.75% of the offering price)........................................................ $ [_____]
Offering Price to Public.......................................................................... $ [_____]
</TABLE>

QUANTITY DISCOUNTS

Investors 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 investor does not wish to make an investment of a size that
would normally qualify for a quantity discount.

32
<PAGE>
In order to obtain quantity discount benefits, an investor must notify FD
Distributors 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 an
investor's holdings through a check of appropriate records. For more information
about quantity discounts, please contact FD Distributors or your financial
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 an investor'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, an investor 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, an investor 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 an investor 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.

First Data Investor Services Group, Inc. ("Investor Services Group"),
Galaxy's administrator, 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
an investor does not purchase the full amount indicated in the Letter of Intent.
The escrow will be released when the investor 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 the
investor's total purchases. If total purchases are less than the amount
specified, the investor 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, Investor Services Group, 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 an investor to purchase the full amount indicated
at the sales charge in effect at the time of signing, but an investor must
complete the intended purchase in accordance with the terms of the Letter of
Intent to obtain the reduced sales charge. To apply, an investor 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.

33
<PAGE>
price equal to the net asset value next determined after Galaxy's transfer agent
receives a reinstatement request and payment in proper form.

Investors wishing to exercise this Privilege must submit a written
reinstatement request to Investor Services Group as transfer agent stating that
the investor is eligible to use the Privilege. The reinstatement request and
payment must be received within 90 days of the trade date of the redemption.
Currently, there are no restrictions on the number of times an investor may use
this Privilege.

Generally, exercising the Reinstatement Privilege will not affect the
character of any gain or loss realized on redemptions for federal income tax
purposes. However, if a redemption results in a loss, the reinstatement may
result in the loss being disallowed under the Code's "wash sale" rules.

GROUP SALES. Members of qualified groups may purchase Retail A Shares of
the Funds at the following group sales rates:

<TABLE>
<CAPTION>
REALLOWANCE TO
TOTAL SALES CHARGE DEALERS
-------------------------------------- -----------------
AS A % OF AS A % OF
OFFERING PRICE AS A % OF NET ASSET OFFERING PRICE
NUMBER OF QUALIFIED GROUP MEMBERS PER SHARE VALUE PER SHARE PER SHARE
- ------------------------------------------------------------------ ----------------- ------------------- -----------------
<S> <C> <C> <C>
50,000 but less than 250,000...................................... 3.00 3.09 3.00
250,000 but less than 500,000..................................... 2.75 2.83 2.75
500,000 but less than 750,000..................................... 2.50 2.56 2.50
750,000 and over.................................................. 2.00 2.04 2.00
</TABLE>

To be eligible for the discount, a group must meet the requirements set
forth below and be approved in advance as a qualified group by FD Distributors.
To receive the group sales charge rate, group members must purchase Retail A
Shares directly from FD Distributors in accordance with any of the procedures
described in the applicable Prospectus. Group members must also ensure that
their qualified group affiliation is identified on the purchase application.

A qualified group is a group that (i) has at least 50,000 members, (ii) was
not formed for the purpose of buying Fund shares at a reduced sales charge,
(iii) within one year of the initial member purchase, has at least 1% of its
members invested in the Funds or any of the other investment portfolios offered
by Galaxy, (iv) agrees to include Galaxy sales material in publications and
mailings to members at a reduced cost or no cost, and (v) meets certain other
uniform criteria. FD Distributors may request periodic certification of group
and member eligibility. FD Distributors reserves the right to determine whether
a group qualifies for a quantity discount and to suspend this offer at any time.

APPLICABLE SALES CHARGE--RETAIL B SHARES

The public offering price for Retail B Shares of the Funds is the net asset
value of the Retail B Shares purchased. Although investors 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 an investor's Retail B Shares. In addition, a
contingent deferred sales

34
<PAGE>
charge will not be assessed on Retail B Shares purchased through reinvestment of
dividends or capital gains distributions.

The proceeds from the contingent deferred sales charge that an investor 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. In addition to the sales charge exemptions described in the applicable
Prospectus, the contingent deferred sales charge with respect to Retail B Shares
is not assessed on: (i) 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 Code; (ii) 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; (iii) 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; (iv) 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; (v) redemptions resulting from a tax-free
return of an excess contribution pursuant to Section 408(d)(4) or (5) of the
Code; or (vi) any redemption of Retail B Shares held by an investor, provided
the investor 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. In addition to the foregoing exemptions, no contingent
deferred sales charge will be imposed on redemptions made pursuant to the
Systematic Withdrawal Plan, subject to the limitations set forth under "Investor
Programs--Retail A Shares and Retail B Shares--Automatic Investment Program and
Systematic Withdrawal Plan" below.

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.
An investor should understand that the purpose and function of the sales charge
structures and shareholder servicing/distribution arrangements for both Retail A
Shares and Retail B Shares are the same.

Retail A Shares of the Funds are sold at their net asset value plus a
front-end sales charge of up to 3.75%. This front-end sales charge may be
reduced or waived in some cases. See the applicable Prospectus and "Applicable
Sales Charges--Retail A Shares" and "Quantity Discounts" above. Retail A Shares
of a Fund are currently subject to ongoing shareholder servicing fees at an
annual rate of up to .30% of the Fund's average daily net assets attributable to
its Retail A Shares.

Retail B Shares of the 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 the applicable Prospectus and
"Applicable Sales Charges--Retail B Shares" above. 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.

35
<PAGE>
investor 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 Charge--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 an investor 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 investor'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 Funds, investors
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.

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. Investors expecting to redeem during this six-year period should
compare the cost of the contingent deferred sales charge plus the aggregate
distribution and shareholder servicing fees on Retail B Shares 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.

36
<PAGE>
PURCHASES OF TRUST SHARES

Trust Shares are sold to investors maintaining qualified accounts at bank
and trust institutions, including subsidiaries of Fleet Financial Group, Inc.,
and to participants in employer-sponsored defined contribution plans (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. 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 ("Trust Business Days"). If an Institution accepts a purchase order
from its Customer on a non-Trust Business Day, the order will not be executed
until it is received and accepted by FD Distributors on a Trust Business Day in
accordance with the foregoing procedures.

Trust Shares of the International Equity Fund may also be sold to clients,
members and employees of Oechsle.

On a Trust Business Day when the Exchange closes early due to a partial
holiday or otherwise, Galaxy will advance the time at which purchase orders must
be received in order to be processed on that Trust Business Day.

REDEMPTION OF RETAIL A SHARES, RETAIL B SHARES
AND TRUST SHARES

Redemption orders are effected at the net asset value per share next
determined after receipt of the order by FD Distributors. On a Business Day or
Trust Business Day when the Exchange closes early due to a partial holiday or
otherwise, Galaxy will advance the time at which redemption orders must be
received in order to be processed on that Business Day or Trust Business Day.
Galaxy may require any information reasonably necessary to ensure that a
redemption has been duly authorized. Proceeds from the redemptions of Retail B
Shares of the 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.

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

Galaxy may 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 SEC exists making disposal of a Fund's
investments or determination of its net asset value not reasonably practicable;
(b) the Exchange is closed (other than customary weekend and holiday closings);
or (c) the SEC by order has permitted such suspension.

INVESTOR PROGRAMS--RETAIL A SHARES AND RETAIL B SHARES

The following information supplements the description in the applicable
Prospectus as to the various Investor Programs available to holders of Retail
Shares of the Funds.

EXCHANGE PRIVILEGE

37
<PAGE>
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 Government
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, investors
should call Investor Services Group at 1-877-BUY-GALAXY (1-877-289-4252).
Customers of institutions should call their institution for such information.
Investors exercising the exchange privilege into other portfolios should request
and review these portfolios' prospectuses prior to making an exchange. Telephone
1-877-BUY-GALAXY (1-877-289-4252) for a prospectus or to make an exchange.

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.

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.

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 traditional, Roth and
Education IRAs and "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 RETIREMENT PLANS ("MERPS"), a retirement vehicle established
by employers for their employees which is qualified under Section 401(k) and
403(b) of the 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 in the applicable
Prospectus. Detailed information concerning eligibility and other matters
related to these plans and the form of application is available from FD
Distributors (call 1-877-BUY-GALAXY (1-877-289-4252)) with respect to IRAs, SEPs
and Keogh Plans and from Fleet Securities, Inc. (call 1-800-221-8210) with
respect to MERPs.

38
<PAGE>
AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN

The Automatic Investment Program permits an investor to purchase Retail
Shares of a Fund each month or each quarter. Provided an investor's financial
institution allows automatic withdrawals, Retail Shares are purchased by
transferring funds from the 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 Shares will be purchased, on a
monthly or quarterly basis, on any Business Day designated by the 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 ("ACH")
member may be so designated.

The Systematic Withdrawal Plan permits an investor to automatically redeem
Retail Shares on a monthly, quarterly, semi-annual, or annual basis on any
Business Day designated by the investor. 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 Investor Services Group,
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. No contingent deferred sales
charge will be assessed on redemptions of Retail B Shares made through the
Systematic Withdrawal Plan that do not exceed 12% of an account's net asset
value on an annualized basis. For example, monthly, quarterly and semi-annual
Systematic Withdrawal Plan redemptions of Retail B Shares will not be subject to
the contingent deferred sales charge if they do not exceed 1%, 3% and 6%,
respectively, of an account's net asset value on the redemption date. Systematic
Withdrawal Plan redemptions of Retail B Shares in excess of this limit are still
subject to the applicable contingent deferred sales charge.

PAYROLL DEDUCTION PROGRAM

To be eligible for the Payroll Deduction Program, the payroll department of
an investor's employer must have the capability to forward transactions directly
through the ACH, or indirectly through a third party payroll processing company
that has access to the ACH. An 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 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. An 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

Galaxy reserves the right to redeem accounts participating in the College
Investment 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. Investors participating in the College Investment Program
will receive consolidated monthly statements of their accounts. Detailed
information concerning College Investment Program accounts and applications may
be obtained from FD Distributors (call 1-877-BUY-GALAXY (1-877-289-4252)).

DIRECT DEPOSIT PROGRAM

39
<PAGE>
Security Administration. Further, Galaxy may terminate an investor's
participation upon 30 days' notice to the investor.

TAXES

Each Fund qualified during its last taxable year and intends to continue to
qualify as a regulated investment company under Subchapter M of the Code, and to
distribute out its income to shareholders each year, so that each Fund itself
generally will be relieved of federal income and excise taxes. If a Fund were to
fail to so qualify: (1) the Fund would be taxed at regular corporate rates
without any deduction for distributions to shareholders; and (2) shareholders
would be taxed as if they received ordinary dividends, although corporate
shareholders could be eligible for the dividends received deduction.

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

The Funds will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or gross sale proceeds paid to
any shareholder who (i) has failed to provide a correct tax identification
number, (ii) is subject to backup withholding due to prior 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."

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.

TAXATION OF CERTAIN FINANCIAL INSTRUMENTS

The tax principles applicable to certain financial instruments and futures
contracts and options that may be acquired by a Fund are complex and, in some
cases, uncertain. Such investments may cause a Fund to recognize taxable income
prior to the receipt of cash, thereby requiring the Fund to liquidate other
positions, or to borrow money, so as to make sufficient distributions to
shareholders to avoid corporate-level tax. Moreover, some or all of the taxable
income recognized may be ordinary income or short-term capital gain, so that the
distributions may be taxable to shareholders as ordinary income.

40
<PAGE>
TRUSTEES AND OFFICERS

The business and affairs of the Funds are managed under the direction of
Galaxy's Board of Trustees in accordance with the laws of the Commonwealth of
Massachusetts and the Trust's Declaration of Trust. The trustees and executive
officers of Galaxy, their addresses, principal occupations during the past five
years, and other affiliations are as follows:

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
POSITIONS WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE GALAXY FUND AND OTHER AFFILIATIONS
- --------------------------------------- ---------------- ------------------------------------------------------
<S> <C> <C>
Dwight E. Vicks, Jr. .................. Chairman & President & Director, Vicks Lithograph & Printing
Vicks Lithograph & Trustee Corporation (book manufacturing and commercial
Printing Corporation printing); Director, Utica Fire Insurance Company;
Commercial Drive Trustee, Savings Bank of Utica; Director, Monitor Life
P.O. Box 270 Insurance Company; Director, Commercial Travelers
Yorkville, NY 13495 Mutual Insurance Company; Trustee, The Galaxy VIP
Age 65 Fund; Trustee, Galaxy Fund II.

John T. O'Neill(1) .................... President, Executive Vice President and CFO, Hasbro, Inc. (toy
Hasbro, Inc. Treasurer & and game manufacturer); Trustee, The Galaxy VIP Fund;
1011 Newport Avenue Trustee Trustee, Galaxy Fund II.
Pawtucket, RI 02862
Age 54

Louis DeThomasis ...................... Trustee President, Saint Mary's College
Saint Mary's College of Minnesota; Director, Bright Day Travel, Inc.;
of Minnesota Trustee, Religious Communities Trust; Trustee, The
Winona, MN 55987 Galaxy VIP Fund; Trustee, Galaxy Fund II.
Age 58

Donald B. Miller ...................... Trustee Chairman, Horizon Media, Inc. (broadcast services);
10725 Quail Covey Road Director/Trustee, Lexington Funds; Chairman, Executive
Boynton Beach, FL 33436 Committee, Compton International, Inc. (advertising
Age 73 agency); Trustee, Keuka College; Trustee, The Galaxy
VIP Fund; Trustee, Galaxy Fund II.

James M. Seed ......................... Trustee Chairman and President, The Astra Projects,
The Astra Ventures, Inc. Incorporated (land development); President, The Astra
One Citizens Plaza Ventures, Incorporated (previously, Buffinton Box
Providence, RI 02903 Company--manufacturer of cardboard boxes);
Age 57 Commissioner, Rhode Island Investment Commission;
Trustee, The Galaxy VIP Fund; Trustee, Galaxy Fund II.

Bradford S. Wellman(1) ................ Trustee Private Investor; Vice President and Director, Acadia
2468 Ohio Street Management Company (investment services); Director,
Bangor, ME 04401 Essex County Gas Company, until January 1994;
Age 67 Director, Maine Mutual Fire Insurance Co.; Member,
Maine Finance Authority; Trustee, The Galaxy VIP Fund;
Trustee, Galaxy Fund II.
</TABLE>

41
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
POSITIONS WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE GALAXY FUND AND OTHER AFFILIATIONS
- --------------------------------------- ---------------- ------------------------------------------------------
<S> <C> <C>
W. Bruce McConnel, III ................ Secretary Partner of the law firm Drinker Biddle & Reath LLP,
Philadelphia National Philadelphia, Pennsylvania.
Bank Building
1345 Chestnut Street.
Philadelphia, PA 19107
Age 56

Jylanne Dunne ......................... Vice President Vice President, First Data Investor Services Group,
First Data Investor Services and Assistant Inc., 1990 to present.
Group, Inc. Treasurer
4400 Computer Drive
Westborough, MA 01581-5108
Age 39

William Greilich ...................... Vice President Vice President, First Data Investor Services Group,
First Data Investor Services Inc., 1991-96; Vice President and Division Manager,
Group, Inc. First Data Investor Services Group, Inc.,
4400 Computer Drive 1996-present.
Westborough, MA 01581-5108
Age 45
</TABLE>

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

(1) May be deemed to be an "interested person" within the definition set forth
in Section 2(a)(19) of the 1940 Act.

Effective March 5, 1998, each trustee receives an annual aggregate fee of
$40,000 for his services as a trustee of Galaxy, The Galaxy VIP Fund ("Galaxy
VIP") and Galaxy Fund II ("Galaxy II") (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 $750 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. Prior to March 5,
1998, (i) each trustee received an annual aggregate fee of $29,000 for his
services as a trustee of 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 Board meeting, and (ii) the President and Treasurer of the Trusts
received the same fees as they are currently paid for their services in these
capacities.

Effective March 1, 1996, each trustee became 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.

42
<PAGE>
No employee of Investor Services Group, receives any compensation from
Galaxy for acting as an officer. No person who is an officer, director or
employee of Fleet or Oechsle, 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.

<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS TOTAL COMPENSATION
AGGREGATE ACCRUED AS PART FROM GALAXY AND
COMPENSATION FROM OF FUND FUND COMPLEX *PAID
NAME OF PERSON/POSITION GALAXY EXPENSES TO TRUSTEES
- -------------------------------------------------------- ------------------ --------------- -------------------
<S> <C> <C> <C>
Bradford S. Wellman ....................................
Trustee [_____] None [_____]

Dwight E. Vicks, Jr. ...................................
Chairman and Trustee [_____] None [_____]

Donald B. Miller** .....................................
Trustee [_____] None [_____]

Rev. Louis DeThomasis ..................................
Trustee [_____] None [_____]

John T. O'Neill ........................................
President, Treasurer and Trustee [_____] None [_____]

James M. Seed** ........................................
Trustee [_____] None [_____]
</TABLE>

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

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

** Deferred compensation (including interest) in the amounts of [_______] and
[_______] accrued during Galaxy's fiscal year ended October 31, 1998 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.

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.

43
<PAGE>
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.

INVESTMENT ADVISER AND SUB-ADVISER

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" below.

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 0.75% of the average daily net assets of each Fund other than
the International Equity Fund. For the services provided and the 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
0.95% of the next $50 million of such assets, plus 0.85% of net assets in excess
of $100 million.

During the last three fiscal years, Galaxy paid advisory fees (net of fee
waivers and/or expense reimbursements) to Fleet as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
--------------------------------------------
FUND 1998 1997 1996
- ------------------------------------------------------------------- ------------- ------------ ---------------
<S> <C> <C> <C>
Asset Allocation................................................... $ [_____] $ 2,313,863 $ 1,447,310
Equity Income...................................................... $ [_____] $ 1,947,792 $ 1,533,644
Growth and Income.................................................. $ [_____] $ 2,361,898 $ 1,690,599(1)
Strategic Equity................................................... $ [_____](2) * *
Equity Value....................................................... $ [_____] $ 2,860,410 $ 2,220,230
Equity Growth...................................................... $ [_____] $ 6,555,045 $ 4,746,270
International Equity(3)............................................ $ [_____] $ 1,844,037 $ 1,154,303
Small Cap Value.................................................... $ [_____] $ 1,370,449 $ 1,079,665(1)
Small Company Equity............................................... $ [_____] $ 2,610,431 $ 1,562,481
</TABLE>

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

* Not in operation during the period.

(1) For the period from December 4, 1995 through October 31, 1996. For the
period from November 1, 1995 to December 3, 1995, the Predecessor Growth and
Income Fund and the Predecessor Small Cap Value Fund paid $207,833 and
$128,152, respectively, to Shawmut Bank, N.A., the investment adviser to
such Predecessor Funds.

(2) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998. Fleet waived advisory fees of $[_________] with respect to
the Strategic Equity Fund during this period.

(3) For the fiscal years ended October 31, 1998, October 31, 1997, and October
31, 1996, Fleet waived advisory fees of $[______], $682,009 and $464,938,
respectively, with respect to the International Equity Fund.

44
<PAGE>
During the last three fiscal years, Fleet reimbursed expenses as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
------------------------------------
FUND 1998 1997 1996
- --------------------------------------------------------------------------- ------------- ---------- ---------
<S> <C> <C> <C>
Asset Allocation........................................................... $ [_____] $ 19,254 $ 12,512
Equity Income.............................................................. $ [_____] $ 38,298 $ 0
Growth and Income.......................................................... $ [_____] $ 306,295 $ 99,656
Strategic Equity........................................................... $ [_____](1) * *
Equity Value............................................................... $ [_____] $ 26,294 $ 2,347
Equity Growth.............................................................. $ [_____] $ 27,033 $ 9,296
International Equity....................................................... $ [_____] $ 18,362 $ 0
Small Cap Value Funds...................................................... $ [_____] $ 103,101 $ 63,394
Small Company Equity....................................................... $ [_____] $ 118,118 $ 331
</TABLE>

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

* Not in operation during the period.

(1) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

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.

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 liability company with principal offices
at One International Place, Boston, Massachusetts 02210, as the sub-adviser to
the International Equity Fund. The managing member of Oechsle is Oechsle Group,
LLC. Fleet Financial Group, Inc. owns approximately a 35% non-voting interest in
Oechsle. As of December 31, 1998, Oechsle had discretionary management authority
over approximately $[____] billion in assets.

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. Oechsle will provide

45
<PAGE>
services under this agreement in accordance with the Fund's investment
objectives, policies and restrictions. Unless sooner terminated by Fleet or the
Board of Trustees upon sixty days' written notice or by Oechsle upon ninety
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 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 fiscal years ended October 31, 1998 and October 31, 1997 and for the
period from August 12, 1996 through October 31, 1996, Oechsle and /or its
predecessor, Oechsle International Advisors, L.P., received sub-advisory fees of
$[_______], $979,810 and $119,374, respectively, with respect to the
International Equity Fund. Prior to August 12, 1996, Wellington Management
Company served as sub-adviser to the International Equity Fund. For the period
from November 1, 1995 through August 11, 1996, Wellington Management Company
received sub-advisory fees of $431,198 with respect to the International Equity
Fund.

Fleet and Oechsle are authorized to allocate purchase and sale orders for
portfolio securities to certain financial institutions, including, to the extent
permitted by law or order of the SEC, financial institutions that are affiliated
with Fleet or Oechsle or that have sold shares of the Funds, if Fleet or
Oechsle, as the case may be, believes that the quality of the transaction and
the commission are comparable to what they would be with other qualified
brokerage firms.

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

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

46
<PAGE>
average daily net assets of the Funds and the other portfolios offered by Galaxy
with an October 31 fiscal year end, computed daily and paid monthly, at the
following annual rates, effective September 10, 1998:

<TABLE>
<CAPTION>
COMBINED AVERAGE DAILY NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- -------------
<S> <C>
Up to $2.5 billion.............................................................. 0.090%
From $2.5 to $5 billion......................................................... 0.085%
From $5 to $12 billion.......................................................... 0.075%
From $12 to $15 billion......................................................... 0.065%
From $15 to $18 billion......................................................... 0.060%
Over $18 billion................................................................ 0.0575%
</TABLE>

Prior to September 10, 1998, Galaxy paid Investor Services Group
administration fees based on the combined average daily net assets of the Funds
and all other portfolios offered by Galaxy at the following annual rates:

Investor Services Group also receives a separate annual fee from each Galaxy
portfolio for certain fund accounting services.

From time to time, Investor Services Group may waive voluntarily all or a
portion of the administration fees payable to it by the Funds. For the fiscal
year ended October 31, 1998, each Fund paid Investor Services Group
administration fees at the effective annual rate of [___]% of such Fund's
average daily net assets. During the last three fiscal years, Investor Services
Group received administration fees (net of fee waivers) as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
--------------------------------------
FUND 1998 1997 1996
- ----------------------------------------- ----------- --------- ------------
<S> <C> <C> <C>
Asset Allocation......................... $[_____] $ 253,881 $ 163,060
Equity Income............................ $[_____] $ 216,835 $ 174,406
Growth and Income........................ $[_____] $ 290,324 $ 203,187(1)
Strategic Equity......................... $[_____](2) * *
Equity Value............................. $[_____] $ 314,236 $ 249,569
Equity Growth............................ $[_____] $ 716,320 $ 532,514
International Equity..................... $[_____] $ 222,620 $ 141,571
Small Cap Value.......................... $[_____] $ 160,350 $ 129,102(1)
Small Company Equity..................... $[_____] $ 222,620 $ 137,000
</TABLE>

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

* Not in operation during the period.

(1) For the period from December 4, 1995 through October 31, 1996. For the
period from November 1, 1995 to December 3, 1995, Federated Administrative
Services, a subsidiary of Federated Investors, served as administrator of
the Predecessor Funds and earned the following administrative fees:
Predecessor Growth and Income Fund, $31,175, none of which was voluntarily
waived; and Predecessor Small Cap Value Fund, $19,223, none of which was
voluntarily waived.

(2) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

47
<PAGE>
During the last three fiscal years, Investor Services Group waived
administration fees as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
OCTOBER 31:
-----------------------------
FUND 1998 1997 1996
- --------------------------------------------------- --------- ------- -------
<S> <C> <C> <C>
Asset Allocation................................... $[___] $ 0 $ 2,010
Equity Income...................................... $[___] $ 0 $ 0
Growth and Income.................................. $[___] $ 0 $ 0
Strategic Equity................................... $[___](1) * *
Equity Value....................................... $[___] $ 0 $ 1,640
Equity Growth...................................... $[___] $ 0 $ 4,360
International Equity............................... $[___] $ 0 $ 0
Small Cap Value.................................... $[___] $ 0 $ 0
Small Company Equity............................... $[___] $ 0 $ 4,570
</TABLE>

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

* Not in operation during the period.

(1) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

Under the administration agreement between Galaxy and Investor Services
Group (the "Administration Agreement"), Investor Services Group 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. Investor Services Group prepares
the Funds' annual and semi-annual reports to the SEC, 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. Unless otherwise terminated, the Administration Agreement
will remain in effect until May 1, 2001 and thereafter will continue from year
to year upon annual approval of Galaxy's Board of Trustees.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("Chase Manhattan"), located at One 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 pursuant to
a Global Custody Agreement. Chase Manhattan may employ sub-custodians for the
Funds for the purpose of providing custodial services for the Funds' foreign
assets held outside the United States.

Under the Global 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 also serves as Galaxy's "foreign custody manager" (as
that term is defined in Rule 17f-5 under the 1940 Act) and in such capacity
employs sub-custodians for the Funds for the purpose of providing custodial
services for the foreign assets of those Funds held outside the U.S. The assets
of the Funds are held under bank custodianship in compliance with the 1940 Act.

48
<PAGE>
Investor Services Group, a wholly-owned subsidiary of First Data
Corporation, serves as the Funds' transfer and dividend disbursing agent
pursuant to a Transfer Agency and Services Agreement (the "Transfer Agency
Agreement"). Communications to Investor Services Group should be directed to
Investor Services Group at P.O. Box 5108, 4400 Computer Drive, Westborough,
Massachusetts 01581. Under the Transfer Agency Agreement, Investor Services
Group 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.

Investor Services Group may enter into agreements with one or more entities,
including affiliates of Fleet, pursuant to which such entities agree to perform
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. Such entities are compensated by Investor Services
Group for the Sub-Account Services and in connection therewith the transfer
agency fees payable by Trust Shares of the Funds to Investor Services Group 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.

EXPENSES

Fleet and Investor Services Group bear all expenses in connection with the
performance of their services for the Funds, except that 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
Investor Services Group); 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 (if applicable), 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.

PORTFOLIO TRANSACTIONS

Fleet or Oechsle will select specific portfolio investments and effect
transactions for the Funds. Fleet seeks to obtain the best net price and the
most favorable execution of orders. Fleet or Oechsle may, in its discretion,
effect transactions in portfolio securities with dealers who provide research
advice or other services to the Funds, Fleet or Oechsle. Fleet or Oechsle is
authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for any Fund which
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if Fleet or Oechsle determines in good
faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed in

49
<PAGE>
terms of either that particular transaction or Fleet or Oechsle's overall
responsibilities to the particular Fund and to Galaxy. Such brokerage and
research services might consist of reports and statistics relating to specific
companies or industries, general summaries of groups of stocks or bonds and
their comparative earnings and yields, or broad overviews of the stock, bond and
government securities markets and the economy. The fees under the investment
advisory agreements between Galaxy and Fleet and Fleet and Oechsle are not
reduced by reason of receiving such brokerage and research services. The Board
of Trustees will periodically review the commissions paid by the Funds to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits inuring to the Funds.

During the fiscal year ended October 31, 1998, the Funds paid soft dollar
commissions as shown below:

<TABLE>
<CAPTION>
FUND COMMISSIONS
- -------------------------------------------------------------------------------- ------------
<S> <C>
Asset Allocation................................................................ $[_______]
Equity Income................................................................... $[_______]
Growth and Income............................................................... $[_______]
Strategic Equity(1)............................................................. $[_______]
Equity Value.................................................................... $[_______]
Equity Growth................................................................... $[_______]
International Equity............................................................ $[_______]
Small Cap Value................................................................. $[_______]
Small Company Equity............................................................ $[_______]
</TABLE>

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

(1) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. There is generally no
stated commission in the case of securities traded in U.S. over-the-counter
markets, but the prices of those securities include undisclosed commissions or
mark-ups. 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. U.S.
Government Securities are generally purchased from underwriters or dealers,
although certain newly issued U.S. Government Securities may be purchased
directly from the U.S. Treasury or from the issuing agency or instrumentality.
No brokerage commissions are typically paid on purchases and sales of U.S.
Government Securities.

50
<PAGE>
The Funds paid brokerage commissions as shown in the table below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
--------------------------------------------
FUND 1998 1997 1996
- ------------------------------------- ------------- ----------- --------------
<S> <C> <C> <C>
Asset Allocation..................... $[_______] $ 155,296 $ 112,582
Equity Income........................ $[_______] $ 201,407 $ 217,231
Growth and Income.................... $[_______] $ 851,919 $ 398,181(1)
Strategic Equity..................... $[_______](2) * *
Equity Value......................... $[_______] $ 934,709 $ 790,862
Equity Growth........................ $[_______] $ 7,006,331 $ 539,416
International Equity................. $[_______] $ 851,919 $ 1,155,060
Small Cap Value...................... $[_______] $ 173,335 $ 118,396(1)
Small Company Equity................. $[_______] $ 354,910 $ 258,606
</TABLE>

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

* Not in operation during the period.

(1) For the period from December 4, 1995 through October 31, 1996.

(2) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

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. 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, Investor Services Group, 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, 1998, (1) the [____________] Fund held [____________] with a
value of $[____________]; (2) the [____________] Fund held [____________] with a
value of $[____________]; (3) the [____________] Fund held [____________] with a
value of $[____________]. [____________] and [____________] are considered
"regular brokers or dealers" of Galaxy.

Investment decisions for each Fund are made independently from those for the
other Funds and portfolios of Galaxy 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 Galaxy's other Funds
and portfolios, or other investment companies or accounts in order to obtain
best execution.

SHAREHOLDER SERVICES PLAN

51
<PAGE>
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.

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
Statement of Additional Information, Galaxy has entered 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. As of October 31, 1998,
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.

During the last three fiscal years, Galaxy made payments to Service
Organizations with respect to Retail A Shares as shown in the table below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
--------------------------------------
FUND 1998 1997 1996
- ------------------------------------------- ----------- --------- ------------
<S> <C> <C> <C>
Asset Allocation........................... $[_____] $ 412,384 $ 267,695
Equity Income.............................. $[_____] $ 434,674 $ 309,334
Growth and Income.......................... $[_____] $ 324,069 $ 154,838(1)
Strategic Equity........................... $[_____](2) * *
Equity Value............................... $[_____] $ 440,920 $ 331,670
Equity Growth.............................. $[_____] $ 558,695 $ 356,642
International Equity....................... $[_____] $ 102,465 $ 79,239
Small Cap Value............................ $[_____] $ 130,739 $ 79,503(1)
Small Company Equity....................... $[_____] $ 287,068 $ 172,887
</TABLE>

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

* Not in operation during the period.

(1) For the period from December 4, 1995 through October 31, 1996.

(2) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

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,

52
<PAGE>
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 pursuant to Rule 12b-1
under the 1940 Act (the "Rule") with respect to Retail B Shares of the Funds
(the "12b-1 Plan"). Under the 12b-1 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 12b-1 Plan, 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 each 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 each 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.

Payments for distribution expenses under the 12b-1 Plan are subject to the
Rule. The Rule defines distribution expenses to include the cost of "any
activity which is primarily intended to result in the sale of shares issued by"
Galaxy. 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

53
<PAGE>
related agreements (the "12b-1 Trustees"), by vote cast in person at a meeting
called for the purpose of considering such amendments.

During the last three fiscal years, Retail B Shares of the Funds bore the
following distribution fees under the 12b-1 Plan:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
FUND 1998 1997 1996
- ------------------------------------------------ --------- --------- --------
<S> <C> <C> <C>
Asset Allocation................................ $ [____] $ 99,219 $ 6,389(1)
Equity Income................................... * * *
Growth and Income............................... $ [____] $ 122,300 $ 7,070(1)
Strategic Equity................................ $ [____](2) ** **
Equity Value.................................... $ [____] $ 50,897 $ 3,518(1)
Equity Growth................................... $ [____] $ 75,906 $ 7,613(1)
International Equity............................ * * *
Small Cap Value................................. * * *
Small Company Equity............................ $ [____] $ 55,371 $ 7,282(1)
</TABLE>

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

* The Equity Income, International Equity and Small Cap Value Funds did not
offer Retail B Shares until November 1, 1998.

** Not in operation during the period.

(1) For the period from March 4, 1996 (initial public offering date) through
October 31, 1996.

(2) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

During the last three fiscal years, Retail B Shares of the Funds bore the
following shareholder servicing fees under the 12b-1 Plan:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
FUND 1998 1997 1996
- -------------------------------------------- ----------- -------- -------
<S> <C> <C> <C>
Asset Allocation............................ $ [____] $ 44,293 $ 2,949(1)
Equity Income............................... * * *
Growth and Income........................... $ [____] $ 54,046 $ 3,263(1)
Strategic Equity............................ $ [____](2) ** **
Equity Value................................ $ [____] $ 21,199 $ 1,624(1)
Equity Growth............................... $ [____] $ 34,034 $ 3,514(1)
International Equity........................ * * *
Small Cap Value............................. * * *
Small Company Equity........................ $ [____] $ 23,556 $ 3,361(1)
</TABLE>

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

* The Equity Income, International Equity and Small Cap Value Funds did not
offer Retail B Shares until November 1, 1998.

** Not in operation during the period.

(1) For the period from March 4, 1996 (initial public offering date) through
October 31, 1996.

(2) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

All amounts paid under the 12b-1 Plan for these periods were attributable to
payments to broker-dealers.

54
<PAGE>
majority of the 12b-1 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 12b-1 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 the 12b-1 Trustees.

DISTRIBUTOR

FD Distributors, a wholly-owned subsidiary of Investor Services Group,
serves as Galaxy's distributor. On March 31, 1995, Investor Services Group
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 between Galaxy and
FD Distributors remains in effect until May 31, 1999, 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
Prospectus and this Statement of Additional Information. During the last three
fiscal years, FD Distributors received front-end sales charges in connection
with Retail A Share purchases as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
------------------------------------------
FUND 1998 1997 1996
- --------------------------------------------------------------------- ------------- ------------ -------------
<S> <C> <C> <C>
Asset Allocation..................................................... $ [___] $ 1,010,359 $ 283,218(1)
Equity Income........................................................ $ [___] $ 592,347 $ 310,366(1)
Growth and Income.................................................... $ [___] $ 988,216 $ 279,670(2)
Strategic Equity..................................................... $ [___](3) * *
Equity Value......................................................... $ [___] $ 451,771 $ 115,099(1)
Equity Growth........................................................ $ [___] $ 491,165 $ 221,387(1)
International Equity................................................. $ [___] $ 320,935 $ 41,596(1)
Small Cap Value...................................................... $ [___] $ 300,152 $ 34,022(2)
Small Company Equity................................................. $ [___] $ 343,614 $ 241,805(1)
</TABLE>

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

* Not in operation during the period.

(1) For the period from December 1, 1995 (date of imposition of sales charges on
Retail A Shares) through October 31, 1996.

(2) For the period from December 4, 1995 through October 31, 1996.

(3) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

FD Distributors retained none of the amounts shown in the table above.

55
<PAGE>
FD Distributors is also entitled to the payment of contingent deferred sales
charges upon the redemption of Retail B Shares of the Funds. During the last
three fiscal years, FD Distributors received contingent deferred sales charges
in connection with Retail B Share redemptions as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
--------------------------------------
FUND 1998 1997 1996
- ---------------------------------------------------------------------- ------------- --------- ------------
<S> <C> <C> <C>
Asset Allocation...................................................... $ [___] $ 57,559 $ 4,687(1)
Equity Income......................................................... * * *
Growth and Income..................................................... $ [___] $ 49,278 $ 2,815(1)
Strategic Equity...................................................... $ [___](2) ** **
Equity Value.......................................................... $ [___] $ 21,384 $ 1,517(1)
Equity Growth......................................................... $ [___] $ 28,379 $ 7,662(1)
International Equity.................................................. * * *
Small Cap Value....................................................... * * *
Small Company Equity.................................................. $ [___] $ 34,481 $ 3,507(1)
</TABLE>

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

* The Equity Income, International Equity and Small Cap Value Funds did not
offer Retail B Shares until November 1, 1998.

** Not in operation during the period.

(1) For the period from March 4, 1996 (initial public offering) through October
31, 1996.

(2) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

FD Distributors retained none of the amounts shown in the table above.

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, 1998:

<TABLE>
<CAPTION>
BROKERAGE
NET UNDERWRITING COMPENSATION ON COMMISSIONS IN
DISCOUNTS AND REDEMPTION AND CONNECTION WITH OTHER
FUND COMMISSIONS(1) REPURCHASE(2) FUND TRANSACTIONS COMPENSATION(3)
- ----------------------------------------- ---------------- ---------------- --------------------- ----------------
<S> <C> <C> <C> <C>
Asset Allocation......................... $ [____] $ [____] $ 0 $ [____]
Equity Income............................ $ [____] $ [____] $ 0 $ [____]
Growth and Income........................ $ [____] $ [____] $ 0 $ [____]
Strategic Equity(4)...................... $ [____] $ [____] $ 0 $ [____]
Equity Value............................. $ [____] $ [____] $ 0 $ [____]
Equity Growth............................ $ [____] $ [____] $ 0 $ [____]
International Equity..................... $ [____] $ [____] $ 0 $ [____]
Small Cap Value.......................... $ [____] $ [____] $ 0 $ [____]
Small Company Equity..................... $ [____] $ [____] $ 0 $ [____]
</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 during the fiscal year ended October 31,
1998, which includes fees accrued in the fiscal year ended October 31, 1997,
which were paid in 1998 (see "Shareholder Services Plan" and "Distribution
and Services Plan" above).

56
<PAGE>
(4) For the period from March 4, 1998 (commencement of operations) through
October 31, 1998.

AUDITORS

[_____________________________] , independent certified public accountants,
with offices at [__________________________] , 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 [___________________________] into this Statement of Additional
Information for the respective fiscal periods ended October 31 of each calendar
year have been audited by [_________________________] for the periods included
in their report thereon which appears therein.

COUNSEL

PERFORMANCE AND YIELD INFORMATION

Investment returns and principal values will vary with market conditions so
that an investor's 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.

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

YIELD = 2[(a-b)/cd +1 )(TO THE POWER OF 6) - 1]

<TABLE>
<S> <C> <C>
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.
</TABLE>

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)

57
<PAGE>
account size. Undeclared earned income will be subtracted from the offering
price per share (variable "d" in the formula).

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

Based on the foregoing calculation, the standard yields for Retail A Shares,
Retail B Shares and Trust Shares of the Funds for the 30-day period ended
October 31, 1998 were as set forth below:

<TABLE>
<CAPTION>
FUND RETAIL A RETAIL B TRUST
- ------------------------------------------------------------------ ----------- ----------- ---------
<S> <C> <C> <C>
Asset Allocation.................................................. [__]% [__]% [__]%
Equity Income..................................................... [__]% [__]% [__]%
Growth and Income................................................. [__]% [__]% [__]%
Strategic Equity.................................................. [__]% [__]% [__]%
Equity Value...................................................... [__]% [__]% [__]%
Equity Growth..................................................... [__]% [__]% [__]%
International Equity.............................................. [__]% [__]% [__]%
Small Cap Value................................................... [__]% [__]% [__]%
Small Company Equity.............................................. [__]% [__]% [__]%
</TABLE>

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:

T = [(ERV/P) - 1](TO THE POWER OF 1/n)

<TABLE>
<S> <C> <C>
Where: T = average annual total return;

ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 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.
</TABLE>

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:

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

58
<PAGE>
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 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 purchases of Retail A Shares
or redemptions of Retail B Shares, as the case may be.

The aggregate total returns for Retail A Shares, Retail B Shares and Trust
Shares (as applicable) of the Funds from the date of initial public offering to
October 31, 1998 are set forth below:

<TABLE>
<CAPTION>
FUND RETAIL A(1) RETAIL B TRUST
- ---------------------------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
Asset Allocation.................................... (2) (3) (2)
Equity Income....................................... (4) * (4)
Growth and Income................................... (5) (3) (6)
Strategic Equity(7).................................
Equity Value........................................ (8) (3) (8)
Equity Growth....................................... (4) (3) (4)
International Equity................................ (2) * (2)
Small Company Equity................................ (2) (3) (2)
Small Cap Value..................................... (5) * (6)
</TABLE>

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

* The Equity Income, International Equity and Small Cap Value Funds did not
offer Retail B Shares until November 1, 1998.

(1) On September 7, 1995, Retail Shares of the Funds were redesignated "Retail A
Shares."

(2) For the period from December 30, 1991 (initial public offering date) through
October 31, 1998.

(3) For the period from March 4, 1996 (initial public offering date) through
October 31, 1998.

(4) For the period from December 14, 1990 (initial public offering date) through
October 31, 1998.

(5) For the period from February 12, 1993 through October 31, 1998. The
Predecessor Growth and Income Fund and Predecessor Small Cap Value Fund
began offering Investment Shares, which were similar to Retail A Shares, on
February 13, 1993.

(6) For the period from December 14, 1992 (initial public offering date) through
October 31, 1998. The Predecessor Growth and Income Fund and Predecessor
Small Cap Value Fund commenced operations on December 14, 1992, and
initially offered Trust Shares, which were similar to Galaxy Trust Shares.

(7) For the period from March 4, 1998 (initial public offering date) through
October 31, 1998.

(8) For the period from September 1, 1988 (initial public offering date) through
October 31, 1998.

59
<PAGE>
The average annual total returns for Retail A Shares, Retail B Shares and
Trust Shares of the Funds for the one-year, five-year and ten-year periods (as
applicable) ended October 31, 1998 are as set forth below:
<TABLE>
<CAPTION>
RETAIL A RETAIL B
------------------------------------- -------------------------------------
FUND ONE- YEAR FIVE- YEAR TEN- YEAR ONE- YEAR FIVE- YEAR TEN- YEAR
- --------------------------------------------------- ----- ----- --- ----- ----- ---
<S> <C> <C> <C> <C> <C> <C>
Asset Allocation................................... [_]% [_]% * [_]% * *
Equity Income...................................... [_]% [_]% * ** ** **
Growth and Income.................................. [_]% [_]% * [_]% * *
Strategic Equity................................... * * * * * *
Equity Value....................................... [_]% [_]% [_]% [_]% * *
Equity Growth...................................... [_]% [_]% * [_]% * *
International Equity............................... [_]% [_]% * ** ** **
Small Cap Value.................................... [_]% [_]% * ** ** **
Small Company Equity............................... [_]% [_]% * [_]% * *

<CAPTION>
TRUST
-------------------------------------
FUND ONE- YEAR FIVE- YEAR TEN- YEAR
- --------------------------------------------------- ----- ----- ---
<S> <C> <C> <C>
Asset Allocation................................... [_]% [_]% *
Equity Income...................................... [_]% [_]% *
Growth and Income.................................. [_]% [_]% *
Strategic Equity................................... * * *
Equity Value....................................... [_]% [_]% [_]%
Equity Growth...................................... [_]% [_]% *
International Equity............................... [_]% [_]% *
Small Cap Value.................................... [_]% [_]% *
Small Company Equity............................... [_]% [_]% *
</TABLE>

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

* Not offered during the full period.

** The Equity Income, International Equity and Small Cap Value Funds did not
offer Retail B Shares until November 1, 1998.

PERFORMANCE REPORTING

From time to time, in advertisements or in reports to shareholders, the
performance of the Funds may be quoted and compared to that 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 Index, 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 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 of the Funds. Performance data will be
calculated separately for Trust Shares, Retail A Shares, Retail B Shares, A
Prime Shares and B Prime Shares of the Funds.

The Funds may also advertise their performance using "average annual total
return" figures 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 and
are calculated as described above. 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

60
<PAGE>
sales load for Retail A Shares of the Funds and the applicable contingent
deferred sales charge for Retail B Shares of the 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 SEC. Quotations that do not reflect
the sales charges will be higher than quotations that do reflect the sales
charges.

The performance of the Funds will fluctuate and any quotation of performance
should not be considered as representative of the 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 data 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 performance calculations.

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

As used in this Statement of Additional Information, "assets belonging to" a
particular Fund or series of a Fund means the consideration received by Galaxy
upon the issuance of shares in that particular Fund or 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.

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

A "vote of the holders of a majority of the outstanding shares" of a
particular Fund or a particular series of shares in a Fund 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 such Fund or such series of shares, or (b) 67% or more of
the shares of such Fund or such series of shares present at a meeting if more
than 50% of the outstanding shares of such Fund or such series of shares are
represented at the meeting in person or by proxy.

As of January [__], 1999, 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 Government Money Market Fund) were as follows: [_________].

61
<PAGE>
As of January [__], 1999, 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: [_________].

As of January [__], 1999, 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: [_________].

FINANCIAL STATEMENTS

Galaxy's Annual Report to Shareholders with respect to the Funds for the
fiscal year ended October 31, 1998 has been filed with the SEC. The financial
statements in such Annual Report (the "Financial Statements") are [__________]
into this Statement of Additional Information. The Financial Statements included
in the Annual Report for the Funds for the fiscal year ended October 31, 1998
have been audited by Galaxy's independent accountants, [__________], whose
report thereon also appears in such Annual Report and is [__________]. The
Financial Statements in such Annual Report have been [__________] in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.

62
<PAGE>
APPENDIX A

DESCRIPTION OF SECURITIES RATINGS

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

CORPORATE AND TAX-EXEMPT BOND RATINGS

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

The five highest ratings of Fitch IBCA 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 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

A-1
<PAGE>
economic conditions which could lead 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 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.

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.

Fitch IBCA'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 IBCA 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.

A-2
<PAGE>
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 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

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 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

A-3
<PAGE>
protection commonly regarded as required of an investment security and not
distinctly or predominantly speculative.

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

A-4
<PAGE>
APPENDIX B

As stated above, the Growth and Income, Strategic 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.

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-

B-1
<PAGE>
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"). Fleet 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 Fleet 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.

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.

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

Fleet 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.

B-2
<PAGE>
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 liquid portfolio securities, 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 the broker.
At any time prior to expiration of the futures contract, Fleet 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 Growth
and Income, Strategic Equity and Small Cap Value 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

B-3
<PAGE>
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 te market, the market may advance and
the value of instruments held in the Fund may decline. If this occurred, the
Fund would lose money on the futures and also experience a decline in value in
its portfolio securities.

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

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

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

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

B-4
<PAGE>
Successful use of futures by the Funds is also subject to Fleet'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-5
<PAGE>
THE GALAXY FUND
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 28, 1999
GALAXY SHORT-TERM BOND FUND
GALAXY INTERMEDIATE GOVERNMENT INCOME FUND
GALAXY HIGH QUALITY BOND FUND
RETAIL A SHARES, RETAIL B SHARES AND
TRUST SHARES
GALAXY CORPORATE BOND FUND
TRUST SHARES

The Galaxy Fund
c/o First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581-5108

or by calling 1-877-BUY-GALAXY (1-877-289-4252).

CURRENT PROSPECTUSES
- -------------------

- Prospectus for Retail A Shares and Retail B Shares of the Short-Term Bond,
Intermediate Government Income and High Quality Bond Funds dated February
28, 1999

- Prospectus for Trust Shares of the Funds dated February 28, 1999

The financial statements included in the Annual Report and the report
thereon of [____________________], The Galaxy Funds' independent accountants,
are [_______________] into this Statement of Additional Information.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION....................................................... 1
DESCRIPTION OF GALAXY AND ITS SHARES...................................... 1
INVESTMENT STRATEGIES, POLICIES AND RISKS................................. 3
Short-Term Bond Fund.................................................... 3
Intermediate Government Income Fund..................................... 4
High Quality Bond Fund.................................................. 4
Corporate Bond Fund..................................................... 5
Special Risk Considerations............................................. 5
Foreign Securities...................................................... 5
Ratings................................................................. 6
Other Investment Policies and Risk Considerations....................... 6
Variable and Floating Rate Obligations.................................. 6
U.S. Government Obligations and Money Market Instruments................ 6
Municipal Securities.................................................... 8
Stand-by Commitments.................................................... 9
Repurchase and Reverse Repurchase Agreements............................ 10
Securities Lending...................................................... 10
Investment Company Securities........................................... 11
Derivative Securities................................................... 11
When-Issued, Forward Commitment and Delayed Settlement Transactions..... 13
Asset-Backed Securities................................................. 13
Mortgage-Backed Securities.............................................. 14
Mortgage Dollar Rolls................................................... 15
Stripped Obligations.................................................... 15
Guaranteed Investment Contracts......................................... 16
Bank Investment Contracts............................................... 16
Zero Coupon Bonds....................................................... 16
Portfolio Turnover...................................................... 16
INVESTMENT LIMITATIONS.................................................... 17
VALUATION OF PORTFOLIO SECURITIES......................................... 18
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................ 19
Purchases of Retail Shares and Trust Shares of the Corporate Bond
Fund.................................................................. 19
General................................................................. 19
Customers of Institutions............................................... 20
Other Purchase Information.............................................. 20
Applicable Sales Charge--Retail A Shares................................ 20
Computation of Offering Price--Retail A Shares.......................... 21
Quantity Discounts...................................................... 22
Applicable Sales Charge--Retail B Shares................................ 24
Characteristics of Retail A Shares and Retail B Shares.................. 24
Factors to Consider When Selecting Retail A Shares or Retail B Shares... 25
</TABLE>

i
<PAGE>
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Purchases of Trust Shares............................................... 26
Redemption of Retail A Shares, Retail B Shares and Trust Shares......... 26
INVESTOR PROGRAMS--RETAIL A SHARES AND RETAIL B SHARES.................... 27
Exchange Privilege...................................................... 27
Retirement Plans........................................................ 27
Automatic Investment Program and Systematic Withdrawal Plan............. 28
Payroll Deduction Program............................................... 28
College Investment Program.............................................. 29
Direct Deposit Program.................................................. 29
TAXES..................................................................... 29
Taxation of Certain Financial Instruments............................... 29
TRUSTEES AND OFFICERS..................................................... 30
Shareholder and Trustee Liability....................................... 32
INVESTMENT ADVISER........................................................ 33
Authority to Act as Investment Adviser.................................. 34
ADMINISTRATOR............................................................. 34
CUSTODIAN AND TRANSFER AGENT.............................................. 35
EXPENSES.................................................................. 36
PORTFOLIO TRANSACTIONS.................................................... 37
SHAREHOLDER SERVICES PLAN................................................. 37
DISTRIBUTION AND SERVICES PLAN............................................ 38
DISTRIBUTOR............................................................... 40
AUDITORS.................................................................. 41
COUNSEL................................................................... 41
PERFORMANCE AND YIELD INFORMATION......................................... 41
Performance Reporting................................................... 44
MISCELLANEOUS............................................................. 45
FINANCIAL STATEMENTS...................................................... 46
APPENDIX A................................................................ A-1
APPENDIX B................................................................ B-1
</TABLE>

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GENERAL INFORMATION

This Statement of Additional Information should be read in conjunction with
a current Prospectus. This Statement of Additional Information relates to the
Prospectuses for Trust Shares of the four Funds listed on the cover page and
Retail A Shares and Retail B Shares of each of the Short-Term Bond, Intermediate
Government Income and High Quality Bond Funds. The Corporate Bond Fund is
authorized to offer Retail A Shares and Trust Shares but currently offers only
Trust Shares. The Short-Term Bond, Intermediate Government Income and High
Quality Bond Funds also offer A Prime Shares and B Prime Shares, which are
described in a separate statement of additional information and related
prospectus. This Statement of Additional Information is incorporated by
reference in its entirety into the Prospectuses. No investment in shares of the
Funds should be made without reading a Prospectus.

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 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 an
unlimited number of shares in each of the series in the Funds as follows: Class
D shares (Trust Shares), Class D--Special Series 1 shares (Retail A Shares),
Class D shares--Special Series 2 shares (Retail B Shares), Class D
shares--Special Series 3 shares, (A Prime Shares) and Class D shares--Special
Series 4 shares (B Prime Shares), each series representing interests in the
Intermediate Government Income Fund; Class J--Series 1 shares (Trust Shares),
Class J--Series 2 shares (Retail A Shares), Class J-- Series 3 shares (Retail B
Shares), Class J--Series 4 shares (A Prime Shares) and Class J--Series 5 shares
(B Prime Shares), each series representing interests in the High Quality Bond
Fund; Class L--Series 1 shares (Trust Shares), Class L--Series 2 shares (Retail
A Shares), Class L--Series 3 shares (Retail B Shares), Class L--Series 4 shares
(A Prime Shares) and Class L--Series 5 shares (B Prime Shares), each series
representing interests in the Short-Term Bond Fund; and Class T--Series 1 shares
(Trust Shares) and Class T--Series 2 shares (Retail A Shares), each series
representing interests in the Corporate Bond Fund.

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Each Fund is classified as a diversified company under the Investment Company
Act of 1940, as amended (the "1940 Act").

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.
Each series of shares (I.E., Retail A Shares, Retail B Shares, Trust Shares, A
Prime Shares and B Prime Shares) bear pro rata the same expenses and are
entitled equally to a Fund's dividends and distributions except as follows. Each
series will bear the expenses of any distribution and/or shareholder servicing
plans applicable to such series. For example, as described below, holders of
Retail A Shares will bear the expenses of the Shareholder Services Plan for
Retail A Shares and Trust Shares (which is currently applicable only to Retail A
Shares) and holders of Retail B Shares will bear the expenses of the
Distribution and Services Plan for Retail B Shares. In addition, each series may
incur differing transfer agency fees and may have differing sales charges.
Standardized yield and total return quotations are computed separately for each
series of shares. The differences in expenses paid by the respective series will
affect their performance. See "Shareholder Services Plan" and "Distribution and
Services Plan" below.

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 each series of a Fund would be solely responsible for the Fund's
payments under any distribution and/or shareholder servicing plan applicable to
such series.

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 shares of a
particular series of a Fund will be entitled to vote on matters submitted to a
vote of shareholders pertaining to any distribution and/or shareholder servicing
plan for such series (E.G., 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 an investment
objective or a fundamental investment policy would be effectively acted upon
with respect to a Fund only if approved by a majority of the outstanding shares
of such Fund (irrespective of series designation). However, the Rule also
provides that the ratification of the appointment of independent public
accountants, the approval of principal underwriting contracts, and the election
of trustees may be effectively acted upon by shareholders of Galaxy voting
without regard to class or series.

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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.
Voting rights are not cumulative and, accordingly, the holders of more than 50%
in the aggregate of Galaxy's outstanding shares may elect all of the trustees,
irrespective of the votes of other shareholders.

INVESTMENT STRATEGIES, POLICIES AND RISKS

Fleet Investment Advisors Inc. ("Fleet"), the Funds' investment adviser,
will use its best efforts to achieve each Fund's investment objective, although
such achievement cannot be assured. The investment objective of a Fund as
described in its Prospectus(es) 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. The following investment strategies, policies and risks supplement
those set forth in the Funds' Prospectuses.

SHORT-TERM BOND FUND

In addition to its primary investment strategies and policies as described
in its Prospectuses, the Short-Term Bond 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. See "Other
Investment Policies and Risk Consideration-Municipal Securities" below. The Fund
may also enter into interest rate futures contracts to hedge against changes in
market values. See "Other Investment Policies and Risk
Considerations--Derivative Securities" below. 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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Debt obligations rated in the lowest of the four highest rating categories
assigned by Standard & Poor's Rating Group ("S&P") ("BBB") or Moody's Investors
Service, Inc. ("Moody's") ("Baa") (or which, if unrated, are determined by Fleet
to be of comparable quality) 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. 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. See Appendix A to
this Statement of Additional Information for a description of S&P's and Moody's
rating categories.

The obligations of foreign banks and obligations issued or guaranteed by
foreign governments or any of their political subdivisions or instrumentalities
in which the Fund may invest 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, which 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.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Short-Term Bond
Fund.

INTERMEDIATE GOVERNMENT INCOME FUND

In addition to its primary investment strategies and policies as described
in its Prospectuses, the Intermediate Government Income Fund may also invest,
from time to time, in municipal securities. See "Other Investment Policies and
Risk Considerations--Municipal Securities" below. The Fund may also enter into
interest rate futures contracts to hedge against changes in market values. See
"Other Investment Policies and Risk Considerations--Derivative Securities"
below. In addition, the Fund may invest in obligations issued by Canadian
Provincial Governments and in debt obligations of supranational entities. The
Fund may also invest in dollar-denominated high quality debt obligations of U.S.
corporations issued outside the United States. Any common stock received through
the conversion of convertible debt obligations will be sold in an orderly manner
as soon as possible.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the Intermediate
Government Income Fund and Appendix A to this Statement of Additional
Information for a description of S&P's and Moody's rating categories.

HIGH QUALITY BOND FUND

In addition to its primary investment strategies and policies as described
in its Prospectuses, the High Quality Bond Fund may also invest, from time to
time, in municipal securities. See "Other Investment Policies and Risk
Considerations--Municipal Securities" below. The Fund may 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--Derivative Securities" below. The
Fund may also invest in obligations issued by Canadian Provincial Governments
and in debt obligations of supranational entities. The Fund may also invest in
dollar-denominated high quality debt

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obligations of U.S. corporations issued outside the United States. Any common
stock received through the conversion of convertible debt obligations will be
sold in an orderly manner as soon as possible.

See "Other Investment Policies and Risk Considerations" below for
information regarding additional investment policies of the High Quality Bond
Fund. See "Short-Term Bond Fund" above for a description of the risks associated
with the Fund's investments in debt obligations that are rated in the lowest of
the four highest rating categories. See Appendix A to this Statement of
Additional Information for a description of S&P's and Moody's rating categories.

CORPORATE BOND FUND

In addition to its primary investment strategies and policies as described
in its Prospectus, the Corporate Bond 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 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. See "Other Investment Policies and Risk
Considerations--Municipal Securities" below. The Fund may enter into interest
rate futures contracts to hedge against changes in market values. See "Other
Investment Policies and Risk Considerations--Derivative Securities" below. The
Fund may also invest in "money market" instruments.

The value of convertible securities in which the Fund may invest fluctuates
in relation to changes in interest rates like bonds and, in addition, fluctuates
in relation to the underlying common stock. Any common stock received through
the conversion of convertible debt obligations will be sold in an orderly manner
as soon as possible.

The Fund may also 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--Foreign Securities" below.
The Fund will not invest more than 20% of its net 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.

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. See "Other Investment Policies and Risk Considerations--Derivative
Securities" below.

See "Short-Term Bond Fund" above for a description of the risks associated
with the Fund's investments in debt obligations that are rated in the lowest of
the four highest rating categories and Appendix A to this Statement of
Additional Information for a description of S&P's and Moody's rating categories.
See "Other Investment Policies and Risk Considerations" below for information
regarding additional investment policies of the Fund.

SPECIAL RISK CONSIDERATIONS

FOREIGN SECURITIES

Investments by the Short-Term Bond and Corporate Bond Funds 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

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<PAGE>
associated with currency exchange rates, less complete financial information
about the issuers, less market liquidity, and political instability. Future
political and economic developments, the possible imposition of withholding
taxes on interest income, the possible seizure or nationalization of foreign
holdings, the possible establishment of exchange controls, or the adoption of
other governmental restrictions, might adversely affect the payment of principal
and interest on foreign obligations.

Although the Short-Term Bond and Corporate Bond Funds may invest in
securities denominated in foreign currencies, the Funds value their securities
and other assets in U.S. dollars. As a result, the net asset value of the Funds'
shares may fluctuate with U.S. dollar exchange rates as well as with price
changes of the Funds' 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 Funds make their foreign investments could reduce the
effect of increases and magnify the effect of decreases in the price of the
Funds' 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 Funds'
foreign 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.

RATINGS

The Corporate Bond 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

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 the Prospectuses
and this Statement of Additional Information. If such an instrument is not
rated, Fleet 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. Long-term 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.

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.

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

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

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<PAGE>
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" below.

MUNICIPAL SECURITIES

The Funds may 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 (the "Code"), 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.

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

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

Each Fund's portfolio may also include "moral obligation" securities, which
are normally issued by special purpose public authorities. If the issuer of
moral obligation securities is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.

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 and S&P, described in
Appendix A to this Statement of Additional Information, represent such NRSRO's
opinion as to the quality of municipal securities. It should be emphasized that
these ratings are general and are not absolute standards of quality. Municipal
securities with the same maturity, interest rate and rating may have different
yields. Municipal securities of the same maturity and interest rate with
different ratings may have the same yield. Subsequent to its purchase by a Fund,
an issue of municipal securities may cease to be rated or its rating may be
reduced below the minimum rating required for purchase by the Fund.

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The payment of principal and interest on most municipal securities purchased
by the Funds will depend upon the ability of the issuers to meet their
obligations. Each state, the District of Columbia, each of their political
subdivisions, agencies, instrumentalities and authorities and each multistate
agency of which a state is a member is a separate "issuer" as that term is used
in this Statement of Additional Information. 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.

Among other instruments, the Funds may purchase short-term general
obligation notes, tax anticipation notes, bond anticipation notes, revenue
anticipation notes, tax-exempt commercial paper, construction loan notes and
other forms of short-term loans. Such instruments are issued with a short-term
maturity in anticipation of the receipt of tax funds, the proceeds of bond
placements or other revenues. In addition, the Funds may invest in long-term
tax-exempt instruments, such as municipal bonds and private activity bonds to
the extent consistent with the limitations set forth 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.

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% (15% with respect to the Corporate Bond Fund) limit described in
Investment Limitation No. 3 under "Investment Limitations" below.

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). Where a Fund pays any consideration

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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. Stand-by commitments acquired by a Fund would be valued at zero in
determining the Fund's net asset value.

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. 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.

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 upon notice of seven days or less, the
repurchase agreement will be considered an illiquid security and will be subject
to the 10% (15% with respect to the Corporate Bond Fund) limit described in
Investment Limitation No. 3 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 the Fund
might be delayed pending court action.

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 1940 Act.

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. Whenever a Fund enters into a reverse repurchase
agreement, it will place in a segregated custodial account liquid assets such as
cash or liquid portfolio 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.

SECURITIES LENDING

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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. 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 the Funds within the limits prescribed
by the 1940 Act. Each Fund currently intends to limit its investments so that,
as determined immediately after a securities purchase is made: (a) not more than
5% of the value of its total assets will be invested in the securities of any
one investment company; (b) not more than 10% of the value of its total assets
will be invested in the aggregate in securities of other investment companies as
a group; (c) not more than 3% of the outstanding voting stock of any one
investment company will be owned by the Fund; and (d) not more than 10% of the
outstanding voting stock of any one closed-end investment company will be owned
in the aggregate by the Funds, other investment portfolios of Galaxy, or any
other investment companies advised by Fleet.

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, interest rate futures, certain asset-backed and
mortgage-backed securities, certain zero coupon bonds and currency forward
contracts.

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 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.

INTEREST RATE FUTURES CONTRACTS. The Funds may enter into contracts (both
purchase 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

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("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 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 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 this Statement of Additional Information.

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

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

The 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 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.

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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 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.

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 adversely 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.

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.

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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.

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

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

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

SMBS are usually structured with two or more classes that receive different
proportions of the interest and principal distributions from a pool of
mortgage-backed obligations. A common type of SMBS will have one class receiving
all of the interest, while the other class will receive all of the principal.
However, in some instances, one class will receive some of the interest and most
of the principal while the other class will receive most of the interest and the
remainder of the principal. If the underlying obligations experience greater
than anticipated prepayments of principal, the Fund may fail to fully recoup its
initial investment in these securities. The market value of the class consisting
entirely of principal payments generally is extremely volatile in response to
changes in interest rates. The yields on a class of SMBS that receives all or
most of the interest are generally higher than prevailing market yields on other
mortgage-backed obligations because their cash flow patterns are more volatile
and there is a greater risk that the initial investment will not be fully
recouped. SMBS which are not issued by the U.S. Government (or a U.S. Government
agency or instrumentality) are considered illiquid 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.

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GUARANTEED INVESTMENT CONTRACTS

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

BANK INVESTMENT CONTRACTS

Each Fund 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% (15% with respect to the Corporate Bond Fund)
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

The Corporate Bond Fund may invest in zero coupon bonds. Zero coupon bonds
do not make interest payments; instead, they are sold at a deep discount from
their face value and are redeemed at face value when they mature. Because zero
coupon bonds do not pay current income, their prices can be very volatile when
interest rates change. In calculating its daily dividend, the Fund takes into
account as income a portion of the difference between a zero coupon bond's
purchase price and its face value.

A broker/dealer creates a derivative zero by separating the interest and
principal components of a U.S. Treasury security and selling them as two
individual securities. CATS (Certificates of Accrual on Treasury Securities),
TIGRs (Treasury Investment Growth Receipts), and TRs (Treasury Receipts) are
examples of derivative zeros.

The Federal Reserve Bank creates STRIPS (Separate Trading of Registered
Interest and Principal of Securities) by separating the interest and principal
components of an outstanding U.S. Treasury bond and selling them as individual
securities. Bonds issued by the Resolution Funding Corporation (REFCORP) and the
Financing Corporation (FICO) can also be separated in this fashion. Original
issue zeros are zero coupon securities originally issued by the U.S. Government,
a U.S. Government agency or a corporation in zero coupon form.

PORTFOLIO TURNOVER

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.

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INVESTMENT LIMITATIONS

In addition to each Fund's investment objective as stated in its
Prospectus(es), 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").

No Fund may:

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

2. Borrow money or issue senior securities, except 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. None of the Short-Term Bond,
Intermediate Government Bond or High Quality Bond Funds will purchase
securities while borrowings (including reverse repurchase agreements) in
excess of 5% of its total assets are outstanding.

3. Invest more than 10% (15% with respect to the Corporate Bond Fund)
of the value of its net assets in illiquid securities, including repurchase
agreements with remaining maturities in excess of seven days, time deposits
with maturities in excess of seven days, restricted securities,
non-negotiable time deposits and other securities which are not readily
marketable.

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

5. 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.

7. Purchase or sell real estate; except that each Fund may purchase
securities that are secured by real estate and may purchase securities of
issuers which deal in real estate or interests therein; however, the Funds
will not purchase or sell interests in real estate limited partnerships.

8. Purchase or sell commodities or commodity contracts or invest in
oil, gas, or other mineral exploration or development programs or mineral
leases; provided however, that each Fund may enter into interest rate
futures contracts to the extent permitted under the Commodity Exchange Act
and the 1940 Act; and further provided that the Short-Term Bond Fund and
Corporate Bond Fund 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.

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

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10. Invest in companies for the purpose of exercising management or
control.

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

In addition to the above limitations:

12. 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 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.

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) 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.

Rule 144A under the Securities Act of 1933, as amended, (the "1933 Act")
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
10% (15% with respect to the Corporate Bond Fund) 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.

VALUATION OF PORTFOLIO SECURITIES

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

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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.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

This Statement of Additional Information provides additional purchase and
redemption information for Trust Shares of the Funds and Retail A Shares and
Retail B Shares of the Tax-Exempt Bond, Intermediate Government Income and High
Quality Bond Funds. Purchase and redemption information for A Prime Shares and B
Prime Shares of the Short-Term Bond, Intermediate Government Income and High
Quality Bond Funds is provided in a separate prospectus and statement of
additional information.

PURCHASES OF RETAIL SHARES AND TRUST SHARES OF THE CORPORATE BOND FUND

GENERAL

Investments in Retail A Shares of the Short-Term Bond, Intermediate
Government Income and High Quality Bond Funds are subject to a front-end sales
charge. Investments in Retail B Shares of such 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 A Shares and Retail B Shares of the Short-Term
Bond, Intermediate Government Income and High Quality Bond Funds (collectively,
"Retail Shares"). These procedures also apply to purchases of Trust Shares of
the Corporate Bond Fund, in addition to the purchase information described below
under "Purchases of Trust Shares." Retail Shares and Trust Shares of the
Corporate Bond Fund 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. Retail Shares and Trust Shares of the
Corporate Bond Fund may also be purchased by FIS 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. Purchases 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.

Galaxy has authorized certain brokers to accept purchase, exchange and
redemption orders on behalf of Galaxy with respect to Retail A Shares of the
Short-Term Bond, Intermediate Government Income and High Quality Bond Funds.
Such brokers are authorized to designate other intermediaries to accept
purchase, exchange and redemption orders on behalf of Galaxy. Galaxy will be
deemed to have received a purchase, exchange or redemption order when such an
authorized broker or designated intermediary accepts the order. Orders for
purchase, exchange or redemption of Retail A Shares of the Short-Term Bond,
Intermediate Government Income and High Quality Bond Funds accepted by any such
authorized broker or designated intermediary will be effected at the Funds'
respective net asset values per share next determined after acceptance of such
order and will not be subject to the front-end sales charge with respect to
Retail A Shares described in the applicable Prospectus and in this Statement of
Additional Information.

19
<PAGE>
CUSTOMERS OF INSTITUTIONS

Retail Shares and Trust Shares of the Corporate Bond Fund purchased by
institutions on behalf of their customers will normally be held of record by the
institution and beneficial ownership of Retail Shares and Trust Shares of the
Corporate Bond Fund 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 and Trust Shares of the Corporate Bond
Fund. Depending on the terms of the arrangement between a particular institution
and Galaxy's transfer agent, confirmations of purchases and redemptions of
Retail Shares and Trust Shares of the Corporate Bond Fund 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 and Trust
Shares of the Corporate Bond Fund established by institutions in connection with
the requirements of their customer accounts may apply. Customers wishing to
purchase Retail Shares or Trust Shares of the Corporate Bond Fund through their
institution should contact such entity directly for appropriate purchase
instructions.

OTHER PURCHASE INFORMATION

On a Business Day when the New York Stock Exchange (the "Exchange') closes
early due to a partial holiday or otherwise, Galaxy will advance the time at
which purchase orders must be received in order to be processed on that Business
Day.

APPLICABLE SALES CHARGE--RETAIL A SHARES

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

20
<PAGE>
- purchases by current and retired members of Galaxy's Board of Trustees and
members of their immediate families;

- purchases by officers, directors, employees and retirees of Fleet
Financial Group, Inc. and any of its affiliates and members of their
immediate families;

- purchases by officers, directors, employees and retirees of First Data
Corporation and any of its affiliates and members of their immediate
families;

- purchases by institutional investors, including but not limited to bank
trust departments and registered investment advisers;

- purchases prior to July 1, 1999 by former deposit customers of financial
institutions (other than registered broker-dealers) acquired by Fleet
Financial Group, Inc. in February 1998.

COMPUTATION OF OFFERING PRICE--RETAIL A SHARES

<TABLE>
<CAPTION>
INTERMEDIATE
SHORT-TERM BOND GOVERNMENT
FUND INCOME FUND
--------------- --------------
<S> <C> <C>
Net Assets....................................................................... $ [______] $ [______]
Outstanding Shares............................................................... [______] [______]
Net Asset Value Per Share........................................................ $ [______] $ [______]
Sales Charge (3.75% of the offering price)....................................... $ [______] $ [______]
Offering Price to Public......................................................... $ [______] $ [______]
</TABLE>

<TABLE>
<CAPTION>
HIGH QUALITY CORPORATE BOND
BOND FUND FUND
--------------- --------------
<S> <C> <C>
Net Assets....................................................................... $ [______] $ [______]
Outstanding Shares............................................................... [______] [______]
Net Asset Value Per Share........................................................ $ [______] $ [______]
Sales Charge (3.75% of the offering price)....................................... $ [______] $ [______]
Offering Price to Public......................................................... $ [______] $ [______]
</TABLE>

QUANTITY DISCOUNTS

21
<PAGE>
In order to obtain quantity discount benefits, an investor must notify FD
Distributors 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 an
investor's holdings through a check of appropriate records. For more information
about quantity discounts, please contact FD Distributors or your financial
institution.

22
<PAGE>
with the terms of the Letter of Intent to obtain the reduced sales charge. To
apply, an investor must indicate his or her intention to do so under a Letter of
Intent at the time of purchase.

REINSTATEMENT PRIVILEGE. Investors 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.

GROUP SALES. Members of qualified groups may purchase Retail A Shares of
the Funds at the following group sales rates:

23
<PAGE>
APPLICABLE SALES CHARGE--RETAIL B SHARES

CHARACTERISTICS OF RETAIL A SHARES AND RETAIL B SHARES

24
<PAGE>
Fund are currently subject to ongoing shareholder servicing fees at an annual
rate of up to .30% of the Fund's average daily net assets attributable to its
Retail A Shares.

Six years after purchase, Retail B Shares of the 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 an investor 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

25
<PAGE>
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. Investors expecting to redeem during this six-year
period should compare the cost of the contingent deferred sales charge plus the
aggregate distribution and shareholder servicing fees on Retail B Shares 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.

PURCHASES OF TRUST SHARES

Trust Shares of the Funds are sold to investors maintaining qualified
accounts at bank and trust institutions, including subsidiaries of Fleet
Financial Group, Inc., and to participants in employer-sponsored defined
contribution plans (such institutions and plans referred to herein collectively
as "Institutions"). Trust Shares sold to such investors ("Customers") will be
held of record by Institutions. 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 ("Trust Business Days"). If an Institution
accepts a purchase order from its Customer on a non-Trust Business Day, the
order will not be executed until it is received and accepted by FD Distributors
on a Trust Business Day in accordance with the foregoing procedures.

REDEMPTION OF RETAIL A SHARES, RETAIL B SHARES AND TRUST SHARES

26
<PAGE>
INVESTOR PROGRAMS--RETAIL A SHARES AND RETAIL B SHARES

The following information supplements the description in the applicable
Prospectus as to the various Investor Programs available to holders of Retail
Shares of the Funds.

EXCHANGE PRIVILEGE

The minimum initial investment to establish an account in another Fund or
portfolio by exchange, except for the Institutional Government Money Market
Fund, is $2,500, unless (i) the Retail Shares being redeemed were purchased
through a registered representative who is a Fleet Bank employee, in which event
there is no minimum investment requirement, or (ii) at the time of the exchange
the investor elects, with respect to the Fund or 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 Government
Money Market Fund is $2 million.

RETIREMENT PLANS

Retail Shares of the Funds are available for purchase in connection with the
following tax-deferred prototype retirement plans:

SIMPLIFIED EMPLOYEE PENSION PLANS ("SEPS"), a form of retirement plan for
sole proprietors, partnerships and corporations. The minimum initial investment
for a SEP account is $500.

27
<PAGE>
MULTI-EMPLOYEE RETIREMENT PLANS ("MERPS"), a retirement vehicle established
by employers for their employees which is qualified under Section 401(k) and
403(b) of the 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.

AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN

The Automatic Investment Program permits an investor to purchase Retail
Shares of a Fund each month or each quarter. Provided an investor's financial
institution allows automatic withdrawals, Retail Shares are purchased by
transferring funds from the 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 Shares will be purchased, on a
monthly or quarterly basis, on any Business Day designated by an 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 ("ACH")
member may be so designated.

PAYROLL DEDUCTION PROGRAM

To be eligible for the Payroll Deduction Program, the payroll department of
an investor's employer must have the capability to forward transactions directly
through the ACH, or indirectly through a third party payroll processing company
that has access to the ACH. An 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 an 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. An 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.

28
<PAGE>
COLLEGE INVESTMENT PROGRAM

DIRECT DEPOSIT PROGRAM

Death or legal incapacity will terminate an investor's participation in the
Direct Deposit Program. An investor may elect at any time to terminate his or
her participation by notifying in writing the Social Security Administration.
Further, Galaxy may terminate an investor's participation upon 30 days' notice
to the investor.

TAXES

TAXATION OF CERTAIN FINANCIAL INSTRUMENTS

29
<PAGE>
TRUSTEES AND OFFICERS

Louis DeThomasis ...................... Trustee President, Saint Mary's College of Minnesota;
Saint Mary's College Director, Bright Day Travel, Inc.; Trustee, Religious
of Minnesota Communities Trust; Trustee, The Galaxy VIP Fund;
Winona, MN 55987 Trustee, Galaxy Fund II.
Age 58

James M. Seed ......................... Trustee Chairman and President, The Astra Projects,
The Astra Ventures, Inc. Incorporated (land development); President, The Astra
One Citizens Plaza Ventures, Incorporated (previously, Buffinton Box
Providence, RI 02903 Company -manufacturer of cardboard boxes);
Age 57 Commissioner, Rhode Island Investment Commission;
Trustee, The Galaxy VIP Fund; Trustee, Galaxy Fund II.

30
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
POSITIONS WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE GALAXY FUND AND OTHER AFFILIATIONS
- --------------------------------------- ---------------- ------------------------------------------------------
<S> <C> <C>
W. Bruce McConnel, III ................ Secretary Partner of the law firm Drinker Biddle & Reath LLP,
Philadelphia National Philadelphia, Pennsylvania.
Bank Building
1345 Chestnut Street.
Philadelphia, PA 19107
Age 56

William Greilich ...................... Vice President Vice President, First Data Investor Services Group,
First Data Investor Services Inc., 1991-1996; Vice President and Division Manager,
Group, Inc. First Data Investor Services Group, Inc.,
4400 Computer Drive 1996-present.
Westborough, MA 01581-5108
Age 45
</TABLE>

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

(1) May be deemed to be an "interested person" within the definition set forth
in Section 2(a)(19) of the 1940 Act.

31
<PAGE>
No employee of Investor Services Group 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.

Dwight E. Vicks, Jr. ...................................
Chairman and Trustee [______] None [______]

Donald B. Miller** .....................................
Trustee [______] None [______]

Rev. Louis DeThomasis ..................................
Trustee [______] None [______]

John T. O'Neill ........................................
President, Treasurer and Trustee [______] None [______]

James M. Seed** ........................................
Trustee [______] None [______]
</TABLE>

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

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

** Deferred compensation (including interest) in the amounts of [________] and
[________] accrued during Galaxy's fiscal year ended October 31, 1998 for
Messrs. Miller and Seed, respectively.

SHAREHOLDER AND TRUSTEE LIABILITY

32
<PAGE>
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.

INVESTMENT ADVISER

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. During the
last three fiscal years, Galaxy paid advisory fees (net of fee waivers and/or
expense reimbursements) to Fleet as set forth below:

During the last three fiscal years, Fleet waived advisory fees as follows:

During the last three fiscal years, Fleet reimbursed expenses as follows:

33
<PAGE>
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 is authorized to allocate purchase and sale orders for portfolio
securities to certain financial institutions, including, to the extent permitted
by law or order of the SEC, financial institutions that are affiliated with
Fleet or that have sold shares of the Funds, if Fleet believes that the quality
of the transaction and the commission are comparable to what they would be with
other qualified brokerage firms.

AUTHORITY TO ACT AS INVESTMENT ADVISER

ADMINISTRATOR

Investor Services Group generally assists the Funds in their administration
and operation. Investor Services Group also serves as administrator to the other
portfolios of Galaxy. For the services provided to the Funds, Investor Services
Group is entitled to receive administration fees based on the combined average
daily net assets of the Funds and the other portfolios offered by Galaxy with an
October 31 fiscal year end, computed daily and paid monthly, at the following
annual rates, effective September 10, 1998:

34
<PAGE>
Prior to September 10, 1998, Galaxy paid Investor Services Group
administration fees based on the combined average daily net assets of the Funds
and all other portfolios offered by Galaxy at the following annual rates:

Investor Services Group also receives a separate annual fee from each Galaxy
portfolio for certain fund accounting services.

From time to time, Investor Services Group may waive voluntarily all or a
portion of the administration fees payable to it by the Funds. For the fiscal
year ended October 31, 1998, Investor Services Group received administration
fees at the effective annual rate of ____% of each Fund's average daily net
assets. During the last three fiscal years, Investor Services Group received
administration fees as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
FUND 1998 1997 1996
- --------------------------------------------------- ----------- --------- ------------
<S> <C> <C> <C>
Short-Term Bond.................................... $[______] $ 69,851 $ 82,440
Intermediate Government Income..................... $[______] $ 227,963 $ 256,059
High Quality Bond.................................. $[______] $ 161,732 $ 143,905
Corporate Bond..................................... $[______] $ 75,411 $ 93,185
</TABLE>

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("Chase Manhattan"), located at One 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 pursuant to
a Global Custody Agreement. Chase Manhattan may employ sub-custodians for the
Short-Term Bond and Corporate Bond Funds for the purpose of providing custodial
services for the Funds' foreign assets held outside the United States.

35
<PAGE>
custodian to exercise reasonable care with respect to the safekeeping of the
Funds' assets. In addition, Chase Manhattan also serves as Galaxy's "foreign
custody manager" (as that term is defined in Rule 17f-5 under the 1940 Act) and
in such capacity employs sub-custodians for the Funds for the purpose of
providing custodial services for the foreign assets of those Funds held outside
the U.S. The assets of the Funds are held under bank custodianship in compliance
with the 1940 Act.

Investor Services Group, a wholly-owned subsidiary of First Data
Corporation, serves as the Funds' transfer and dividend disbursing agent
pursuant to a Transfer Agency and Services Agreement (the "Transfer Agency
Agreement"). Communications to Investor Services Group should be directed to
Investor Services Group at P.O. Box 5108, 4400 Computer Drive, Westborough,
Massachusetts 01581. Under the Transfer Agency Agreement, Investor Services
Group 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.

Fleet Bank, an affiliate of Fleet, is paid a fee for Sub-Account Services
performed with respect to Trust Shares of the Funds held by defined contribution
plans. Pursuant to an agreement between Fleet Bank and Investor Services Group,
Fleet Bank will be paid $21.00 per year for each defined contribution plan
participant sub-account. For the fiscal year ended October 31, 1998, Fleet Bank
received $[____________] for Sub-Account Services. Investor Services Group bears
this expense directly, and shareholders of Trust Shares of the Funds bear this
expense indirectly through fees paid to Investor Services Group for transfer
agency services.

EXPENSES

36
<PAGE>
PORTFOLIO TRANSACTIONS

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

The Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year. In purchasing or selling securities for the Funds,
Fleet will seek to obtain the best net price and the most favorable execution of
orders. To the extent that the execution and price offered by more than one
broker/dealer are comparable, Fleet may effect transactions in portfolio
securities with broker/dealers who provide research, advice or other services
such as market investment literature.

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, Investor
Services Group, 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.
During fiscal year ended October 31, 1998, the Funds did not acquire or sell
securities of its regular brokers and dealers.

Investment decisions for each Fund are made independently from those for the
other Funds and portfolios of Galaxy 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 Galaxy's other Funds and
portfolios, or other investment companies or accounts in order to obtain best
execution.

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 render
certain administrative and support services to customers who are the beneficial
owners of Retail A Shares. Such services are provided to customers who are the
beneficial owners of Retail A Shares and are intended to supplement the services
provided by Investor Services Group 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 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.

37
<PAGE>
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
Statement of Additional Information, Galaxy has entered into servicing
agreements under the Shareholder Services Plan only with respect to Retail A
Shares of the Short-Term Bond, Intermediate Government Income and High Quality
Bond Funds, 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. As of October 31, 1998, Galaxy had entered into
Servicing Agreements only with Fleet Bank and affiliates.

During the last three fiscal years, Galaxy made payments to Service
Organizations with respect to Retail A Shares as shown in the table below:

DISTRIBUTION AND SERVICES PLAN

Galaxy has adopted a Distribution and Services Plan pursuant to Rule 12b-1
under the 1940 Act (the "Rule") with respect to Retail B Shares of the
Short-Term Bond, Intermediate Government Income and High Quality Bond Funds (the
"12b-1 Plan"). Under the 12b-1 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

38
<PAGE>
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 12b-1 Plan, 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 .15% and .15%, respectively, of the
average daily net assets attributable to each 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 each Fund's 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.

During the last three fiscal years, Retail B Shares of the Short-Term Bond
and High Quality Bond Funds bore the following distribution fees under the 12b-1
Plan:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
FUND 1998 1997 1996
- ------------------------------------------------------- ---------- ------- -------
<S> <C> <C> <C>
Short-Term Bond........................................ $ [______] $ 3,443 $ 822(1)
High Quality Bond...................................... $ [______] $ 7,645 $ 1,580(1)
</TABLE>

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

(1) For the period March 4, 1996 (initial public offering date) through October
31, 1996.

39
<PAGE>
During the last three fiscal years, Retail B Shares of the Short-Term Bond
and High Quality Bond Funds bore the following shareholder servicing fees under
the 12b-1 Plan:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
FUND 1998 1997 1996
- --------------------------------------------------------- --------- ------- -------
<S> <C> <C> <C>
Short-Term Bond.......................................... $[______] $ 788 $ 190(1)
High Quality Bond........................................ $[______] $ 1,729 365(1)
</TABLE>

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

(1) For the period ended March 4, 1996 (initial public offering date) through
October 31, 1996.

All amounts paid under the 12b-1 Plan for these periods 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 Funds and holders of Retail B
Shares. The 12b-1 Plan is subject to annual reapproval by a majority of the
12b-1 Trustees and is terminable at any time with respect to any Fund by a vote
of a majority of the 12b-1 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 12b-1 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 the 12b-1 Trustees.

DISTRIBUTOR

FD Distributors is entitled to the payment of a front-end sales charge on
the sale of Retail A Shares of the Short-Term Bond, Intermediate Government
Income and High Quality Bond Funds as described in the applicable Prospectus and
this Statement of Additional Information. During the last three fiscal years, FD
Distributors received front-end sales charges in connection with Retail A Share
purchases as follows:

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

(1) For the period from December 1, 1995 (date of imposition of sales charges on
Retail A Shares) through October 31, 1996.

FD Distributors retained none of the amounts shown in the table above.

40
<PAGE>
FD Distributors is also entitled to the payment of contingent deferred sales
charges upon the redemption of Retail B Shares of the Funds. During the last
three fiscal years, FD Distributors received contingent deferred sales charges
in connection with Retail B Share redemptions as follows:

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

* The Intermediate Government Income Fund did not offer Retail B Shares until
November 1, 1998.

(1) For the period from March 4, 1996 (initial public offering) through October
31, 1996.

FD Distributors retained none of the amounts shown in the table above.

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, 1998:

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

(1) Represents amounts received from front-end sales charges on Retail A Shares
and commissions received in connection with sales of Retail B Shares.

(3) Represents payments made under the Shareholder Services Plan and
Distribution and Services Plan during the fiscal year ended October 31,
1998, which includes fees accrued in the fiscal year ended October 31, 1997
which were paid in 1998 (see "Shareholder Services Plan" and "Distribution
and Services Plan" above).

AUDITORS

[________], independent certified public accountants, with offices at
[________], serve as auditors to Galaxy. The financial highlights for the
respective Funds included in their Prospectus(es) and the financial statements
for the Funds contained in Galaxy's Annual Report to Shareholders and [________]
into this Statement of Additional Information for the respective fiscal periods
ended October 31 of each calendar year have been audited by [________] for the
periods included in their report thereon which appears therein.

COUNSEL

41
<PAGE>
PERFORMANCE AND YIELD INFORMATION

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

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

<TABLE>
<S> <C> <C>
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.
</TABLE>

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.

42
<PAGE>
remaining term of the security, if any, if the weighted average date is not
available or (b) not to amortize discount or premium on the remaining security.

Based on the foregoing calculation, the standard yields for Retail A Shares,
Retail B Shares and Trust Shares (as applicable) of the Funds for the 30-day
period ended October 31, 1998 were as set forth below:

<TABLE>
<CAPTION>
FUND RETAIL A RETAIL B TRUST
- ------------------------------------------------------------------ ----------- ----------- ---------
<S> <C> <C> <C>
Short-Term Bond................................................... [___]% [___]% [___]%
Intermediate Government Income.................................... [___]% * [___]%
High Quality Bond................................................. [___]% [___]% [___]%
Corporate Bond.................................................... ** ** [___]%
</TABLE>

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

* The Intermediate Government Income Fund did not offer Retail B Shares until
November 1, 1998.

** The Corporate Bond Fund does not offer Retail A Shares or Retail B Shares.

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

<TABLE>
<S> <C> <C>
Where: T = average annual total return;

ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 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.
</TABLE>

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

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. In addition, the 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 purchases of Retail A Shares or
redemptions of Retail B Shares, as the case may be.

43
<PAGE>
The aggregate total returns for Retail A Shares, Retail B Shares and Trust
Shares (as applicable) of the Funds from the date of initial public offering to
October 31, 1998 are set forth below:

<TABLE>
<CAPTION>
FUND RETAIL A(1) RETAIL B TRUST
- ---------------------------------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Short-Term Bond............................... [_____]%(2) [_____]%(3) [_____]%(2)
Intermediate Government Income................ [_____]%(4) * [_____]%(4)
High Quality Bond............................. [_____]%(5) [_____]%(3) [_____]%(5)
Corporate Bond................................ ** ** [_____]%(6)
</TABLE>

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

* The Intermediate Government Income Fund did not offer Retail B Shares until
November 1, 1998.

** The Corporate Bond Fund does not offer Retail A Shares or Retail B Shares.

(1) On September 7, 1995, Retail Shares of the Funds were redesignated "Retail A
Shares."

(2) For the period from December 30, 1991 (initial public offering date) through
October 31, 1998.

(3) For the period from March 4, 1996 (initial public offering date) through
October 31, 1998.

(4) For the period from September 1, 1988 (initial public offering date) through
October 31, 1998.

(5) For the period from December 14, 1990 (initial public offering date) through
October 31, 1998.

(6) For the period from December 12, 1994 (initial public offering date) through
October 31, 1998.

The average annual total returns for Retail A Shares, Retail B Shares and
Trust Shares (as applicable) of the Funds for the one-year, five-year and
ten-year periods (as applicable) are as set forth below:

<TABLE>
<CAPTION>
RETAIL A RETAIL B TRUST
------------------- ------------------- -------------------
ONE- FIVE- TEN- ONE- FIVE- TEN- ONE- FIVE- TEN-
FUND YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
- -------------------------------------------------- ---- ----- ---- ---- ----- ---- ---- ----- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Short-Term Bond................................... [__]% [__]% * [__]% * * [__]% [__]% *
Intermediate Government Income.................... [__]% [__]% [__]% ** ** ** [__]% [__]% [__]%
High Quality Bond................................. [__]% [__]% * [__]% * * [__]% [__]% *
Corporate Bond.................................... *** *** *** *** *** *** [__]% [__]% *
</TABLE>

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

* Not offered during the full period.

** The Intermediate Government Income Fund did not offer Retail B Shares until
November 1, 1998.

*** The Corporate Bond Fund does not offer Retail A Shares or Retail B Shares.

PERFORMANCE REPORTING

44
<PAGE>
The standard yield is computed as described above. Each 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.

MISCELLANEOUS

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

45
<PAGE>
A "vote of the holders of a majority of the outstanding shares" of a
particular Fund or a particular series of shares in a Fund 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 such Fund or such series of shares, or (b) 67% or more of
the shares of such Fund or such series of shares present at a meeting if more
than 50% of the outstanding shares of such Fund or such series of shares are
represented at the meeting in person or by proxy.

As of January [__], 1999, 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: [__________________].

As of January [__], 1999, 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: [_____________________________________________________].

FINANCIAL STATEMENTS

Galaxy's Annual Report to Shareholders with respect to the Funds for the
fiscal year ended October 31, 1998 has been filed with the SEC. The financial
statements in such Annual Report (the "Financial Statements") are [____________]
into this Statement of Additional Information. The Financial Statements included
in the Annual Report for the Funds for the fiscal year ended October 31, 1998
have been audited by Galaxy's independent accountants, [___________________],
whose report thereon also appears in such Annual Report and is
[___________________]. The Financial Statements in such Annual Report have been
[___________________] in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.

46
<PAGE>
APPENDIX A

DESCRIPTION OF SECURITIES RATINGS

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.

CORPORATE AND TAX-EXEMPT COMMERCIAL PAPER RATINGS

TAX-EXEMPT NOTE RATINGS

A-3
<PAGE>
protection commonly regarded as required of an investment security and not
distinctly or predominantly speculative.

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

A-4
<PAGE>
APPENDIX B

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

I. INTEREST RATE FUTURES CONTRACTS

B-1
<PAGE>
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.

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.

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 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

B-2
<PAGE>
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.

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.

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.

B-3
<PAGE>
On March 23, the bonds in the portfolio have the following values:

<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 position in municipal bonds Sell 50 Municipal Bond futures contracts at
86-09
March 23 $4,873,438 long position in municipal bonds Buy 50 Municipal Bond futures contracts at
-------------------------------------------- 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

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 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.

B-4
<PAGE>
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. 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.

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.

B-5
<PAGE>
a liquid secondary market on any exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures investment position, and in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin. However, in the event futures contracts have been
used to hedge portfolio securities, such securities will not be sold until the
futures contract can be terminated. In such circumstances, an increase in the
price of the securities, if any, may partially or completely offset losses on
the futures contract. However, as described above, there is no guarantee that
the price of the securities will in fact correlate with the price movements in
the futures contract and thus provide an offset on a futures contract.

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

B-6
<PAGE>
THE GALAXY FUND
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 28, 1999

GALAXY TAX-EXEMPT BOND FUND

RETAIL A SHARES, RETAIL B SHARES AND
TRUST SHARES

GALAXY NEW JERSEY MUNICIPAL BOND FUND
GALAXY NEW YORK MUNICIPAL BOND FUND
GALAXY CONNECTICUT MUNICIPAL BOND FUND
GALAXY MASSACHUSETTS MUNICIPAL BOND FUND
GALAXY RHODE ISLAND MUNICIPAL BOND FUND

RETAIL A SHARES AND TRUST SHARES

The Galaxy Fund
c/o First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581-5108

or by calling 1-877-BUY-GALAXY (1-877-289-4252).

CURRENT PROSPECTUSES
- -----------------

- PROSPECTUS FOR RETAIL A SHARES OF THE FUNDS AND RETAIL B SHARES OF THE
TAX-EXEMPT BOND FUND DATED FEBRUARY 28, 1999

- PROSPECTUS FOR TRUST SHARES OF THE FUNDS DATED FEBRUARY 28, 1999

The financial statements included in the Annual Report and the report
thereon of [________________], The Galaxy Funds' independent accountants, are
[________________] into this Statement of Additional Information.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION....................................................... 1
DESCRIPTION OF GALAXY AND ITS SHARES...................................... 1
INVESTMENT STRATEGIES, POLICIES AND RISKS................................. 3
Tax-Exempt Bond Fund.................................................... 3
New Jersey Municipal Bond Fund.......................................... 4
New York Municipal Bond Fund............................................ 4
Connecticut Municipal Bond Fund......................................... 4
Massachusetts Municipal Bond Fund....................................... 5
Rhode Island Municipal Bond Fund........................................ 6
Special Considerations and Risks........................................ 6
Investment Quality...................................................... 6
General Risk Consideration.............................................. 7
Other Investment Policies and Risk Considerations....................... 7
Variable and Floating Rate Obligations.................................. 7
U.S. Government Obligations and Money Market Instruments................ 8
Municipal Securities.................................................... 9
Stand-by Commitments.................................................... 10
Private Activity Bonds.................................................. 11
Repurchase and Reverse Repurchase Agreements............................ 11
Securities Lending...................................................... 12
Investment Company Securities........................................... 12
Custodial Receipts and Certificates of Participation.................... 12
Derivative Securities................................................... 13
Futures Contracts....................................................... 13
When-Issued, Forward Commitment and Delayed Settlement Transactions..... 14
Asset-Backed Securities................................................. 15
Mortgage-Backed Securities.............................................. 15
Guaranteed Investment Contracts......................................... 16
Bank Investment Contracts............................................... 16
Special Considerations Relating to New Jersey Municipal Securities...... 16
Special Considerations Relating to New York Municipal Securities........ 19
Special Considerations Relating to Connecticut Municipal Securities..... 29
Portfolio Turnover...................................................... 32
INVESTMENT LIMITATIONS.................................................... 32
VALUATION OF PORTFOLIO SECURITIES......................................... 34
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................ 34
Purchases Of Retail A Shares And Retail B Shares........................ 34
General................................................................. 34
Customers of Institutions............................................... 34
Other Purchase Information.............................................. 35
Applicable Sales Charge--Retail A Shares................................ 35
</TABLE>

i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Computation of Offering Price--Retail A Shares.......................... 36
Quantity Discounts...................................................... 37
Applicable Sales Charge--Retail B Shares................................ 38
Characteristics of Retail A Shares and Retail B Shares.................. 39
Factors to Consider When Selecting Retail A Shares or Retail B Shares... 40
Purchases of Trust Shares............................................... 41
Redemption of Retail A Shares, Retail B Shares and Trust Shares......... 41
INVESTOR PROGRAMS--RETAIL A SHARES AND RETAIL B SHARES.................... 41
Exchange Privilege...................................................... 41
Retirement Plans........................................................ 42
Automatic Investment Program and Systematic Withdrawal Plan............. 43
Payroll Deduction Program............................................... 43
College Investment Program.............................................. 43
Direct Deposit Program.................................................. 44
TAXES..................................................................... 44
State and Local......................................................... 45
Taxation of Certain Financial Instruments............................... 47
Miscellaneous........................................................... 47
TRUSTEES AND OFFICERS..................................................... 47
Shareholder and Trustee Liability....................................... 50
INVESTMENT ADVISER........................................................ 51
Authority to Act as Investment Adviser.................................. 52
ADMINISTRATOR............................................................. 53
CUSTODIAN AND TRANSFER AGENT.............................................. 54
EXPENSES.................................................................. 55
PORTFOLIO TRANSACTIONS.................................................... 55
SHAREHOLDER SERVICES PLAN................................................. 56
DISTRIBUTION AND SERVICES PLAN............................................ 57
DISTRIBUTOR............................................................... 58
AUDITORS.................................................................. 60
COUNSEL................................................................... 60
PERFORMANCE AND YIELD INFORMATION......................................... 60
Tax Equivalency Tables--New Jersey Municipal Bond and New York Municipal
Bond Funds............................................................ 63
Performance Reporting................................................... 66
MISCELLANEOUS............................................................. 67
FINANCIAL STATEMENTS...................................................... 67
APPENDIX A................................................................ A-1
APPENDIX B................................................................ B-1
</TABLE>

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GENERAL INFORMATION

This Statement of Additional Information should be read in conjunction with
a current Prospectus. This Statement of Additional Information relates to the
Prospectuses for Trust Shares and Retail A Shares of the six Funds listed on the
cover page and Retail B Shares of the Tax-Exempt Bond Fund. The Tax-Exempt Bond
Fund is the only Fund that currently offers Retail B Shares. The Tax-Exempt Bond
Fund also offers A Prime Shares and B Prime Shares, which are described in a
separate statement of additional information and related prospectus. As of the
date of this Statement of Additional Information and the Prospectus for Trust
Shares of the Funds, Trust Shares of the Rhode Island Municipal Bond Fund were
not being offered to investors. This Statement of Additional Information is
incorporated by reference in its entirety into the Prospectuses. No investment
in shares of the Funds should be made without reading a Prospectus.

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 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 an
unlimited number of shares in each of the series in the Funds as follows: Class
M--Series 1 shares (Trust Shares), Class M--Series 2 shares (Retail A Shares),
Class M--Series 3 shares (Retail B Shares), Class M--Series 4 shares (A Prime
Shares) and Class M--Series 5 shares (B Prime 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; 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; and Class
Y--Series 1 shares (Trust Shares) and Class Y--Series 2 shares (Retail A
Shares), each series

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<PAGE>
representing interests in the New Jersey Municipal Bond Fund. The Tax-Exempt
Bond Fund is classified as a diversified investment company and the New Jersey
Municipal Bond, New York Municipal Bond, Connecticut Municipal Bond,
Massachusetts Municipal Bond and Rhode Island Municipal Bond Funds are
classified as non-diversified companies under the Investment Company Act of
1940, as amended (the "1940 Act").

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.
Each series of shares (i.e., Retail A Shares, Retail B Shares and Trust Shares)
bear pro rata the same expenses and are entitled equally to a Fund's dividends
and distributions except as follows. Each series will bear the expenses of any
distribution and/or shareholder servicing plans applicable to such series. For
example, as described below, holders of Retail A Shares will bear the expenses
of the Shareholder Services Plan for Retail A Shares and Trust Shares (which is
currently applicable only to Retail A Shares) and holders of Retail B Shares
will bear the expenses of the Distribution and Services Plan for Retail B
Shares. In addition, each series may incur differing transfer agency fees and
may have differing sales charges. Standardized yield and total return quotations
are computed separately for each series of shares. The differences in expenses
paid by the respective series will affect their performance. See "Shareholder
Services Plan" and "Distribution and Services Plan" below.

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 each series of a Fund would be solely responsible for the Fund's
payments under any distribution and/or shareholder servicing plan applicable to
such series.

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 shares of a
particular series of a Fund will be entitled to vote on matters submitted to a
vote of shareholders pertaining to any distribution and/or shareholder servicing
plan for such series (e.g., 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 an investment
objective or a 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

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<PAGE>
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.

INVESTMENT STRATEGIES, POLICIES AND RISKS

Fleet Investment Advisors Inc. ("Fleet"), the Funds' investment adviser,
will use its best efforts to achieve each Fund's investment objective, although
such achievement cannot be assured. The investment objective of a Fund as
described in its Prospectuses 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 "New Jersey Municipal Bond Fund,"
"New York Municipal Bond Fund," "Connecticut Municipal Bond Fund,"
"Massachusetts Municipal Bond Fund" and "Rhode Island Municipal Bond 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. The following
investment strategies, policies and risks supplement those set forth in the
Funds' Prospectuses.

TAX-EXEMPT BOND FUND

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Tax-Exempt Bond 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 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

3
<PAGE>
from regular federal income tax ("Municipal Securities"), primarily bonds (at
least 65% under normal market conditions).

Although there is no present intention to do so on a regular basis, the Fund
may invest 25% or more 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 25% or more of the
Fund's assets are invested 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.

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 JERSEY MUNICIPAL BOND FUND

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the New Jersey Municipal Bond Fund
will invest, except during temporary defensive periods, at least 80% of its
total assets in 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 Municipal Securities issued by or on behalf of the State of New
Jersey, 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 New Jersey personal income taxes ("New Jersey Municipal
Securities"). See "Other Investment Policies and Risk Considerations--Special
Considerations Relating to New Jersey Municipal Securities" below for a
discussion of certain risks in investing in New Jersey Municipal Securities.
Dividends derived from interest on Municipal Securities other than New Jersey
Municipal Securities will generally be exempt from regular federal income tax
but may be subject to New Jersey personal income tax. See "Taxes" below.

See "Special Considerations and Risks" and "Other Investment Policies and
Risk Considerations" below for information regarding additional investment
policies of the New Jersey Municipal 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 New York Municipal Bond Fund
will invest, except during temporary defensive periods, at least 80% of its
total assets in Municipal Securities, primarily in Municipal Securities issued
by or on behalf 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 "Other
Investment Policies and Risk Considerations--Special Considerations Relating to
New York Municipal Securities" 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.

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 Connecticut Municipal Bond
Fund will invest, except during temporary defensive periods, at least 80% of its
total assets in Municipal Securities, primarily in Municipal Securities issued
by

4
<PAGE>
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 which is, in the opinion of
qualified legal counsel, exempt from federal income tax and from Connecticut
personal income tax by virtue of federal law ("Connecticut Municipal
Securities"). See "Other Investment Policies and Risk Considerations-- Special
Considerations Relating to Connecticut Municipal Securities" 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.

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 Massachusetts Municipal Bond
Fund will invest, except during temporary defensive periods, at least 80% of its
total assets in Municipal Securities, primarily in Municipal Securities issued
by or on behalf 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").
Dividends derived from interest on Municipal Securities other than Massachusetts
Municipal Securities will generally be exempt from regular federal income tax
but may be subject to Massachusetts personal income tax. See "Taxes" below.

The Fund'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.

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.

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<PAGE>
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 Rhode Island Municipal Bond
Fund will invest, except during temporary defensive periods, at least 80% of its
total assets in Municipal Securities, primarily in Municipal Securities issued
by or on behalf 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"). Dividends derived from
interest on Municipal Securities other than Rhode Island Municipal Securities
will generally be exempt from regular federal income tax but may be subject to
Rhode Island personal income tax. See "Taxes" below.

The Fund'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.

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

INVESTMENT QUALITY

Municipal Securities purchased by the Funds 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 a Fund
are subsequently downgraded below the four highest ratings 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 will not
necessarily result in an

6
<PAGE>
automatic sale of the Municipal Security. Under normal market and economic
conditions, at least 65% of each 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 this Statement of Additional Information for a
description of S&P's and Moody's rating categories.

GENERAL RISK CONSIDERATION

Generally, the market value of fixed income securities, such as Municipal
Securities, in the Funds can be expected to vary inversely to changes in
prevailing interest rates. During periods of declining interest rates, the
market value of investment portfolios comprised primarily of fixed income
securities, such as the Funds, will tend to increase, and during periods of
rising interest rates, the market value will tend to decrease. In addition,
during periods of declining interest rates, the yields of investment portfolios
comprised primarily of fixed income securities will tend to be higher than
prevailing market rates and, in periods of rising interest rates, yields will
tend to be somewhat lower. Fixed income securities with longer maturities, which
tend to produce higher yields, are subject to potentially greater capital
appreciation and depreciation than obligations with shorter maturities. Changes
in the financial strength of an issuer or changes in the ratings of any
particular security may also offset the value of these investments. Fluctuations
in the market value of fixed income securities subsequent to their acquisition
will not offset cash income from such securities but will be reflected in a
Fund's net asset value.

Although no Fund presently intends to do so on a regular basis, each Fund
may invest more than 25% of its assets in Municipal Securities the interest on
which is paid solely from revenues 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.

The New Jersey Municipal Bond, 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.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

VARIABLE AND FLOATING RATE OBLIGATIONS

The Funds may purchase variable and floating rate instruments. If such an
instrument is not rated, Fleet 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

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<PAGE>
rate adjustment. Long-term 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.

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.

8
<PAGE>
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.

MUNICIPAL SECURITIES

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

The two principal 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.

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 and S&P, represent
such NRSRO's opinion as to the quality of Municipal Securities. It should be
emphasized that these ratings are general and are not absolute standards of
quality. Municipal Securities with the same maturity, interest rate and rating
may have different yields. Municipal Securities of the same maturity and
interest rate with different ratings may have the same yield. Subsequent to its
purchase by a Fund, an issue of Municipal Securities may cease to be rated or
its rating may be reduced below the minimum rating required for purchase by the
Fund.

The payment of principal and interest on most Municipal Securities purchased
by the Funds will depend upon the ability of the issuers to meet their
obligations. Each state, the District of Columbia, each of their political
subdivisions, agencies, instrumentalities and authorities and each multistate
agency of which a state is a member is a separate "issuer" as that term is used
in this Statement of Additional Information. The non-governmental user of
facilities financed by private activity bonds is also considered

9
<PAGE>
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.

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 Funds and the liquidity and value of their
respective portfolios. In such an event, each 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 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% (15% with respect to the New Jersey Municipal Bond Fund) limit described
in Investment Limitation No. 3 under "Investment Limitations" below.

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). Where a Fund pays any consideration directly
or indirectly for a stand-by commitment, its cost will be reflected as
unrealized depreciation for the

10
<PAGE>
period during which the commitment is held by the Fund. Stand-by commitments
acquired by a Fund would be valued at zero in determining the Fund's net asset
value.

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. 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.

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 upon notice of seven days or less, the
repurchase agreement will be considered an illiquid security and will be subject
to the 10% (15% with respect to the New Jersey Municipal Bond Fund) limit
described in Investment Limitation No. 3 under "Investment Limitations" below.

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<PAGE>
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 1940 Act.

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. Whenever a Fund enters into a reverse repurchase
agreement, it will place in a segregated custodial account liquid assets such as
cash or liquid portfolio 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.

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. 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. 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, 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

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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).

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.

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.

FUTURES CONTRACTS

Each 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 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

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<PAGE>
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 this
Statement of Additional Information and in Appendix B.

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 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 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.

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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.

ASSET-BACKED SECURITIES

MORTGAGE-BACKED SECURITIES

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mortgages as interest rates decline. To the extent that the Fund purchases
mortgage-backed securities at a premium, mortgage foreclosures and prepayments
of principal by mortgagors (which may be made at any time without penalty) may
result in some loss of the Fund's principal investment to the extent of the
premium paid. The yield of a Fund that invests in mortgage-backed securities may
be affected by reinvestment of prepayments at higher or lower rates than the
original investment.

Other mortgage-backed securities are issued by private issuers, generally
originators of and investors in mortgage loans, including savings associations,
mortgage bankers, commercial banks, investment bankers, and special purpose
entities. These private mortgage-backed securities may be supported by U.S.
Government mortgage-backed securities or some form of non-government credit
enhancement. Mortgage-backed securities have either fixed or adjustable interest
rates. The rate of return on mortgage-backed securities may be affected by
prepayments of principal on the underlying loans, which generally increase as
interest rates decline; as a result, when interest rates decline, holders of
these securities normally do not benefit from appreciation in market value to
the same extent as holders of other non-callable debt securities. In addition,
like other debt securities, the 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, 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%
(15% with respect to the New Jersey Municipal Bond Fund) 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% (15% with respect to the New Jersey Municipal Bond
Fund) limitation on such investments, unless there is an active and substantial
secondary market for the particular instrument and market quotations are readily
available.

SPECIAL CONSIDERATIONS RELATING TO NEW JERSEY MUNICIPAL SECURITIES

The New Jersey Municipal Bond Fund's ability to achieve its investment
objective is dependent upon the ability of the issuers of New Jersey Municipal
Securities to meet their continuing obligations for the payment of principal and
interest. Since the Fund invests primarily in New Jersey Municipal Securities,
the value of the Fund's shares may be especially affected by factors pertaining
to the economy of New Jersey and other factors specifically affecting the
ability of issuers of New Jersey Municipal Securities to meet their obligations.

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<PAGE>
The State of New Jersey generally has a diversified economic base consisting
of, among others, commerce and service industries, selective commercial
agriculture, insurance, tourism, petroleum refining and manufacturing, although
New Jersey's manufacturing industry has experienced a downward trend in the last
few years. New Jersey is a major recipient of federal assistance and, of all the
states, is among the highest in the amount of federal aid received. Therefore, a
decrease in federal financial assistance may adversely affect the financial
condition of New Jersey and its political subdivisions and instrumentalities.
While New Jersey's economic base has become more diversified over time and thus
its economy appears to be less vulnerable during recessionary periods, a
recurrence of high levels of unemployment could adversely affect New Jersey's
overall economy and the ability of New Jersey and its political subdivisions and
instrumentalities to meet their financial obligations. In addition, New Jersey
maintains a balanced budget which restricts total appropriation increases to
only 5% annually with respect to any municipality or county. This balanced
budget plan may adversely affect a particular municipality's or county's ability
to repay its obligations.

The State of New Jersey and its political subdivisions, agencies and public
authorities are authorized to issue two general classes of indebtedness: general
obligation bonds and revenue bonds. Both classes of bonds may be included in the
Fund's portfolio. The repayment of principal and interest on general obligation
bonds is secured by the full faith and credit of the issuer, backed by the
issuer's taxing authority, without recourse to any special project or source of
revenue. Special obligation or revenue bonds may be repaid only from revenues
received in connection with the project for which the bonds are issued, special
excise taxes, or other special revenue sources and generally are issued by
entities without taxing power. Neither the State of New Jersey nor any of its
subdivisions is liable for the repayment of principal or interest on revenue
bonds except to the extent stated in the preceding sentences.

General obligation bonds of the State are repaid from revenues obtained
through the State's general taxing authority. An inability to increase taxes may
adversely affect the State's ability to authorize or repay debt.

Public authorities, private non-profit corporations, agencies and similar
entities of New Jersey ("Authorities") are established for a variety of
beneficial purposes, including economic development, housing and mortgage
financing, health care facilities and public transportation. The Authorities are
not operating entities of the State of New Jersey, but are separate legal
entities that are managed independently. The State oversees the Authorities by
appointing the governing boards, designating management, and by significantly
influencing operations. The Authorities are not subject to New Jersey
constitutional restrictions on the incurrence of debt, applicable to the State
of New Jersey itself, and may issue special obligation or private activity bonds
in legislatively authorized amounts.

An absence or reduction of revenue will affect a bond-issuing Authority's
ability to repay debt on special obligation bonds and no assurance can be given
that sufficient revenues will be obtained to make such payments, although in
some instances repayment may be guaranteed or otherwise secured.

Various Authorities have issued bonds for the construction of health care
facilities, transportation facilities, office buildings and related facilities,
housing facilities, pollution control facilities, water and sewage facilities
and power and electric facilities. Each of these facilities may incur different
difficulties in meeting its debt repayment obligations. Hospital facilities, for
example, are subject to changes in Medicare and Medicaid reimbursement
regulations, attempts by Federal and state legislatures to limit the costs of
health care and management's ability to complete construction projects on a
timely basis as well as to maintain projected rates of occupancy and
utilization. At any given time, there are several proposals pending on a federal
and state level concerning health care which may further affect a hospital's
debt service obligation.

Housing facilities may be subject to increases in operating costs,
management's ability to maintain occupancy levels, rent restrictions and
availability of federal or state subsidies, while power and electric facilities
may be subject to increased costs resulting from environmental restrictions,
fluctuations in fuel

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<PAGE>
costs, delays in licensing procedures and the general regulatory framework in
which these facilities operate. All of these entities are constructed and
operated under rigid regulatory guidelines.

Some entities which financed facilities with proceeds of private activity
bonds issued by the New Jersey Economic Development Authority, a major issuer of
special obligation bonds, have defaulted on their debt service obligations.
Because these special obligation bonds were repayable only from revenue received
from the specific projects which they funded, the New Jersey Economic
Development Authority was unable to repay the debt service to bondholders for
such facilities. Each issue of special obligation bonds, however, depends on its
own revenue for repayment, and thus these defaults should not affect the ability
of the New Jersey Economic Development Authority to repay obligations on other
bonds that it issues in the future.

The State has experienced a gradual economic recovery in the past five
years. While unemployment in manufacturing has declined, employment gains have
been recorded in business services, construction and retail sectors. Business
investment expenditures and consumer spending have also increased substantially
in the State as well as in the Nation. To the extent that any adverse conditions
exist in the future which affect the obligor's ability to repay debt, the value
of the New Jersey Municipal Bond Fund may be immediately and substantially
affected.

The following are cases presently pending or threatened in which the State
has a potential for either a significant loss of revenue or a significant
unanticipated expenditure: (i) several labor unions have challenged 1994
legislation mandating a revaluation of several public employee pension funds
which resulted in a refund of millions of dollars in public employer
contributions to the State and significant ongoing annual savings to the State;
(ii) several cases filed in the State courts challenged the basis on which
recoveries of certain costs for residents in State psychiatric hospitals and
other facilities are shared between the State Department of Human Services and
the State's county governments, and certain counties are seeking the recovery
from the Department of costs they have incurred for the maintenance of such
residents; (iii) the County of Passaic and other parties have filed suit
alleging the State violated a 1984 consent order concerning the construction of
a resource recovery facility in that county; (iv) several Medicaid eligible
children and the Association for Children of New Jersey have filed suit claiming
the Medicaid reimbursement rates for services rendered to such children are
inadequate under federal law; (v) a coalition of churches and church leaders in
Hudson County have filed suit asserting the State-owned Liberty State Park in
Jersey City violates environmental standards; (vi) representatives of the
trucking industry have filed a constitutional challenge to annual hazardous and
solid waste licensure renewal fees; (vii) the Education Law Center filed a
motion compelling the State to close the spending gap between poor urban school
districts and wealthy rural school districts; (viii) a group of insurance
companies have filed a constitutional challenge to the State's assessment of
monies pursuant to the Fair Automobile Insurance Reform Act of 1990; (ix) a
class action consisting of prisoners with serious mental disorders has been
filed against officers of the Department of Corrections, alleging sex
discrimination, violation of the Americans with Disabilities Act of 1990, and
constitutional violations; (x) a class action has been brought in federal court
challenging the State's method of determining the monthly needs of a spouse of
an institutionalized person under the Medicare Catastrophic Act; (xi) several
suits have been filed against the State in federal court alleging that the State
committed securities fraud and environmental violations in the financing of a
new Atlantic City highway and tunnel; (xii) a class action has been filed
against the State alleging the State's breach of contract for not paying certain
Medicare co-insurance and deductibles; and (xiii) an action has been filed
challenging the State's issuance of bonds to fund the accrued liability in its
pension funds under the Pension Bond Financing Act of 1997.

Although the New Jersey Municipal Bond Fund generally intends to invest its
assets primarily in New Jersey Municipal Securities rated within the four
highest rating categories assigned by S&P or Moody's, there can be no assurance
that such ratings will remain in effect until such obligations mature or are
redeemed or will not be revised downward or withdrawn. Such revisions or
withdrawals may have an adverse affect on the market price of such securities.

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Although there can be no assurance that such conditions will continue, the
State's general obligation bonds are currently rated "AA+" by S&P and "Aa1" by
Moody's.

SPECIAL CONSIDERATIONS RELATING TO NEW YORK MUNICIPAL SECURITIES

Some of the significant financial considerations relating to the New York
Municipal Bond Fund's investments 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's location and its
excellent air transport facilities and natural harbors have made it an important
link in international commerce. Travel and tourism constitute an important part
of the economy. Like the rest of the nation, New York has a declining proportion
of its workforce engaged in manufacturing, and an increasing proportion engaged
in service industries.

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. State per capita
personal income has historically been significantly higher than the national
average, although the ratio has varied substantially. Because New York City (the
"City") is a regional employment center for a multi-state region, State personal
income measured on a residence basis understates the relative importance of the
State to the national economy and the size of the base to which State taxation
applies.

The State economic forecast has been raised slightly from the enacted budget
forecast. Continued growth is projected in 1998 and 1999 for employment, wages,
and personal income, although the growth rates of personal income and wages are
expected to be lower than those in 1997. The growth of personal income is
projected to decline from 5.7 percent in 1997 to 4.8 percent in 1998 and 4.2
percent in 1999, in part because growth in bonus payments is expected to slow
down, a distinct shift from the torrid rate of the last few years. Overall
employment growth is expected to be 1.9 percent in 1998, the strongest in a
decade, but will drop to 1.0 percent in 1999, reflecting the slowing growth in
the national economy, continued restraint in governmental spending, and
restructuring in the health care, social service, and banking sectors.

There can be no assurance that the State economy will not experience
worse-than-predicted results, with corresponding material and adverse effects on
the State's projections of receipts and disbursements.

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 monies 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.

State law requires the Governor to propose a balanced budget each year. In
recent years, the State has closed projected budget gaps of $5.0 billion
(1995-96), $2.3 billion (1997-98), and less than $1 billion (1998-99). The
State, as part of the 1998-99 Executive Budget projections submitted to the
Legislature in February 1998, projected a 1999-00 General Fund budget gap of
approximately $1.7 billion and a 2000-01

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<PAGE>
gap of $3.7 billion. As a result of changes made in the 1998-99 enacted budget,
the 1999-00 gap is now expected to be roughly $1.3 billion, or about $400
million less than previously projected, after application of reserves created as
part of the 1998-99 budget process. Such reserves would not be available against
subsequent year imbalances.

Sustained growth in the State's economy could contribute to closing
projected budget gaps over the next several years, both in terms of
higher-than-projected tax receipts and in lower-than-expected entitlement
spending. However, the State's projections in 1999-00 currently assume actions
to achieve $600 million in lower disbursements and $250 million in additional
receipts from the settlement of State claims against the tobacco industry.
Consistent with past practice, the projections do not include any costs
associated with new collective bargaining agreements after the expiration of the
current round of contracts at the end of the 1998-99 fiscal year. The State
expects that the 1990-00 Financial Plan will achieve savings from initiatives by
State agencies to deliver services more efficiently, workforce management
efforts, maximization of federal and non-General Fund spending offsets, and
other actions necessary to bring projected disbursements and receipts into
balance.

The State will formally update its outyear projections of receipts and
disbursements for the 2000-01 and 2001-02 fiscal years as a part of the 1999-00
Executive Budget process, as required by law. The revised expectations for years
2000-01 and 2001-02 will reflect the cumulative impact of tax reductions and
spending commitments enacted over the last several years as well as new 1999-00
Executive Budget recommendations. The School Tax Relief Program ("STAR"), which
dedicates a portion of personal income tax receipts to fund school tax
reductions, has a significant impact on General Fund receipts. STAR is projected
to reduce personal income tax revenues available to the General Fund by an
estimated $1.3 billion in 2000-01. Measured from the 1998-99 base, scheduled
reductions to estate and gift, sales and other taxes, reflecting tax cuts
enacted in 1997-98 and 1998-99, will lower General Fund taxes and fees by an
estimated $1.8 billion in 2000-01. Disbursement projections for the outyears
currently assume additional outlays for school aid, Medicaid, welfare reform,
mental health community reinvestment, and other multi-year spending commitments
in law.

On September 11, 1997, the New York State Comptroller issued a report which
noted that the ability to deal with future budget gaps could become a
significant issue in the State's 2000-2001 fiscal year, when the cost of tax
cuts increases by $1.9 billion. The report contained projections that, based on
current economic conditions and current law for taxes and spending, showed a gap
in the 2000-2001 State fiscal year of $5.6 billion and of $7.4 billion in the
2001-2002 State fiscal year. The report noted that these gaps would be smaller
if recurring spending reductions produce savings in earlier years. The State
Comptroller has also stated that if Wall Street earnings moderate and the State
experiences a moderate recession, the gap for the 2001-2002 State fiscal year
could grow to nearly $12 billion.

The State's current fiscal year began on April 1, 1998 and ends on March 31,
1999 and is referred to herein as the State's 1998-99 fiscal year. The
Legislature adopted the debt service component of the State budget for the
1998-99 fiscal year on March 30, 1998 and the remainder of the budget on April
18, 1998. In the period prior to adoption of the budget for the current fiscal
year, the Legislature also enacted appropriations to permit the State to
continue its operations and provide for other purposes. On April 25, 1998, the
Governor vetoed certain items that the Legislature added to the Executive
Budget. The Legislature had not overridden any of the Governor's vetoes as of
the start of the legislative recess on June 19, 1998 (under the State
Constitution, the Legislature can override one or more of the Governor's vetoes
with the approval of two-thirds of the members of each house).

General Fund disbursements in 1998-99 are now projected to grow by $2.43
billion over 1997-98 levels, or $690 million more than proposed in the
Governor's Executive Budget, as amended. The change in General Fund
disbursements from the Executive Budget to the enacted budget reflects
legislative additions (net of the value of the Governor's vetoes), actions taken
at the end of the regular legislative session, as well as spending that was
originally anticipated to occur in 1997-98 but is now expected to occur

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in 1998-99. The State projects that the 1998-99 State Financial Plan is balanced
on a cash basis, with an estimated reserve for future needs of $761 million.

The State's enacted budget includes several new multi-year tax reduction
initiatives, including acceleration of State-funded property and local income
tax relief for senior citizens under the STAR, expansion of the child care
income-tax credit for middle-income families, a phased-in reduction of the
general business tax, and reduction of several other taxes and fees, including
an accelerated phase-out of assessments on medical providers. The enacted budget
also provides for significant increases in spending for public schools, special
education programs, and for the State and City university systems. It also
allocates $50 million for a new Debt Reduction Reserve Fund ("DRRF") that may
eventually be used to pay debt service costs on or to prepay outstanding
State-supported bonds.

The 1998-99 State Financial Plan projects a closing balance in the General
Fund of $1.42 billion that is comprised of a reserve of $761 million available
for future needs, a balance of $400 million in the Tax Stabilization Reserve
Fund ("TSRF"), a balance of $158 million in the Community Projects Fund ("CPF"),
and a balance of $100 million in the Contingency Reserve Fund ("CRF"). The TSRF
can be used in the event of an unanticipated General Fund cash operating
deficit, as provided under the State Constitution and State Finance Law. The CPF
is used to finance various legislative and executive initiatives. The CRF
provides resources to help finance any extraordinary litigation costs during the
fiscal year.

The forecast of General Fund receipts in 1998-99 incorporates several
Executive Budget tax proposals that, if enacted, would further reduce receipts
otherwise available to the General Fund by approximately $700 million during
1998-99. The Executive Budget proposes accelerating school tax relief for senior
citizens under STAR, which is projected to reduce General Fund receipts by $537
million in 1998-99. The proposed reduction supplements STAR tax reductions
already scheduled in law, which are projected at $187 million in 1998-99. The
Budget also proposes several new tax-cut initiatives and other funding changes
that are projected to further reduce receipts available to the General Fund by
over $200 million. These initiatives include reducing the fee to register
passenger motor vehicles and earmarking a larger portion of such fees to
dedicated funds and other purposes; extending the number of weeks in which
certain clothing purchases are exempt from sales taxes; more fully conforming
State law to reflect recent Federal changes in estate taxes; continuing lower
pari-mutuel tax rates; and accelerating scheduled property tax relief for
farmers from 1999 to 1998. In addition to the specific tax and fee reductions
discussed above, the Executive Budget also proposes establishing a reserve of
$100 million to permit the acceleration into 1998-99 of other tax reductions
that are otherwise scheduled in law for implementation in future fiscal years.

The Division of the Budget ("DOB") estimates that the 1998-99 Financial Plan
includes approximately $62 million in non-recurring resources, comprising less
than two-tenths of one percent of General Fund disbursements. The non-recurring
resources projected for use in 1998-99 consist of $27 million in retroactive
federal welfare reimbursements for family assistance recipients with HIV/AIDS,
$25 million in receipts from the Housing Finance Agency that were originally
anticipated in 1997-98, and $10 million in other measures, including $5 million
in asset sales.

Disbursements from Capital Projects funds in 1998-99 are estimated at $4.82
billion, or $1.07 billion higher than 1997-98. The proposed spending plan
includes: $2.51 billion in disbursements for transportation purposes, including
the State and local highway and bridge program; $815 million for environmental
activities; $379 million for correctional services; $228 million for the State
University of New York ("SUNY") and the City University of New York ("CUNY");
$290 million for mental hygiene projects; and $375 million for CEFAP.
Approximately, 28 percent of capital projects are proposed to be financed by
"pay-as-you-go" resources. State-supported bond issuances finance 46 percent of
capital projects, with federal grants financing the remaining 26 percent.

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Many complex political, social and economic forces influence the State's
economy and finances, which may in turn affect the State's Financial Plan. These
forces may affect the State unpredictably from fiscal year to fiscal year and
are influenced by governments, institutions, and organizations that are not
subject to the State's control. The State Financial Plan is also necessarily
based upon forecasts of national and State economic activity. Economic forecasts
have frequently failed to predict accurately the timing and magnitude of changes
in the national and the State economies. The DOB believes that its projections
of receipts and disbursements relating to the current State Financial Plan, and
the assumptions on which they are based, are reasonable. Actual results,
however, could differ materially and adversely from their projections, and those
projections may be changed materially and adversely from time to time.

In the past, the State has taken management actions and made use of internal
sources to address potential State financial plan shortfalls, and the DOB
believes it could take similar actions should variances occur in its projections
for the current fiscal year.

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.

On March 31, 1998, the State recorded, on a GAAP-basis, its first-ever,
accumulated positive balance in its General Fund. This "accumulated surplus" was
$567 million. The improvement in the State's GAAP position is attributable, in
part, to the cash surplus recorded at the end of the State's 1997-98 fiscal
year. Much of that surplus is reserved for future requirements, but a portion is
being used to meet spending needs in 1998-99. Thus, the State expects some
deterioration in its GAAP position, but expects to maintain a positive GAAP
balance through the end of the current fiscal year.

The State completed its 1997-98 fiscal year with a combined Governmental
Funds operating surplus of $1.80 billion, which included an operating surplus in
the General Fund of $1.56 billion, in Capital Projects Funds of $232 million and
in Special Revenue Funds of $49 million, offset in part by an operating deficit
of $43 million in Debt Service Funds.

The State reported a General Fund operating surplus of $1.56 billion for the
1997-98 fiscal year, as compared to an operating surplus of $1.93 billion for
the 1996-97 fiscal year. As a result, the State reported an accumulated surplus
of $567 million in the General Fund for the first time since it began reporting
its operations on a GAAP-basis. The 1997-98 fiscal year operating surplus
reflects several major factors, including the cash-basis operating surplus
resulting from the higher-than-anticipated personal income tax receipts, an
increase in taxes receivable of $681 million, an increase in other assets of
$195 million and a decrease in pension liabilities of $144 million. This was
partially offset by an increase in payables to local governments of $270 million
and tax refunds payable of $147 million.

DEBT LIMITS AND OUTSTANDING DEBT. There are a number of methods by which
the State of New York may incur debt. Under the State Constitution, the State
may not, with limited exceptions for emergencies, undertake long-term general
obligation borrowing (I.E., borrowing for more than one year) unless the
borrowing is authorized in a specific amount for a single work or purpose by the
Legislature and approved by the voters. There is no limitation on the amount of
long-term general obligation debt that may be so authorized and subsequently
incurred by the State.

The State may undertake short-term borrowings without voter approval (i) in
anticipation of the receipt of taxes and revenues, by issuing tax and revenue
anticipation notes, and (ii) in anticipation of the receipt of proceeds from the
sale of duly authorized but unissued general obligation bonds, by issuing bond
anticipation notes. The State may also, pursuant to specific constitutional
authorization, directly guarantee certain obligations of the State of New York's
authorities and public benefit corporations ("Authorities"). Payments of debt
service on New York State general obligation and New York State-guaranteed bonds
and notes are legally enforceable obligations of the State of New York.

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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 February 1997, the Job Development Authority ("JDA") issued approximately
$85 million of State-guaranteed bonds to refinance certain of its outstanding
bonds and notes in order to restructure and improve JDA's capital structure. Due
to concerns regarding the economic viability of its programs, JDA's loan and
loan guarantee activities had been suspended since the Governor took office in
1995. As a result of the structural imbalances in JDA's capital structure, and
defaults in its loan portfolio and loan guarantee program incurred between 1991
and 1996, JDA would have experienced a debt service cash flow shortfall had it
not completed its recent refinancing. JDA anticipates that it will transact
additional refinancings in 1999, 2000 and 2003 to complete its long-term plan of
finance and further alleviate cash flow imbalances which are likely to occur in
future years. The State does not anticipate that it will be called upon to make
any payments pursuant to the State guarantee in the 1997-98 fiscal year. JDA
recently resumed its lending activities under a revised set of lending programs
and underwriting guidelines.

On January 13, 1992, S&P reduced its ratings on the State's general
obligation bonds from A to A- and, in addition, reduced its ratings on the
State's moral obligation, lease purchase, guaranteed and contractual obligation
debt. See Appendix "A" for an explanation of bond ratings. On August 28, 1997,
S&P revised its ratings on the State's general obligation bonds from A- to A and
revised its ratings on the State's moral obligation, lease purchase, guaranteed
and contractual obligation debt. On March 2, 1998, S&P affirmed it's A rating on
the State's outstanding bonds.

On January 6, 1992, 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. On March 20, 1998, Moody's assigned
the highest commercial paper rating of P-1 to the short-term notes of the State.
On July 6, 1998, Moody's assigned an A2 rating with a stable outlook to the
State's general obligations.

The State anticipates that its capital programs will be financed, in part,
through borrowings by the State and its public authorities in the 1998-99 fiscal
year. Information on the State's five-year Capital Program and Financing Plan
for the 1998-99 through 2002-03 fiscal years, updated to reflect actions taken
in the 1998-99 State budget, will be released on or before July 30, 1998. The
projection of State borrowings for the 1998-99 fiscal year is subject to change
as market conditions, interest rates and other factors vary throughout the
fiscal year.

The State expects to issue $528 million in general obligation bonds
(including $154 million for purposes of redeeming outstanding BANs) and $154
million in general obligation commercial paper. The State also anticipates the
issuance of up to a total of $419 million in Certificates of Participation to
finance equipment purchases (including costs of issuance, reserve funds, and
other costs) during the 1998-99 fiscal year. Of this amount, it is anticipated
that approximately $191 million will be issued to finance agency equipment
acquisitions, including amounts to address Statewide technology issues related
to Year 2000 compliance. Approximately $228 million will also be issued to
finance equipment acquisitions for welfare reform-related information technology
systems.

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Borrowings by public authorities pursuant to lease-purchase and
contractual-obligation financings for capital programs of the State are
projected to total approximately $2.93 billion, including costs of issuance,
reserve funds, and other costs, net of anticipated refundings and other
adjustments in 1998-99.

The proposed 1997-98 through 2002-03 Capital Program and Financing Plan was
released with the 1998-99 Executive Budget on January 20, 1998. As a part of
that Plan, changes were proposed to the State's 1997-98 borrowing plan,
including: the delay in the issuance of COPs to finance welfare information
systems until 1998-99 to permit a thorough assessment of needs; and the
elimination of issuances for the CEFAP to reflect the proposed conversion of
that bond-financed program to pay-as-you-go financing.

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) an action against New York
State and New York City officials alleging inadequate shelter allowances to
maintain proper housing; (4) alleged responsibility of New York State officials
to assist in remedying racial segregation in the City of Yonkers; (5) challenges
to regulations promulgated by the Superintendent of Insurance establishing
certain excess medical malpractice premium rates; (6) challenges to the
constitutionality of Public Health Law 2807-d, which imposes a gross receipts
tax from certain patient care services; (7) an action seeking enforcement of
certain sales and excise taxes and tobacco products and motor fuel sold to
non-Indian consumers on Indian reservations; (8) a challenge to the
constitutionality of Clean Water/Clean Air Bond Act; and (9) a challenge to the
Governor's application of his constitutional line item veto authority.

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 year
1996-97, $193 million in fiscal year 1997-98, peaking at $241 million in fiscal
year 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 monies 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 cure rights, tort, real property and contract claims in which the
State is a defendant and the monetary damages sought are substantial, generally
in excess of $100 million. These proceedings could affect adversely the
financial condition of the State in the 1997-98 fiscal year or thereafter.
Adverse developments in these proceedings, other proceedings for which there are
unanticipated, unfavorable and material judgments, or the initiation of new
proceedings could affect the ability of the State to maintain a balanced
financial plan. An adverse decision in any of these proceedings could exceed the
amount of the reserve established in the

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State's financial plan for the payment of judgments and, therefore, could affect
the ability of the State to maintain a balanced financial plan.

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 is
State-supported or State-related.

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.

NEW YORK CITY AND OTHER LOCALITIES. The fiscal health of the State may also
be impacted by the fiscal health of its localities, particularly the City, which
has required and continues to require significant financial assistance from the
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.

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, S&P 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 S&P.

On July 2, 1985, S&P revised its rating of City bonds upward to BBB+ and on
November 19, 1987, to A-. On February 3, 1998 and again on May 27, 1998, S&P
assigned a BBB+ rating to the City's general obligation debt and placed the
ratings on CreditWatch with positive implications.

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 February 25, 1998, Moody's
upgraded nearly $28 billion of the City's general obligations from Baa1 to A3.
On June 9, 1998, Moody's again assigned an A3 rating to the City's general
obligations and stated that its outlook was stable.

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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 June
30, 1997, MAC had outstanding an aggregate of approximately $4.267 billion of
its bonds. MAC is authorized to issue bonds and notes to refund its outstanding
bonds and notes and to fund certain reserves, without limitation as to principal
amount, and to finance certain capital commitments to the Transit Authority and
the New York City School Construction Authority through the 1997 fiscal year in
the event the City fails to provide such financing.

Since 1975, the City's financial condition has been subject to oversight and
review by the New York State Financial Control Board (the "Control Board") and
since 1978 the City's financial statements have been audited by independent
accounting firms. To be eligible for guarantees and assistance, the City is
required during a "control period" to submit annually for Control Board
approval, and when a control period is not in effect for Control Board review, a
financial plan for the next four fiscal years covering the City and certain
agencies showing balanced budgets determined in accordance with GAAP. New York
State also established the Office of the State Deputy Comptroller for New York
City ("OSDC") to assist the Control Board in exercising its powers and
responsibilities. On June 30, 1986, the City satisfied the statutory
requirements for termination of the control period. This means that the Control
Board's powers of approval are suspended, but the Board continues to have
oversight responsibilities.

On June 10, 1997, the City submitted to the Control Board the Financial Plan
(the "1998-2001 Financial Plan") for the 1998 through 2001 fiscal years,
relating to the City, the Board of Education ("BOE") and CUNY and reflected the
City's expense and capital budgets for the 1998 fiscal year, which were adopted
on June 6, 1997. The 1998-2001 Financial Plan projected revenues and
expenditures for the 1998 fiscal year balanced in accordance with GAAP. The
1998-99 Financial Plan projects General Fund receipts (including transfers from
other funds) of $36.22 billion, an increase of $1.02 billion over the estimated
1997-98 level. Recurring growth in the State General Fund tax base is projected
to be approximately six percent during 1998-99, after adjusting for tax law and
administrative changes. This growth rate is lower than the rates for 1996-97 or
currently estimated for 1997-98, but roughly equivalent to the rate for 1995-96.

The 1998-99 forecast for user taxes and fees also reflects the impact of
scheduled tax reductions that will lower receipts by $38 million, as well as the
impact of two Executive Budget proposals that are projected to lower receipts by
an additional $79 million. The first proposal would divert $30 million in motor
vehicle registration fees from the General Fund to the Dedicated Highway and
Bridge Trust Fund; the second would reduce fees for motor vehicle registrations,
which would further lower receipts by $49 million. The underlying growth of
receipts in this category is projected at 4 percent, after adjusting for these
scheduled and recommended changes.

In comparison to the current fiscal year, business tax receipts are
projected to decline slightly in 1998-99, falling from $4.98 billion to $4.96
billion. The decline in this category is largely attributable to scheduled tax
reductions. In total, collections for corporation and utility taxes and the
petroleum business

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tax are projected to fall by $107 million from 1997-98. The decline in receipts
in these categories is partially offset by growth in the corporation franchise,
insurance and bank taxes, which are projected to grow by $88 million over the
current fiscal year.

The Financial Plan is projected to show a GAAP-basis surplus of $131 million
for 1997-98 and a GAAP-basis deficit of $1.3 billion for 1998-99 in the General
Fund, primarily as a result of the use of the 1997-98 cash surplus. In 1998-99,
the General Fund GAAP Financial Plan shows total revenues of $34.68 billion,
total expenditures of $35.94 billion, and net other financing sources and uses
of $42 million.

Although the City has maintained balanced budgets in each of its last
seventeen fiscal years and is projected to achieve balanced operating results
for the 1998 fiscal year, there can be no assurance that the gap-closing actions
proposed in the 1998-2001 Financial Plan can be successfully implemented or that
the City will maintain a balanced budget in future years without additional
State aid, revenue increases or expenditure reductions. Additional tax increases
and reductions in essential City services could adversely affect the City's
economic base.

The projections set forth in the 1998-2001 Financial Plan were 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 1998-2001 Financial Plan, employment growth, the
ability to implement proposed reductions in City personnel and other cost
reduction initiatives, the ability of the Health and Hospitals Corporation 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 1998-2001 Financial Plan is also dependent upon the
City's ability to market its securities successfully. The City's financing
program for fiscal years 1998 through 2001 contemplates the issuance of $5.7
billion of general obligation bonds and $5.7 billion of bonds to be issued by
the proposed New York City Transitional Finance Authority (the "Finance
Authority") to finance City capital projects. The Finance Authority was created
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. Despite this additional financing mechanism, the
City currently projects that, if no further action is taken, it will reach its
debt limit in City fiscal year 1999-2000. 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. On June 2, 1997, an action was commenced seeking a declaratory
judgment declaring the legislation establishing the Transitional Finance
Authority to be unconstitutional. If such legislation were voided, projected
contracts for the City capital projects would exceed the City's debt limit
during fiscal year 1997-98. Future developments concerning the City or entities
issuing debt for the benefit of the City, and public discussion of such
developments, as well as prevailing market conditions and securities credit
ratings, may affect the ability or cost to sell securities issued by the City or
such entities and may also affect the market for their outstanding securities.

The City Comptroller and other agencies and public officials have issued
reports and made public statements which, among other things, state that
projected revenues and expenditures may be different from those forecast in the
City's financial plans. It is reasonable to expect that such reports and
statements will continue to be issued and to engender public comment.

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. Although the City's current financial plan projects $2.4
billion of seasonal financing for the 1998 fiscal year, the City expects to
undertake only
approximately $1.4 billion of seasonal financing. The City issued $2.4 billion
of short-term obligations in

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fiscal year 1997. 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 in the 1993 fiscal year. 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 years.

Certain localities, in addition to the City, have experienced financial
problems and have requested and received additional New York State assistance
during the last several State fiscal years. The potential impact on the State of
any future requests by localities for additional assistance is not included in
the State's projections of its receipts and disbursements for the 1997-98 fiscal
year.

Fiscal difficulties experienced by the City of Yonkers ("Yonkers") resulted
in the re-establishment 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
State to assist Yonkers could result in increased State expenditures for
extraordinary local assistance.

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 seeking federal
bankruptcy protection while Troy MAC bonds are outstanding. Troy MAC has issued
bonds to effect a restructuring of the City of Troy's obligations.

Eighteen municipalities received extraordinary assistance during the 1996
legislative session through $50 million in special appropriations targeted for
distressed cities, and that was largely continued in 1997. Twenty-eight
municipalities are scheduled to share in more than $32 million in targeted
unrestricted aid allocated in the 1997-98 budget. An additional $21 million will
be dispersed among all cities, towns and villages, a 3.97% increase in General
Purpose State Aid.

The 1998-99 budget includes an additional $29.4 million in unrestricted aid
targeted to 57 municipalities across the State. Other assistance for
municipalities with special needs totals more than $25.6 million. Twelve upstate
cities will receive $24.2 million in one-time assistance from a cash flow
acceleration of State aid.

Municipalities and school districts have engaged in substantial short-term
and long-term borrowings. In 1996, the total indebtedness of all localities in
the State other than New York City was approximately $20 billion. A small
portion (approximately $77.2 million) of that indebtedness represented borrowing
to finance budgetary deficits and was issued pursuant to enabling 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, that are authorized by State law to issue debt to finance
deficits during the period that such deficit financing is outstanding.
Twenty-one localities had outstanding indebtedness for deficit financing at the
close of their fiscal year ending in 1996.

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
the State, the 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 the 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 State assistance in the future.

YEAR 2000 COMPLIANCE. The State is currently addressing "Year 2000" data
processing compliance issues. The Year 2000 compliance issue ("Y2K") arises
because most computer software programs allocate two digits to the data field
for "year" on the assumption that the first two digits will be "19". Such

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programs will thus interpret the year 2000 as the year 1900 absent
reprogramming. Y2K could impact both the ability to enter data into computer
programs and the ability of such programs to correctly process data.

The Office for Technology is monitoring compliance on a quarterly basis and
is providing assistance and assigning resources to accelerate compliance for
mission critical systems, with most compliance testing expected to be completed
by mid-1999. There can be no guarantee, however, that all of the State's
mission-critical and high-priority computer systems will be Year 2000 compliant
and that there will not be an adverse impact upon State operations or State
finances as a result.

SPECIAL CONSIDERATIONS RELATING TO CONNECTICUT MUNICIPAL SECURITIES

The following information is a brief summary of factors affecting the
economies and financial strengths of the State of Connecticut, its
municipalities and its political subdivisions and does not purport to be a
complete description of such factors. Other factors will affect issuers. The
summary is based primarily upon one or more publicly available offering
statements relating to debt offerings of this State of Connecticut that were
available prior to the date of this Statement of Additional Information. The
accuracy and completeness of the information contained in such offering
statements have not been independently verified.

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

Manufacturing has historically been of prime economic importance to
Connecticut (sometimes referred to as the "State"). The State's manufacturing
industry is diversified, with transportation equipment (primarily aircraft
engines, helicopters and submarines) the dominant industry, followed by
fabricated metals, non-electrical machinery, and electrical equipment. As a
result of a rise in employment in service-related industries and a decline in
manufacturing employment, however, manufacturing accounted for only 17.09% of
total non-agricultural employment in Connecticut in 1997. Defense-related
business represents a relatively high proportion of the manufacturing sector. On
a per capita basis, defense awards to Connecticut have traditionally been among
the highest in the nation, and reductions in defense spending have had a
substantial adverse impact on Connecticut's economy.

The average annual unemployment rate in Connecticut increased from a low of
3.0% in 1988 to a high of 7.6% in 1992 and, after a number of important changes
in the method of calculation, was reported to be 5.8% in 1996. Average per
capita personal income of Connecticut residents increased in every year from
1989 to 1997, rising from $25,443 to $36,434. However, pockets of significant
unemployment and poverty exist in several Connecticut cities and towns.

For the four fiscal years ended June 30, 1991, the General Fund experienced
operating deficits but, for the seven fiscal years ended June 30, 1998, the
General Fund recorded operating surpluses, based on Connecticut's budgetary
method of accounting. General Fund expenditures are budgeted to be approximately
$9,972,000,000 for the 1998-99 fiscal year, compared to budgeted expenditures of
approximately $7,008,000,000 for the 1991-92 fiscal year, but a surplus of more
than $150,000,000 is expected for this 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 notes scheduled to be paid during
the 1995-96 fiscal year was rescheduled to be

29
<PAGE>
made over the four fiscal years ending June 30, 1999. Connecticut's general
obligation bonds are rated Aa3 by Moody's and AA by Fitch IBCA, Inc. ("Fitch
IBCA"). On October 8, 1998, S&P upgraded its ratings of Connecticut's general
obligations bonds from AA- to AA.

At the end of the 1990-1991 fiscal year, the General Fund had an accumulated
unappropriated deficit of $965,712,000. For the six fiscal years ended June 30,
1997, the General Fund ran operating surpluses, based on the State's budgetary
method of accounting, of approximately $110,200,000, $113,500,000, $19,700,000,
$80,500,000, $250,000,000, and $262,600,000, respectively. General Fund budgets
for the biennium ending June 30, 1999, were adopted in 1997. General Fund
expenditures and revenues are expected to exceed budgeted amounts for the
1997-1998 and 1998-1999 fiscal years, but a surplus estimated to be $312,900,000
was realized for the 1997-1998 fiscal year and a surplus of more than
$150,000,000 is expected for the 1998-1999 fiscal year.

During 1991 the State issued a total of $965,710,000 Economic Recovery
Notes. The notes were to be payable no later than June 30, 1996, but as part of
the budget adopted for the biennium ending June 30, 1997, payment of the notes
scheduled to be paid during the 1995-1996 fiscal year was rescheduled to be made
over the four fiscal years ending June 30, 1999. The outstanding notes were
$78,055,000 as of December 1, 1998.

The State's primary method for financing capital projects is through the
sale of general obligation bonds. These bonds are backed by the full faith and
credit of the State. As of December 1, 1998, the State had authorized direct
general obligation bond indebtedness totaling $12,398,200,000, of which
$11,057,371,000 had been approved for issuance by the State Bond Commission and
$9,814,857,000 had been issued. As of December 1, 1998, net State direct general
obligation indebtedness outstanding was $6,837,131,000.

In 1995, the State established the University of Connecticut as a separate
corporate entity to issue bonds and construct certain infrastructure
improvements. The University is authorized to issue bonds totaling $962,000,000
to finance the improvements. The University's bonds will be secured by a State
debt service commitment, the aggregate amount of which is limited to
$382,000,000 for bonds issued in the four fiscal years ending June 30, 1999, and
$580,000,000 for bonds issued in the six fiscal years ending June 30, 2005.

In addition, the State has limited or contingent liability on a significant
amount of other bonds. Such bonds have been issued by the following quasi-public
agencies: the Connecticut Housing Finance Authority, the Connecticut Development
Authority, the Connecticut Higher Education Supplemental Loan Authority, the
Connecticut Resources Recovery Authority and the Connecticut Health and
Educational Facilities Authority. Such bonds have also been issued by the cities
of Bridgeport and West Haven and the Southeastern Connecticut Water Authority.
As of December 1, 1997, the amount of bonds outstanding on which the State has
limited or contingent liability totaled $4,054,900,000.

In 1984, the State established a program to plan, construct and improve the
State's transportation system (other than Bradley International Airport). The
total cost of the program through June 30, 2002, is currently estimated to be
$12.6 billion, to be met from federal, state, and local funds. The State expects
to finance most of its $5.1 billion share of such cost by issuing $4.6 billion
of special tax obligation ("STO") bonds. The STO bonds are payable solely from
specified motor fuel taxes, motor vehicle receipts, and license, permit and fee
revenues pledged therefor and credited to the Special Transportation Fund, which
was established to budget and account for such revenues.

The State's general obligation bonds are rated Aa3 by Moody's and AA by
Fitch. On October 8, 1998, Standard & Poor's upgraded its ratings of the State's
general obligation bonds from AA- to AA.

30
<PAGE>
class action by the Connecticut Criminal Defense Lawyers Association claiming a
campaign of illegal surveillance activity and seeking damages and injunctive
relief; (ii) an action on behalf of all persons with traumatic brain injury who
have been placed in certain State hospitals, and other persons with acquired
brain injury who are in the custody of the Department of Mental Health and
Addiction Services, claiming that their constitutional rights are violated by
placement in State hospitals alleged not to provide adequate treatment and
training, and seeking placement in community residential settings with
appropriate support services; (iii) litigation involving claims by Indian tribes
to portions of the State's land area; and (iv) an action by certain students and
municipalities claiming that the State's formula for financing public education
violates the State's Constitution and seeking a declaratory judgment and
injunctive relief.

As a result of litigation on behalf of black and Hispanic school children in
the City of Hartford seeking "integrated education" within the Greater Hartford
metropolitan area, on July 9, 1996, the State Supreme Court directed the
legislature to develop appropriate measures to remedy the racial and ethnic
segregation in the Hartford public schools. The Superior Court recently ordered
the State to show cause as to whether there has been compliance with the Supreme
Court's ruling. The fiscal impact of this decision might be significant but is
not determinable at this time.

The State's Department of Information Technology is reviewing the State's
Year 2000 exposure and developing plans for modification or replacement of
existing software that it believes will prevent significant operations problems.
There is a risk that the plan will not be completed on time, that planned
testing will not reveal all problems, or that systems of others on whom the
State relies will not be timely updated. If the necessary remediations are not
completed in a timely fashion, the Year 2000 problem may have a material impact
on the operations of the State.

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. State
legislation enacted in 1993 prohibits municipal bankruptcy filings without the
prior written consent of the Governor. 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.

General obligation bonds issued by municipalities are payable primarily from
ad valorem taxes on property located in the municipality. A municipality's
property tax base is subject to many factors outside the control of the
municipality, including the decline in Connecticut's manufacturing industry.
Certain Connecticut municipalities have experienced severe fiscal difficulties
and have reported operating and accumulated deficits. The most notable of these
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 has 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. State legislation
enacted in 1993 prohibits municipal bankruptcy filings without the prior written
consent of the Governor.

In addition to general obligation bonds backed by the full faith and credit
of the municipality, certain municipal authorities finance projects by issuing
bonds that are not considered to be debts of the municipality. Such bonds may be
repaid only from revenues of the financed project, the revenues from which may
be insufficient to service the related debt obligations.

Regional economic difficulties, reductions in revenues and increases in
expenses could lead to further fiscal problems for the State and its political
subdivisions, authorities and agencies. Difficulties in payment of debt service
on borrowings could result in declines, possibly severe, in the value of their
outstanding

31
<PAGE>
obligations, increases in their future borrowing costs, and impairment of their
ability to pay debt service on their obligations.

PORTFOLIO TURNOVER

INVESTMENT LIMITATIONS

In addition to each Fund's investment objective as stated in its
Prospectuses, 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").

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.

3. Invest more than 10% (15% with respect to the New Jersey Municipal Bond
Fund) of the value of its net assets in illiquid securities, including
repurchase agreements with remaining maturities in excess of seven days,
time deposits with maturities in excess of seven days, restricted
securities, non-negotiable time deposits and other securities which are
not readily marketable.

4. Purchase 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.

5. 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>
6. 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.

7. Purchase or sell real estate; except that each 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.

8. 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 municipal bond
index futures contracts and interest rate futures contracts to the
extent permitted under the Commodity Exchange Act and the 1940 Act.

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

10. Invest in companies for the purpose of exercising management or control.

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

12. 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.

13. Purchase foreign securities, except that the 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.

In addition, the Tax-Exempt Bond Fund may not:

14. 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 Jersey Municipal Bond, New York Municipal Bond,
Connecticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds may not:

15. 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.

33
<PAGE>
VALUATION OF PORTFOLIO SECURITIES

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

This Statement of Additional Information provides additional purchase and
redemption information for Trust Shares and Retail A Shares of each Fund and
Retail B Shares of the Tax-Exempt Bond Fund. Purchase and redemption information
for A Prime Shares and B Prime Shares of the Tax-Exempt Bond Fund are described
in a separate prospectus and statement of additional information.

PURCHASES OF RETAIL A SHARES AND RETAIL B SHARES

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" below before deciding between the two with respect to the Tax-Exempt
Bond Fund.

FD Distributors has established several procedures to enable different types
of investors to purchase Retail A Shares of the Funds and Retail B Shares of the
Tax-Exempt Bond Fund (collectively, "Retail Shares"). Retail Shares 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. Retail Shares may also be purchased by FIS 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. Purchases 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.

CUSTOMERS OF INSTITUTIONS

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<PAGE>
the account statements provided to its customers. Galaxy's transfer agent may
establish an account of record for each customer of an institution reflecting
beneficial ownership of Retail Shares. Depending on the terms of the arrangement
between a particular institution and Galaxy's transfer agent, confirmations of
Retail Share purchases and redemptions and pertinent account statements will
either be sent by Galaxy's transfer agent directly to a customer with a copy to
the institution, or will be furnished directly to the customer by the
institution. Other procedures for the purchase of Retail Shares established by
institutions in connection with the requirements of their customer accounts may
apply. Customers wishing to purchase Retail Shares through their institution
should contact such entity directly for appropriate purchase instructions.

OTHER PURCHASE INFORMATION

APPLICABLE SALES CHARGE--RETAIL A SHARES

<TABLE>
<CAPTION>
REALLOWANCE TO
DEALERS
-----------------
AS A % OF
OFFERING PRICE
AMOUNT OF TRANSACTION PER SHARE
- ------------------------------------------------------------------------------- -----------------
<S> <C>
Less than $50,000.............................................................. 3.25
$50,000 but less than $100,000................................................. 3.00
$100,000 but less than $250,000................................................ 2.50
$250,000 but less than $500,000................................................ 2.00
$500,000 and over.............................................................. 0.00
</TABLE>

- purchases by directors, officers and employees 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 current and retired members of Galaxy's Board of Trustees and
members of their immediate families;

- purchases by officers, directors, employees and retirees of Fleet
Financial Group, Inc. and any of its affiliates and members of their
immediate families;

35
<PAGE>
- purchases by officers, directors, employees and retirees of First Data
Corporation and any of its affiliates and members of their immediate
families;

- purchases by institutional investors, including but not limited to bank
trust departments and registered investment advisers;

- purchases prior to July 1, 1999 by former deposit customers of financial
institutions (other than registered broker-dealers) acquired by Fleet
Financial Group, Inc. in February 1998.

COMPUTATION OF OFFERING PRICE--RETAIL A SHARES

<TABLE>
<CAPTION>
NEW JERSEY
TAX-EXEMPT BOND MUNICIPAL BOND
FUND FUND
---------------- ----------------
<S> <C> <C>
Net Assets.......................................................... $ [_________] $ [_________]
Outstanding Shares.................................................. [_________] [_________]
Net Asset Value Per Share........................................... $ [_________] $ [_________]

Sales Charge (3.75% of the offering price).......................... $ [_________] $ [_________]
Offering Price to Public............................................ $ [_________] $ [_________]

NEW YORK CONNECTICUT
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND
---------------- ----------------
Net Assets.......................................................... $ [_________] $ [_________]
Outstanding Shares.................................................. [_________] [_________]
Net Asset Value Per Share........................................... $ [_________] $ [_________]

Sales Charge (3.75% of the offering price).......................... $ [_________] $ [_________]
Offering Price to Public............................................ $ [_________] $ [_________]

MASSACHUSETTS RHODE ISLAND
MUNICIPAL BOND MUNICIPAL BOND
FUND FUND
---------------- ----------------
Net Assets.......................................................... $ [_________] $ [_________]
Outstanding Shares.................................................. [_________] [_________]
Net Asset Value Per Share........................................... $ [_________] $ [_________]

Sales Charge (3.75% of the offering price).......................... $ [_________] $ [_________]
Offering Price to Public............................................ $ [_________] $ [_________]
</TABLE>

36
<PAGE>
QUANTITY DISCOUNTS

In order to obtain quantity discount benefits, an investor must notify FD
Distributors 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 an
investor's holdings through a check of appropriate records. For more information
about quantity discounts, please contact FD Distributors or your financial
institution.

37
<PAGE>
profit-sharing plan established (or the aggregate investment of a trustee or
other fiduciary) for the benefit of the persons listed above.

GROUP SALES. Members of qualified groups may purchase Retail A Shares of
the Funds at the following group sales rates:

<TABLE>
<CAPTION>
REALLOWANCE TO
TOTAL SALES CHARGE DEALERS
------------------------------------ -----------------
AS A % OF AS A % OF NET AS A % OF
OFFERING PRICE ASSET VALUE PER OFFERING PRICE
NUMBER OF QUALIFIED GROUP MEMBERS PER SHARE SHARE PER SHARE
- ----------------------------------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
50,000 but less than 250,000................... 3.00 3.09 3.00
250,000 but less than 500,000.................. 2.75 2.83 2.75
500,000 but less than 750,000.................. 2.50 2.56 2.50
750,000 and over............................... 2.00 2.04 2.00
</TABLE>

APPLICABLE SALES CHARGE--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 investors 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

38
<PAGE>
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 the 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 an investor'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.

EXEMPTIONS FROM THE CONTINGENT DEFERRED SALES CHARGE. Certain types of
redemptions may also qualify for an exemption from the contingent deferred sales
charge. In addition to the sales charge exemptions described in the applicable
Prospectus, the contingent deferred sales charge with respect to Retail B Shares
is not assessed on: (i) 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 Code; (ii) 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; (iii) redemptions effected pursuant to the
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; (iv) 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; (v) redemptions resulting from a tax-free
return of an excess contribution pursuant to Section 408(d)(4) or (5) of the
Code; or (vi) any redemption of Retail B Shares held by investors, provided the
investor was the beneficial owner of shares of the Fund (or any of the other
portfolios offered by Galaxy or otherwise advised by Fleet or its affiliates)
before December 1, 1995. In addition to the foregoing exemptions, no contingent
deferred sales charge will be imposed on redemptions made pursuant to the
Systematic Withdrawal Plan, subject to the limitations set forth under "Investor
Programs--Retail A Shares and Retail B Shares--Automatic Investment Program and
Systematic Withdrawal Plan" below.

CHARACTERISTICS OF RETAIL A SHARES AND RETAIL B 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 the
applicable Prospectus and "Applicable Sales Charges--Retail B Shares" above.
Retail B Shares of the 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

39
<PAGE>
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 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 an investor 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 Charge--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 an investor makes a
one-time purchase of Retail B Shares of the Fund, and subsequently acquires
additional Retail B Shares of the Fund only through reinvestment of dividends
and/ or distributions, all of such investor'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

Investors deciding whether to purchase Retail A Shares or Retail B Shares of
the Tax-Exempt Bond Fund 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.

Although Retail A Shares are subject to a shareholder servicing fee, they
are not subject to the higher distribution and shareholder servicing fee
applicable to Retail B Shares. For this reason, Retail A Shares can be expected
to pay correspondingly higher dividends per Share. However, because initial
sales charges are deducted at the time of purchase, purchasers of Retail A
Shares (that do not qualify for exemptions from or reductions in the initial
sales charge) would have less of their purchase price initially invested in the
Fund than purchasers of Retail B Shares in the Fund.

40
<PAGE>
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.

PURCHASES OF TRUST SHARES

Trust Shares are sold to investors maintaining qualified accounts at bank
and trust institutions, including subsidiaries of Fleet Financial Group, Inc.,
and to participants in employer-sponsored defined contribution plans (such
institutions and plans referred to herein collectively as "Institutions"). Trust
Shares sold to such investors ("Customers") will be held of record by
Institutions. 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 ("Trust Business Days"). If an Institution accepts a purchase order
from its Customer on a non-Trust Business Day, the order will not be executed
until it is received and accepted by FD Distributors on a Trust Business Day in
accordance with the foregoing procedures.

REDEMPTION OF RETAIL A SHARES, RETAIL B SHARES AND TRUST SHARES

INVESTOR PROGRAMS--RETAIL A SHARES AND RETAIL B SHARES

The following information supplements the description in the applicable
Prospectus as to the various Investor Programs available to holders of Retail
Shares of the Funds.

EXCHANGE PRIVILEGE

41
<PAGE>
redeemed were purchased through a registered representative who is a Fleet Bank
employee, in which event there is no minimum investment requirement, or (ii) at
the time of the exchange the investor elects, with respect to the Fund or
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
Government Money Market Fund is $2 million.

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, investors
should call Investor Services Group at 1-877-BUY-GALAXY (1-877-289-4252).
Customers of institutions should call their institution for such information.
Customers exercising the exchange privilege into other portfolios should request
and review these portfolios' prospectuses prior to making an exchange. Telephone
1-877-BUY-GALAXY (1-877-289-4252) for a prospectus or to make an exchange.

RETIREMENT PLANS

Retail Shares of the Funds are available for purchase in connection with the
following tax-deferred prototype retirement plans:

SIMPLIFIED EMPLOYEE PENSION PLANS ("SEPS"), a form of retirement plan for
sole proprietors, partnerships and corporations. The minimum initial investment
for a SEP account is $500.

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

42
<PAGE>
and other matters related to these plans and the form of application is
available from FD Distributors (call 1-877-BUY-GALAXY (1-877-289-4252)) with
respect to IRAs, SEPs and Keogh Plans and from Fleet Securities, Inc. (call
1-877-BUY-GALAXY (1-877-289-4252)) with respect to MERPs.

AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN

The Systematic Withdrawal Plan permits an investor to automatically redeem
Retail Shares on a monthly, quarterly, semi-annual, or annual basis on any
Business Day designated by an 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 Investor Services Group, 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. No contingent deferred sales charge will be assessed on
redemptions of Retail B Shares made through the Systematic Withdrawal Plan that
do not exceed 12% of an account's net asset value on an annualized basis. For
example, monthly, quarterly and semi-annual Systematic Withdrawal Plan
redemptions of Retail B Shares will not be subject to the contingent deferred
sales charge if they do not exceed 1%, 3% and 6%, respectively, of an account's
net asset value on the redemption date. Systematic Withdrawal Plan redemptions
of Retail B Shares in excess of this limit are still subject to the applicable
contingent deferred sales charge.

PAYROLL DEDUCTION PROGRAM

COLLEGE INVESTMENT PROGRAM

43
<PAGE>
DIRECT DEPOSIT PROGRAM

TAXES

Each Fund qualified during its last taxable year and intends to continue to
qualify as a regulated investment company under Subchapter M of the Code, and to
invest all, or substantially all, of its assets in debt obligations the interest
on which is exempt for federal income tax purposes, so that the Fund itself
generally will be relieved of federal income and excise taxes. If a Fund were to
fail to so qualify: (1) the Fund would be taxed on its taxable income at regular
corporate rates without any deduction for distributions to shareholders; and (2)
shareholders would be taxed as if they received ordinary dividends, although
corporate shareholders could be eligible for the dividends received deduction.
For a Fund to pay tax-exempt dividends for any taxable year, at least 50% of the
aggregate value of the Fund's assets at the close of each quarter of the Fund's
taxable year must consist of exempt-interest obligations.

A 4% non-deductible excise tax is imposed on regulated investment companies
that fail to distribute with respect to each calendar year at least 98% of their
ordinary taxable income and capital gain net income (excess of capital gains
over capital losses) for the one year period ending October 31 of such calendar
year. Each Fund intends to make sufficient distributions or deemed distributions
of its ordinary taxable income and any capital gain net income prior to the end
of each calendar year to avoid liability for this excise tax.

The Funds will be required in certain cases to withhold and remit to the
United States Treasury 31% of taxable dividends or gross sale proceeds paid to
any shareholder who (i) has failed to provide a correct tax identification
number, (ii) is subject to withholding by the Internal Revenue Service for
failure to properly include on his or her return payments of taxable interest or
dividends, or (iii) has failed to certify to the Funds that he or she is not
subject to back up withholding when required to do so or that he or she is an
"exempt recipient."

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.

An investment in a Fund is not intended to constitute a balanced investment
program. Shares of the Funds would not be suitable for tax-exempt institutions
and may not be suitable for retirement plans qualified under Section 401 of the
Code, H.R. 10 plans and individual retirement accounts because such plans and
accounts are generally tax-exempt and, therefore, not only would the shareholder
not gain any additional benefit from the Funds' dividends being tax-exempt, but
such dividends would be ultimately taxable to the beneficiaries when
distributed. In addition, the Funds may not be an appropriate investment for
entities which are "substantial users" of facilities financed by "private
activity bonds" or "related persons" thereof. "Substantial user" is defined
under U.S. Treasury Regulations to include a non-exempt person who (i) regularly
uses a part of such facilities in his or her trade or business and whose gross
revenues derived with respect to the facilities financed by the issuance of
bonds are more than 5% of the total revenues derived by all users of such
facilities, (ii) occupies more than 5% of the usable area of such facilities or
(iii) are persons for whom such facilities or a part thereof were specifically
constructed, reconstructed or acquired. "Related persons" include certain
related natural persons, affiliated corporations, a partnership and its partners
and an S corporation and its shareholders.

44
<PAGE>
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.

It is anticipated that substantially all dividends paid by the New Jersey
Municipal Bond Fund will not be subject to New Jersey personal income tax. In
accordance with the provisions of New Jersey law as currently in effect,
distributions paid by a "qualified investment fund" will not be subject to the
New Jersey personal income tax to the extent that the distributions are
attributable to income received as interest or gain from New Jersey Municipal
Securities (as defined above), or as interest or gain from direct U.S.
Government obligations. Distributions by a "qualified investment fund" that are
attributable to most other sources will be subject to the New Jersey personal
income tax. Shares of the Fund are not subject to property taxation by New
Jersey or its political subdivisions.

The New Jersey personal income tax is not applicable to corporations. For
all corporations subject to the New Jersey Corporation Business Tax, dividends
and distributions from a "qualified investment fund" are included in the net
income tax base for purposes of computing the Corporation Business Tax.
Furthermore, any gain upon the redemption or sale of shares by a corporate
shareholder is also included in the net income tax base for purposes of
computing the Corporation Business Tax.

With respect to the New York Municipal Bond Fund, exempt-interest dividends
(as defined for federal income tax purposes), derived from interest on New York
Municipal Securities (as defined above) will be exempt from New York State and
New York City personal income taxes (but not corporate franchise taxes),
provided the interest on such obligations is and continues to be exempt from
applicable federal, New York State and New York City income taxes. To the extent
that investors are subject to state and local taxes outside of New York State
and New York City, dividends by the Fund may be taxable income for purposes
thereof. Dividends and distributions derived from income (including capital
gains on all New York Municipal Securities) other than interest on New York
Municipal Securities described above are not exempt from New York State and New
York City taxes. Interest or indebtedness incurred or continued by a shareholder
to purchase or carry shares of the Fund is not deductible for federal, New York
State or New York City personal income tax purposes.

Dividends paid by the Connecticut Municipal Bond Fund that qualify as
exempt-interest dividends for federal income tax purposes are not subject to the
Connecticut personal income tax imposed on resident and non-resident
individuals, trusts and estates to the extent that they are derived from
Connecticut Municipal Securities (as defined above). Other Fund dividends and
distributions, whether received in cash or additional shares, are subject to
this tax, except that, in the case of shareholders who hold their shares of the
Fund as capital assets, distributions treated as capital gain dividends for
federal income tax purposes are not subject to the tax to the extent that they
are 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.
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.

45
<PAGE>
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 (as defined above), (ii) capital gains
realized by the Fund from the sale of certain Massachusetts Municipal
Securities, or (iii) interest on U.S. Government obligations exempt from state
income taxation. 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. In 1994, the Massachusetts personal income tax
statute was modified to provide for graduated rates of tax (with some
exceptions) on gains from the sale or exchange of capital assets held for more
than one year based on the length of time the asset has been held since January
1, 1995. The Massachusetts Department of Revenue has released proposed
regulations providing that the holding period of the mutual fund (rather than
that of its shareholders) will be determinative for purposes of applying the
revised statute to shareholders that receive capital gain distributions (other
than exempt capital gain distributions, as discussed above), so long as the
mutual fund separately designates the amount of such distributions attributable
to each of six classes of gains from the sale or exchange of capital assets held
for more than one year in a notice provided to shareholders and the Commissioner
of Revenue on or before March 1 of the calendar year after the calendar year of
such distributions. In the absence of such notice, the holding period of the
assets giving rise to such gain is deemed to be more than one but not more than
two years. Shareholders should consult their tax advisers with respect to the
Massachusetts tax treatment of capital gain distributions from the Fund.

Distributions by the Massachusetts Municipal Bond Fund to corporate
shareholders, including exempt-interest dividends, may be subject to
Massachusetts corporate excise tax. Fund shares are not, however, subject to
property taxation by Massachusetts or its political subdivisions.

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 (as defined above) 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.

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. 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.

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.

46
<PAGE>
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 certain distribution requirements imposed
by the Code and on the income or gain qualifying under source of income
requirements established by the Code.

Generally, futures contracts and options on futures contracts held 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. With respect to certain
Instruments, deductions for interest and carrying charges may not be allowed.

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.

MISCELLANEOUS

Shareholders will be advised annually as to the federal income tax
consequences and, with respect to shareholders of the New Jersey Municipal Bond,
New York Municipal Bond, Connecticut Municipal Bond, Massachusetts Municipal
Bond and Rhode Island Municipal Bond Funds, the New Jersey personal income tax,
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.

TRUSTEES AND OFFICERS

<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATION DURING PAST 5 YEARS
NAME AND ADDRESS THE GALAXY FUND AND OTHER AFFILIATIONS
- -------------------------------------------- ---------------- -------------------------------------------------
<S> <C> <C>
Dwight E. Vicks, Jr. Chairman & President & Director, Vicks Lithograph & Printing
Vicks Lithograph & Printing Trustee Corporation (book manufacturing and commercial
Corporation printing); Director, Utica Fire Insurance
Commercial Drive Company; Trustee, Savings Bank of Utica;
P.O. Box 270 Director, Monitor Life Insurance Company;
Yorkville, NY 13495 Director, Commercial Travelers Mutual Insurance
Age 65 Company; Trustee, The Galaxy VIP Fund; Trustee,
Galaxy Fund II.
</TABLE>

47
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATION DURING PAST 5 YEARS
NAME AND ADDRESS THE GALAXY FUND AND OTHER AFFILIATIONS
- -------------------------------------------- ---------------- -------------------------------------------------
<S> <C> <C>
John T. O'Neill(1) President, Executive Vice President and CFO, Hasbro, Inc.
Hasbro, Inc. Treasurer & (toy and game manufacturer); Trustee, The
1011 Newport Avenue Trustee Galaxy VIP Fund; Trustee, Galaxy Fund II.
Pawtucket, RI 02862
Age 54

Louis DeThomasis Trustee President, Saint Mary's College of Minnesota;
Saint Mary's College of Minnesota Director, Bright Day Travel, Inc.; Trustee,
Winona, MN 55987 Religious Communities Trust; Trustee, The
Age 58 Galaxy VIP Fund; Trustee, Galaxy Fund II.

Donald B. Miller Trustee Chairman, Horizon Media, Inc. (broadcast
10725 Quail Covey Road services); Director/Trustee, Lexington Funds;
Boynton Beach, FL 33436 Chairman, Executive Committee, Compton
Age 73 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 Projects,
The Astra Ventures, Inc. Incorporated (land development); President, The
One Citizens Plaza Astra Ventures, Incorporated (previously,
Providence, RI 02903 Buffinton Box Company--manufacturer of
Age 57 cardboard boxes); Commissioner, Rhode Island
Investment Commission; Trustee, The Galaxy VIP
Fund; Trustee, Galaxy Fund II.

Bradford S. Wellman(1) Trustee Private Investor; Vice President and Director,
2468 Ohio Street Acadia Management Company (investment
Bangor, ME 04401 services); Director, Essex County Gas Company,
Age 67 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 Drinker Biddle & Reath
Philadelphia National Bank Building LLP, Philadelphia, Pennsylvania.
1345 Chestnut Street
Philadelphia, PA 19107
Age 56

Jylanne Dunne Vice President Vice President, First Data Investor Services
First Data Investor Services and Assistant Group, Inc., 1990 to present.
Group, Inc. Treasurer
4400 Computer Drive
Westborough, MA 01581-5108
Age 39
</TABLE>

48
<PAGE>
<TABLE>
<CAPTION>
POSITIONS WITH PRINCIPAL OCCUPATION DURING PAST 5 YEARS
NAME AND ADDRESS THE GALAXY FUND AND OTHER AFFILIATIONS
- -------------------------------------------- ---------------- -------------------------------------------------
<S> <C> <C>
William Greilich Vice President Vice President, First Data Investor Services
First Data Investor Services Group, Inc., 1991-96; Vice President and
Group, Inc. Division Manager, First Data Investor Services
4400 Computer Drive Group, Inc., 1996-present.
Westborough, MA 01581-5108
Age 45
</TABLE>

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

(1) May be deemed to be an "interested person" within the definition set forth
in Section 2(a)(19) of the 1940 Act.

No employee of Investor Services Group 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.

49
<PAGE>
The following chart provides certain information about the fees received by
Galaxy's trustees in the most recently completed fiscal year.

<TABLE>
<CAPTION>
PENSION OR TOTAL
RETIREMENT COMPENSATION FROM
AGGREGATE BENEFITS ACCRUED GALAXY AND FUND
COMPENSATION FROM AS PART OF FUND COMPLEX*PAID TO
NAME OF PERSON/POSITION GALAXY EXPENSES TRUSTEES
- ------------------------------------- ------------------ ----------------- -----------------
<S> <C> <C> <C>
Bradford S. Wellman None
Trustee

Dwight E. Vicks, Jr. None
Chairman and Trustee

Donald B. Miller** None
Trustee

Rev. Louis DeThomasis None
Trustee

John T. O'Neill None
President, Treasurer
and Trustee

James M. Seed** None
Trustee
</TABLE>

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

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

** Deferred compensation (including interest) in the amounts of [______] and
[______] accrued during Galaxy's fiscal year ended October 31, 1998 for
Messrs. Miller and Seed, respectively.

SHAREHOLDER AND TRUSTEE LIABILITY

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

50
<PAGE>
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.

INVESTMENT ADVISER

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. 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
Fund's average daily net assets, but Fleet may in its discretion revise or
discontinue this waiver at any time. During the last three fiscal years, Galaxy
paid advisory fees (net of fee waivers and/or expense reimbursements) to Fleet
as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
FUND 1998 1997 1996
- ------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Tax-Exempt Bond........................................ $ [_____] $ 789,598 $ 696,116
New Jersey Municipal Bond.............................. $ [_____](1) * *
New York Municipal Bond................................ $ [_____] $ 351,041 $ 360,298
Connecticut Municipal Bond............................. $ [_____] $ 74,799 $ 67,091
Massachusetts Municipal Bond........................... $ [_____] $ 102,040 $ 78,783
Rhode Island Municipal Bond............................ $ [_____] $ 37,641 $ 38,943
</TABLE>

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

* Not in operation during the period.

(1) For the period from April 3, 1998 (commencement of operations) through
October 31, 1998.

During the last three fiscal years, Fleet waived advisory fees as set forth
below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
FUND 1998 1997 1996
- ------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Tax-Exempt Bond........................................ $ [_____] $ 287,127 $ 253,133
New Jersey Municipal Bond.............................. $ [_____](1) * *
New York Municipal Bond................................ $ [_____] $ 127,651 $ 131,020
Connecticut Municipal Bond............................. $ [_____] $ 149,599 $ 163,904
Massachusetts Municipal Bond........................... $ [_____] $ 204,080 $ 191,624
Rhode Island Municipal Bond............................ $ [_____] $ 75,284 $ 60,030
</TABLE>

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

* Not in operation during the period.

(1) For the period from April 3, 1998 (commencement of operations) through
October 31, 1998.

51
<PAGE>
During the last three fiscal years, Fleet reimbursed expenses as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
FUND 1998 1997 1996
- ------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Tax-Exempt Bond........................................ $ [_____] $ 73,334 $ 62,854
New Jersey Municipal Bond.............................. $ [_____](1) * *
New York Municipal Bond................................ $ [_____] $ 48,842 $ 123,317
Connecticut Municipal Bond............................. $ [_____] $ 0 $ 0
Massachusetts Municipal Bond........................... $ [_____] $ 0 $ 0
Rhode Island Municipal Bond............................ $ [_____] $ 538 $ 15,079
</TABLE>

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

* Not in operation during the period.

(1) For the period from April 3, 1998 (commencement of operations) through
October 31, 1998.

The organizational arrangements of Fleet require that all investment
decisions with respect to the Funds be made by Fleet's Tax-Exempt Investment
Policy Committee and no one person is responsible for making recommendations to
that Committee.

AUTHORITY TO ACT AS INVESTMENT ADVISER

52
<PAGE>
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

Investor Services Group also receives a separate annual fee from each Galaxy
portfolio for certain fund accounting services.

From time to time, Investor Services Group may waive voluntarily all or a
portion of the administration fee payable to it by the Funds. For the fiscal
year ended October 31, 1998, Investor Services Group received administration
fees at the effective annual rate of [____]% of each Fund's average daily net
assets.

53
<PAGE>
During the last three fiscal years, Investor Services Group received
administration fees (net of fee waivers) as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
FUND 1998 1997 1996
- -------------------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Tax-Exempt Bond........................................................... $ [_____] $ 117,223 $ 108,062
New Jersey Municipal Bond................................................. $ [_____](1) * *
New York Municipal Bond................................................... $ [_____] $ 26,292 $ 55,624
Connecticut Municipal Bond................................................ $ [_____] $ 0 $ 0
Massachusetts Municipal Bond.............................................. $ [_____] $ 2,406 $ 0
Rhode Island Municipal Bond............................................... $ [_____] $ 12,293 $ 11,196
</TABLE>

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

* Not in operation during the period.

(1) For the period from April 3, 1998 (commencement of operations) through
October 31, 1998.

During the last three fiscal years, Investor Services Group waived
administration fees as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
FUND 1998 1997 1996
- -------------------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Tax-Exempt Bond........................................................... $ [_____] $ 0 $ 0
New Jersey Municipal Bond................................................. $ [_____](1) * *
New York Municipal Bond................................................... $ [_____] $ 25,827 $ 0
Connecticut Municipal Bond................................................ $ [_____] $ 39,755 $ 46,559
Massachusetts Municipal Bond.............................................. $ [_____] $ 30,919 $ 46,772
Rhode Island Municipal Bond............................................... $ [_____] $ 0 $ 0
</TABLE>

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

* Not in operation during the period.

(1) For the period from April 3, 1998 (commencement of operations) through
October 31, 1998.

CUSTODIAN AND TRANSFER AGENT

Under the Global 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.

54
<PAGE>
Under the Transfer Agency Agreement, Investor Services Group 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.

EXPENSES

PORTFOLIO TRANSACTIONS

Investment decisions for each Fund are made independently from those for the
other Funds and portfolios of Galaxy 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 Galaxy's other Funds and
portfolios, or other investment companies or accounts in order to obtain best
execution.

55
<PAGE>
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
Statement of Additional Information, Galaxy has entered 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. As of October 31, 1998,
Galaxy had entered into Servicing Agreements only with Fleet Bank and
affiliates.

During the last three fiscal years, Galaxy made payments to Service
Organizations with respect to Retail A Shares as shown in the table below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
FUND 1998 1997 1996
- -------------------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Tax-Exempt Bond........................................................... $ [_____] $ 37,652 $ 42,210
New Jersey Municipal Bond................................................. $ [_____](1) * *
New York Municipal Bond................................................... $ [_____] $ 56,596 $ 57,674
Connecticut Municipal Bond................................................ $ [_____] $ 32,160 $ 36,878
Massachusetts Municipal Bond.............................................. $ [_____] $ 40,842 $ 38,823
Rhode Island Municipal Bond............................................... $ [_____] $ 0 $ 0
</TABLE>

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

* Not in operation during the period.

(1) For the period from April 3, 1998 (commencement of operations) through
October 31, 1998.

56
<PAGE>
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 pursuant to Rule 12b-1
under the 1940 Act (the "Rule") with respect to Retail B Shares of the
Tax-Exempt Bond Fund (the "12b-1 Plan"). Under the 12b-1 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 12b-1 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 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 Statement of
Additional Information, Galaxy intends to limit the Fund's 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.

57
<PAGE>
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 (the "12b-1 Trustees"), by vote cast
in person at a meeting called for the purpose of considering such amendments.

During the last three fiscal years, Retail B Shares of the Tax-Exempt Bond
Fund bore the following distribution fees and shareholder servicing fees under
the 12b-1 Plan:

<TABLE>
<CAPTION>
SHAREHOLDER
DISTRIBUTION SERVICING
FOR THE FISCAL YEAR ENDED OCTOBER 31: FEES FEES
- --------------------------------------------------------------------------------- --------------- -------------
<S> <C> <C>
1998............................................................................. $ [___] $ [___]
1997............................................................................. $ 7,788 $ 1,784
1996(1).......................................................................... $ 300 $ 0
</TABLE>

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

(1) For the period from March 4, 1996 (initial public offering date) through
October 31, 1996.

During these periods, 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 Fund and holders of Retail B
Shares. The 12b-1 Plan is subject to annual reapproval by a majority of the
12b-1 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 12b-1 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 the 12b-1 Trustees.

DISTRIBUTOR

58
<PAGE>
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 and this Statement of Additional Information. During the last three
fiscal years, FD Distributors received front-end sales charges in connection
with Retail A Share purchases as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
FUND 1998 1997 1996(1)
- --------------------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Tax-Exempt Bond............................................................ $ [_____] $ 19,403 $ 32,788
New Jersey Municipal Bond.................................................. $ [_____](2) * *
New York Municipal Bond.................................................... $ [_____] $ 49,295 $ 58,347
Connecticut Municipal Bond................................................. $ [_____] $ 46,322 $ 28,847
Massachusetts Municipal Bond............................................... $ [_____] $ 140,492 $ 119,132
Rhode Island Municipal Bond................................................ $ [_____] $ 22,941 $ 27,227
</TABLE>

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

* Not in operation during the period.

(1) For the period from December 1, 1995 (date of imposition of sales charges on
Retail A Shares) through October 31, 1996.

(2) For the period from April 3, 1998 (commencement of operations) through
October 31, 1998.

FD Distributors retained none of the amounts shown in the table above.

FD Distributors is also entitled to the payment of contingent deferred sales
charges upon the redemption of Retail B Shares of the Tax-Exempt Bond Fund. For
the fiscal years ended October 31, 1998 and October 31, 1997, and for the period
from March 4, 1996 (initial public offering date) through October 31, 1996, FD
Distributors received contingent deferred sales charges in connection with
Retail B Share redemptions of the Tax-Exempt Bond Fund in the amounts of
$[__________], $5,353 and $0, respectively. FD Distributors retained none of
this amount.

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, 1998:

<TABLE>
<CAPTION>
NET UNDERWRITING COMPENSATION ON BROKERAGE COMMISSIONS
DISCOUNTS AND REDEMPTION AND IN CONNECTION WITH OTHER
FUND COMMISSIONS(1) REPURCHASE(2) FUND TRANSACTIONS COMPENSATION(3)
- ----------------------------------------- ---------------- ---------------- --------------------- ----------------
<S> <C> <C> <C> <C>
Tax-Exempt Bond.......................... $ [______] $ [______] $ 0 $ [______]
New York Municipal Bond.................. $ [______] N/A $ 0 $ [______]
Connecticut Municipal Bond............... $ [______] N/A $ 0 $ [______]
Massachusetts Municipal Bond............. $ [______] N/A $ 0 $ [______]
Rhode Island Municipal Bond.............. $ [______] N/A $ 0 $ [______]
New Jersey Municipal Bond................ $ [______] N/A $ 0 $ [______]
</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.

(3) Represents payments made under the Shareholder Services Plan and
Distribution and Services Plan during the fiscal year ended October 31,
1998, which includes fees accrued in the fiscal year ended October 31, 1997
which were paid in 1998 (see "Shareholder Services Plan" and "Distribution
and Services Plan" above).

59
<PAGE>
AUDITORS

[____________________], independent certified public accountants, with
offices at [____________________], 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 [____________________] into this Statement of Additional
Information for the respective fiscal periods ended October 31 of each calendar
year have been audited by [____________________] for the periods included in
their report thereon which appears therein.

COUNSEL

Drinker Biddle & Reath LLP (of which W. Bruce McConnel, III, Secretary of
Galaxy, is a partner), 1345 Chestnut Street, Suite 1100, Philadelphia,
Pennsylvania 19107, are counsel to Galaxy, will pass upon certain legal matters
on its behalf, and has reviewed the portion of this Statement of Additional
Information and the Prospectuses with respect to the New Jersey Municipal Bond
Fund concerning New Jersey taxes and the description of special considerations
relating to New Jersey Municipal Securities.

PERFORMANCE AND YIELD INFORMATION

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

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

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

60
<PAGE>
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).

The "tax-equivalent" yield of the New Jersey Municipal Bond, 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) 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 calculations, the standard yields and tax-equivalent
yields for Retail A Shares and Trust Shares of the Funds for the 30-day period
ended October 31, 1998 were as set forth below:

<TABLE>
<CAPTION>
RETAIL A TRUST
---------------------------- ----------------------------
TAX- TAX-
FUND STANDARD EQUIVALENT STANDARD EQUIVALENT
- ------------------------------------------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Tax-Exempt Bond................................. [__]% [__]% [__]% [__]%
New Jersey Municipal Bond....................... [__]% [__]% [__]% [__]%
New York Municipal Bond......................... [__]% [__]% [__]% [__]%
Connecticut Municipal Bond...................... [__]% [__]% [__]% [__]%
Massachusetts Municipal Bond.................... [__]% [__]% [__]% [__]%
Rhode Island Municipal Bond..................... [__]% [__]% * *
</TABLE>

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

* The Rhode Island Municipal Bond Fund does not offer Trust Shares.

Based on the foregoing calculations, (i) the standard yield for Retail B
Shares of the Tax-Exempt Bond Fund for the 30-day period ended October 31, 1998
was [____]%, and (ii) the tax-equivalent yield for Retail B Shares of the
Tax-Exempt Bond Fund for the 30-day period ended October 31, 1998 was [____]%.

61
<PAGE>
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:

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

Where:

<TABLE>
<CAPTION>
<C> <S>
T = average annual total return;

ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year (or other)
period 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.
</TABLE>

Aggregate Total Return = [(ERV/P)-1]

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. In addition, the Funds' Retail Shares average annual return
and aggregate total return quotations will reflect the deduction of the maximum
sales load charged in connection with purchases of Retail A shares or
redemptions of Retail B shares, as the case may be.

The aggregate total returns for Retail A Shares and Trust Shares of the
Funds from the date of initial public offering through October 31, 1998 are set
forth below:

<TABLE>
<CAPTION>
FUND RETAIL A TRUST
-------------------------------------------------- -------- -----
<S> <C> <C>
Tax-Exempt Bond................................... [__]%(1) [__]%(1)
New Jersey Municipal Bond......................... [__]%(2) [__]%(2)
New York Municipal Bond........................... [__]%(3) [__]%(3)
Connecticut Municipal Bond........................ [__]%(4) [__]%(4)
Massachusetts Municipal Bond...................... [__]%(5) [__]%(5)
Rhode Island Municipal Bond....................... [__]%(6) *
</TABLE>

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

* The Rhode Island Municipal Bond Fund does not offer Trust Shares.

(1) For the period from December 30, 1991 (initial public offering date) through
October 31, 1998.

(2) For the period from April 3, 1998 (initial public offering date) through
October 31, 1998.

(3) For the period from December 31, 1991 (initial public offering date) through
October 31, 1998.

(4) For the period from March 16, 1993 (initial public offering date) through
October 31, 1998.

62
<PAGE>
(5) For the period from March 12, 1993 (initial public offering date) through
October 31, 1998.

(6) For the period from December 20, 1994 (initial public offering date) through
October 31, 1998.

The aggregate total return for Retail B Shares of the Tax-Exempt Bond Fund
from March 4, 1996 (initial public offering date) through October 31, 1998 was
[___]%.

The average annual total returns for Retail A Shares and Trust Shares (as
applicable) of the Funds for the one-year and five-year periods (as applicable)
ended October 31, 1998 are as set forth below:

<TABLE>
<CAPTION>
RETAIL A TRUST
---------------------------- ----------------------------
FUND ONE-YEAR FIVE-YEAR ONE-YEAR FIVE-YEAR
- --------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Tax-Exempt Bond.................................... [__]% [__]% [__]% [__]%
New Jersey Municipal Bond.......................... * * * *
New York Municipal Bond............................ [__]% [__]% [__]% [__]%
Connecticut Municipal Bond......................... [__]% [__]% [__]% [__]%
Massachusetts Municipal Bond....................... [__]% [__]% [__]% [__]%
Rhode Island Municipal Bond........................ [__]% * ** **
</TABLE>

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

* Not offered during the full period.

** The Rhode Island Municipal Bond Fund does not offer Trust Shares.

The average annual total return for Retail B Shares of the Tax-Exempt Bond
Fund for the one-year period ended October 31, 1998 was [____]%.

TAX EQUIVALENCY TABLES--NEW JERSEY MUNICIPAL BOND AND NEW YORK MUNICIPAL BOND
FUNDS

The New Jersey Municipal Bond and New York Municipal Bond Funds may use
tax-equivalency tables in advertising and sales. These tables are intended to
demonstrate the advantages of investing in tax free investments such as the New
Jersey Municipal Bond and New York Municipal Bond Funds. The tax exempt yields
used here are hypothetical and no assurance can be made that the Fund will
obtain any particular yield. A Fund's yield fluctuates as market conditions
change.

The tax brackets and related yield calculations are based on the expected
1998 Federal and state marginal tax rates. The combined Federal and state rate
reflects an assumed deduction of the state tax liability. In fact, however,
certain limitations on this deductibility may apply. Also, the tables do not
reflect the phase out of personal exemptions and itemized deductions which will
apply to certain higher income taxpayers.

Investors are urged to consult their tax advisors as to these matters.

63
<PAGE>
NEW JERSEY 1998
EQUIVALENT YIELDS: TAX-EXEMPT
<TABLE>
<CAPTION>
NEW JERSEY
AND FEDERAL NEW JERSEY TAX EQUIVALENT YIELDS:**
$TAXABLE INCOME* STATE FEDERAL EFFECTIVE -----------------------------------------------------
SINGLE RATE RATE RATE 1.5% 2.0% 2.5% 3.0% 3.5%
- ----------------------------------- --------- ----------- ------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-20,000 1.40% 15.0% 16.19% 1.79% 2.39% 2.98% 3.58% 4.18%
20,001-25,350 1.75% 15.0% 16.49% 1.80% 2.39% 2.99% 3.59% 4.19%
25,351-35,000 1.75% 28.0% 29.26% 2.12% 2.83% 3.53% 4.24% 4.95%
35,001-40,000 3.50% 28.0% 30.52% 2.16% 2.88% 3.60% 4.32% 5.04%
40,001-61,400 5.525% 28.0% 31.98% 2.21% 2.94% 3.68% 4.41% 5.15%
61,401-75,000 5.525% 31.0% 34.81% 2.30% 3.07% 3.84% 4.60% 5.37%
75,001-128,100 6.37% 31.0% 35.40% 2.32% 3.10% 3.87% 4.64% 5.42%
128,101-278,450 6.37% 36.0% 40.08% 2.50% 3.34% 4.17% 5.01% 5.84%
Over 278,450 6.37% 39.6% 43.45% 2.65% 3.54% 4.42% 5.30% 6.19%

NEW JERSEY
AND FEDERAL NEW JERSEY TAX EQUIVALENT YIELDS:**
$TAXABLE INCOME* STATE FEDERAL EFFECTIVE -----------------------------------------------------
MARRIED FILING JOINTLY RATE RATE RATE 1.5% 2.0% 2.5% 3.0% 3.5%
- ----------------------------------- --------- ----------- ------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
0-20,000 1.40% 15.0% 16.19% 1.79% 2.39% 2.98% 3.58% 4.18%
20,001-42,350 1.75% 15.0% 16.49% 1.80% 2.39% 2.99% 3.59% 4.19%
42,351-50,000 1.75% 28.0% 29.26% 2.12% 2.83% 3.53% 4.24% 4.95%
50,001-70,000 2.45% 28.0% 29.76% 2.14% 2.85% 3.56% 4.27% 4.98%
70,001-80,000 3.50% 28.0% 30.52% 2.16% 2.88% 3.60% 4.32% 5.04%
80,001-102,300 5.525% 28.0% 31.98% 2.21% 2.94% 3.68% 4.41% 5.15%
102,301-150,000 5.525% 31.0% 34.81% 2.30% 3.07% 3.84% 4.60% 5.37%
150,001-155,950 6.37% 31.0% 35.40% 2.32% 3.10% 3.87% 4.64% 5.42%
155,951-278,450 6.37% 36.0% 40.08% 2.50% 3.34% 4.17% 5.01% 5.84%
Over 278,450 6.37% 39.6% 43.45% 2.65% 3.54% 4.42% 5.30% 6.19%

$TAXABLE INCOME*
SINGLE 4.0% 4.5% 5.0% 5.5% 6.0%
- ----------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
0-20,000 4.77% 5.37% 5.97% 6.56% 7.16%
20,001-25,350 4.79% 5.39% 5.99% 6.59% 7.18%
25,351-35,000 5.65% 6.36% 7.07% 7.77% 8.48%
35,001-40,000 5.76% 6.48% 7.20% 7.92% 8.64%
40,001-61,400 5.88% 6.62% 7.35% 8.09% 8.82%
61,401-75,000 6.14% 6.90% 7.67% 8.44% 9.20%
75,001-128,100 6.19% 6.97% 7.74% 8.51% 9.29%
128,101-278,450 6.68% 7.51% 8.34% 9.18% 10.01%
Over 278,450 7.07% 7.96% 8.84% 9.73% 10.61%

$TAXABLE INCOME*
MARRIED FILING JOINTLY 4.0% 4.5% 5.0% 5.5% 6.0%
- ----------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
0-20,000 4.77% 5.37% 5.97% 6.56% 7.16%
20,001-42,350 4.79% 5.39% 5.99% 6.59% 7.18%
42,351-50,000 5.65% 6.36% 7.07% 7.77% 8.48%
50,001-70,000 5.70% 6.41% 7.12% 7.83% 8.54%
70,001-80,000 5.76% 6.48% 7.20% 7.92% 8.64%
80,001-102,300 5.88% 6.62% 7.35% 8.09% 8.82%
102,301-150,000 6.14% 6.90% 7.67% 8.44% 9.20%
150,001-155,950 6.19% 6.97% 7.74% 8.51% 9.29%
155,951-278,450 6.68% 7.51% 8.34% 9.18% 10.01%
Over 278,450 7.07% 7.96% 8.84% 9.73% 10.61%
</TABLE>

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

* This amount represents taxable income as defined in the Internal Revenue
Code. It is assumed that taxable income for New Jersey tax purposes is the
same as defined in the Internal Revenue Code. In fact, however, New Jersey
taxable income may differ due to differences in exemptions, itemized
deductions, and other items.

** Each entry represents the taxable yield that is the equivalent to the
specified Federal and New Jersey tax-exempt yield for a New Jersey taxpayer
in the specified income bracket.

64
<PAGE>
NEW YORK STATE AND CITY: 1998
EQUIVALENT YIELDS: TAX-EXEMPT

09-FEB-98
<TABLE>
<CAPTION>
NEW YORK
TAX
EQUIVALENT
TAXABLE INCOME* NEW YORK STATE NEW YORK STATE YIELDS:****
- --------------------------------- STATE CITY FEDERAL AND FEDERAL CITY AND FEDERAL -----------
SINGLE CITY RATE*** STATE RATE COMBINED RATE EFFECTIVE RATE EFFECTIVE RATE** 1.5%
- ---------------- --------------- ----- ----------- ----------- ----------------- ------------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
0 - 8,000 3.08% 4% 7.08000% 15% 18.40% 21.02% 1.90%
8,001 - 8,400 3.08% 4.5% 7.58000% 15% 18.83% 21.44% 1.91%
8,401 - 11,000 3.66% 4.5% 8.16000% 15% 18.83% 21.94% 1.92%
11,001 - 12,000 3.66% 5.25% 8.91000% 15% 19.46% 22.57% 1.94%
12,001 - 13,000 4.34% 5.25% 9.59000% 15% 19.46% 23.15% 1.96%
13,001 - 15,000 4.34% 5.9% 10.24000% 15% 20.02% 23.70% 1.97%
15,001 - 20,000 4.39% 5.9% 10.29000% 15% 20.02% 23.75% 1.97%
20,001 - 25,000 4.39% 6.85% 11.24000% 15% 20.82% 24.55% 1.99%
25,001 - 25,350 4.40% 6.85% 11.25000% 15% 20.82% 24.56% 1.99%
25,351 - 50,000 4.40% 6.85% 11.25000% 28% 32.93% 36.10% 2.35%
50,001 - 61,400 4.46% 6.85% 11.31000% 28% 32.93% 36.14% 2.35%
61,401 - 128,100 4.46% 6.85% 11.31000% 31% 35.73% 38.80% 2.45%
128,101 -
278,450 4.46% 6.85% 11.31000% 36% 40.38% 43.24% 2.64%
over 278,450 4.46% 6.85% 11.31000% 39.6% 43.74% 46.43% 2.80%

TAXABLE
- ----------------
SINGLE 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%

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

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 - 8,000 2.53% 3.17% 3.80% 4.43% 5.06% 5.70% 6.33% 6.96% 7.60%

8,001 - 8,400 2.55% 3.18% 3.82% 4.46% 5.09% 5.73% 6.36% 7.00% 7.64%

8,401 - 11,000 2.56% 3.20% 3.84% 4.48% 5.12% 5.76% 6.41% 7.05% 7.69%

11,001 - 12,000 2.58% 3.23% 3.87% 4.52% 5.17% 5.81% 6.46% 7.10% 7.75%

12,001 - 13,000 2.60% 3.25% 3.90% 4.55% 5.21% 5.86% 6.51% 7.16% 7.81%

13,001 - 15,000 2.62% 3.28% 3.93% 4.59% 5.24% 5.90% 6.55% 7.21% 7.86%

15,001 - 20,000 2.62% 3.28% 3.93% 4.59% 5.25% 5.90% 6.56% 7.21% 7.87%

20,001 - 25,000 2.65% 3.31% 3.98% 4.64% 5.30% 5.96% 6.63% 7.29% 7.95%

25,001 - 25,350 2.65% 3.31% 3.98% 4.64% 5.30% 5.97% 6.63% 7.29% 7.95%

25,351 - 50,000 3.13% 3.91% 4.69% 5.48% 6.26% 7.04% 7.82% 8.61% 9.39%

50,001 - 61,400 3.13% 3.92% 4.70% 5.48% 6.26% 7.05% 7.83% 8.61% 9.40%

61,401 - 128,100 3.27% 4.09% 4.90% 5.72% 6.54% 7.35% 8.17% 8.99% 9.80%

128,101 -
278,450 3.52% 4.40% 5.29% 6.17% 7.05% 7.93% 8.81% 9.69% 10.57%

over 278,450 3.73% 4.67% 5.60% 6.53% 7.47% 8.40% 9.33% 10.27% 11.20%

</TABLE>
<TABLE>
<CAPTION>
NEW YORK
TAX
EQUIVALENT
TAXABLE INCOME* NEW YORK STATE NEW YORK STATE YIELDS:****
- --------------------------------- STATE CITY FEDERAL AND FEDERAL CITY AND FEDERAL -----------
JOINT CITY RATE*** STATE RATE COMBINED RATE EFFECTIVE RATE EFFECTIVE RATE** 1.5%
- ---------------- --------------- ----- ----------- ----------- ----------------- ------------------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
0 - 14,400 3.08% 4% 7.0800% 15% 18.40% 21.02% 1.90%
14,401 - 16,000 3.66% 4% 7.6600% 15% 18.40% 21.51% 1.91%
16,001 - 21,600 3.66% 4.5% 8.1600% 15% 18.83% 21.94% 1.92%
21,601 - 22,000 4.34% 4.5% 8.8400% 15% 18.83% 22.51% 1.94%
22,001 - 26,000 4.34% 5.25% 9.5900% 15% 19.46% 23.15% 1.95%
26,001 - 27,000 4.34% 5.9% 10.2400% 15% 20.02% 23.70% 1.97%
27,001 - 40,000 4.39% 5.9% 10.2900% 15% 20.02% 23.75% 1.97%
40,001 - 42,350 4.39% 6.85% 11.2400% 15% 20.82% 24.55% 1.99%
42,351 - 45,000 4.39% 6.85% 11.2400% 28% 32.93% 36.09% 2.35%
45,001 - 90,000 4.40% 6.85% 11.2500% 28% 32.93% 36.10% 2.35%
90,001 - 102,300 4.46% 6.85% 11.3100% 28% 32.93% 36.14% 2.35%
102,301 -
155,950 4.46% 6.85% 11.3100% 31% 35.73% 38.80% 2.45%
155,951 -
278,450 4.46% 6.85% 11.3100% 36% 40.38% 43.24% 2.64%
over 278,450 4.46% 6.85% 11.3100% 39.6% 43.74% 46.43% 2.80%

TAXABLE
- ----------------
JOINT 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%

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

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 - 14,400 2.53% 3.17% 3.80% 4.43% 5.06% 5.70% 6.33% 6.96% 7.60%

14,401 - 16,000 2.55% 3.19% 3.82% 4.46% 5.10% 5.73% 6.37% 7.01% 7.64%

16,001 - 21,600 2.56% 3.20% 3.84% 4.48% 5.12% 5.76% 6.41% 7.05% 7.69%

21,601 - 22,000 2.58% 3.23% 3.87% 4.52% 5.16% 5.81% 6.45% 7.10% 7.74%

22,001 - 26,000 2.60% 3.25% 3.90% 4.55% 5.21% 5.86% 6.51% 7.16% 7.81%

26,001 - 27,000 2.62% 3.28% 3.93% 4.59% 5.24% 5.90% 6.55% 7.21% 7.86%

27,001 - 40,000 2.62% 3.28% 3.93% 4.59% 5.25% 5.90% 6.56% 7.21% 7.87%

40,001 - 42,350 2.65% 3.31% 3.98% 4.64% 5.30% 5.96% 6.63% 7.29% 7.95%

42,351 - 45,000 3.13% 3.91% 4.69% 5.48% 6.26% 7.04% 7.82% 8.61% 9.39%

45,001 - 90,000 3.13% 3.91% 4.69% 5.48% 6.26% 7.04% 7.82% 8.61% 9.39%

90,001 - 102,300 3.13% 3.92% 4.70% 5.48% 6.26% 7.05% 7.83% 8.61% 9.40%

102,301 -
155,950 3.27% 4.09% 4.90% 5.72% 6.54% 7.35% 8.17% 8.99% 9.80%

155,951 -
278,450 3.52% 4.40% 5.29% 6.17% 7.05% 7.93% 8.81% 9.69% 10.57%

over 278,450 3.73% 4.67% 5.60% 6.53% 7.47% 8.40% 9.33% 10.27% 11.20%

</TABLE>

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

* This amount represents taxable income as defined in the Internal Revenue
Code. It is assumed that taxable income as defined in the Internal Revenue
Code is the same as under the New York State or City Personal Income Tax
law; however, New York state or city taxable income may differ due to
differences in exemptions, itemized deductions, and other items.

** For federal tax purposes, these combined rates reflect the applicable
marginal rates for 1998, including indexing for inflation. These rates
include the effect of deducting state and city taxes on your Federal return.
For New York purposes, these combined rates reflect the expected New York
State and New York City tax and surcharge rates for 1998.

*** The New York city rate is comprised of the tax base rate, city surcharge,
and the additional city surcharge for 1998.

****These represent New York State, City, and Federal Equivalent Yields

65
<PAGE>
PERFORMANCE REPORTING

Performance 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 of the Funds. Performance data will be
calculated separately for Trust Shares, Retail A Shares, Retail B Shares, A
Prime Shares and B Prime Shares of the Funds.

The standard yield is computed as described above. Each Fund may also
advertise its "effective yield" which is calculated similarly but, when
annualized, the income earned by an investment in a Fund is assumed to be
reinvested. Each Fund may also quote its "tax equivalent yield" which
demonstrates the level of taxable yield necessary to produce an after-tax
equivalent yield to the Fund's tax-free yield. It is calculated as described
above. A Fund's tax-equivalent yield will always be higher than its yield.

66
<PAGE>
MISCELLANEOUS

As used in this Statement of Additional Informational, "assets belonging to"
a particular Fund or series of a Fund means the consideration received by Galaxy
upon the issuance of shares in that particular Fund or 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.

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

As of January [__], 1999, 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: [_________].

FINANCIAL STATEMENTS

Galaxy's Annual Report to Shareholders with respect to the Funds for the
fiscal year ended October 31, 1998 has been filed with the SEC. The financial
statements in such Annual Report (the "Financial Statements") are
[__________]into this Statement of Additional Information. The Financial
Statements included in the Annual Report for the Funds for the fiscal year ended
October 31, 1998 have been audited by Galaxy's independent accountants,
[__________], whose report thereon also appears in such Annual Report and is
[__________]. The Financial Statements in such Annual Report have been
[__________] in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

67
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS

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

CORPORATE AND TAX-EXEMPT BOND RATINGS

The five highest ratings of Fitch IBCA 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 very 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 good credit quality. The obligor's
ability to pay interest and repay principal is considered to be adequate.
Adverse changes in economic conditions and circumstances, however, are more
likely to have an adverse impact on these bonds, and therefore, impair timely
payment. The likelihood that the ratings of these bonds will fall below
investment grade is higher than for bonds with higher ratings. 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.

CORPORATE AND TAX-EXEMPT COMMERCIAL PAPER RATINGS

TAX-EXEMPT NOTE RATINGS

A-3
<PAGE>
protection commonly regarded as required of an investment security and not
distinctly or predominantly speculative.

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

A-4
<PAGE>
APPENDIX B

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

I. INTEREST RATE FUTURES CONTRACTS

B-1
<PAGE>
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.

II. MUNICIPAL BOND INDEX FUTURES CONTRACTS

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

B-3
<PAGE>
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 93/8 5/05/83 5/1/13 94-2
NYS Power 93/4 5/24/83 1/1/17 102-0
San Diego, CA IDR 10 6/07/83 6/1/18 100-14
Muscatine, IA Elec 105/8 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.

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

<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 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 position in Sell 50 Municipal Bond futures
municipal bonds contracts at 86-09

March 23 $4,873,438 long position in Buy 50 Municipal Bond futures
municipal bonds contracts at 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-4
<PAGE>
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 the broker.
At any time prior to expiration of the futures contract, Fleet 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

B-5
<PAGE>
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.

Successful use of futures by the Funds is also subject to Fleet'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-6
<PAGE>
THE GALAXY FUND
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 28, 1999

GALAXY MONEY MARKET FUND

RETAIL A SHARES, RETAIL B SHARES AND
TRUST SHARES

GALAXY GOVERNMENT FUND
GALAXY U.S. TREASURY FUND
GALAXY TAX-EXEMPT FUND

RETAIL A SHARES AND TRUST SHARES

GALAXY INSTITUTIONAL GOVERNMENT MONEY MARKET FUND
GALAXY CONNECTICUT MUNICIPAL MONEY MARKET FUND
GALAXY MASSACHUSETTS MUNICIPAL MONEY MARKET FUND

The Galaxy Fund
c/o First Data Distributors, Inc.
4400 Computer Drive
Westborough, MA 01581-5108

or by calling 1-877-BUY-GALAXY (1-877-289-4252).

CURRENT PROSPECTUSES

- Prospectus for Retail A Shares and Retail B Shares of the Money Market
Fund, Retail A Shares of the Government, U.S. Treasury and Tax-Exempt
Funds, and Shares of the Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds dated February 28, 1999

- Prospectus for Trust Shares of the Money Market, Government, U.S. Treasury
and Tax-Exempt Funds and Shares of the Institutional Government Money
Market Fund dated February 28, 1999

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GENERAL INFORMATION....................................................... 1
DESCRIPTION OF GALAXY AND ITS SHARES...................................... 1
INVESTMENT STRATEGIES, POLICIES AND RISKS................................. 3
Money Market Fund....................................................... 3
Government Fund......................................................... 3
U.S. Treasury Fund...................................................... 3
Tax-Exempt Fund......................................................... 4
Institutional Government Money Market Fund.............................. 4
Connecticut Municipal Money Market Fund................................. 4
Massachusetts Municipal Money Market Fund............................... 5
Other Investment Policies and Risk Considerations....................... 5
Quality Requirements.................................................... 5
U.S. Government Obligations............................................. 6
Money Market Instruments................................................ 6
Municipal Securities.................................................... 7
Stand-By Commitments.................................................... 9
Tender Option Bonds..................................................... 10
Variable and Floating Rate Instruments.................................. 10
Repurchase and Reverse Repurchase Agreements............................ 11
When-Issued and Delayed Settlement Transactions......................... 11
Securities Lending--Money Market and Government Funds................... 12
Guaranteed Investment Contracts--Money Market Fund...................... 12
Asset-Backed Securities--Money Market Fund.............................. 13
Investment Company Securities--Tax-Exempt Money Market Funds and the
Institutional Government Money Market Fund............................ 13
Non-Diversification--Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds............................ 14
Connecticut Investment Risks............................................ 14
Massachusetts Investment Risks.......................................... 17
Portfolio Securities Generally.......................................... 17
INVESTMENT LIMITATIONS.................................................... 17
NET ASSET VALUE........................................................... 23
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................ 23
Purchases of Retail Shares and Shares of the Institutional Government
Money Market Fund..................................................... 23
General................................................................. 23
Customers of Institutions............................................... 24
Other Purchase Information.............................................. 24
Applicable Sales Charges--Retail B Shares............................... 24
Purchases of Trust Shares............................................... 26
Redemption of Retail A Shares, Retail B Shares and Trust Shares......... 26
INVESTOR PROGRAMS......................................................... 27
Exchange Privilege--Retail Shares and Institutional Shares.............. 27
</TABLE>

i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Retirement Plans--Retail Shares......................................... 27
Automatic Investment Program and Systematic Withdrawal Plan--Retail
Shares................................................................ 28
College Investment Program--Retail Shares............................... 28
Checkwriting--Retail Shares............................................. 28
Direct Deposit Program--Retail Shares................................... 29
TAXES..................................................................... 29
State and Local......................................................... 30
Miscellaneous........................................................... 31
TRUSTEES AND OFFICERS..................................................... 32
Shareholder and Trustee Liability....................................... 34
INVESTMENT ADVISER........................................................ 35
Authority to Act as Investment Adviser.................................. 37
ADMINISTRATOR............................................................. 37
CUSTODIAN AND TRANSFER AGENT.............................................. 38
EXPENSES.................................................................. 39
PORTFOLIO TRANSACTIONS.................................................... 40
SHAREHOLDER SERVICES PLAN................................................. 40
DISTRIBUTION AND SERVICES PLAN............................................ 42
DISTRIBUTOR............................................................... 43
AUDITORS.................................................................. 44
COUNSEL................................................................... 44
PERFORMANCE AND YIELD INFORMATION......................................... 44
Tax-Equivalency Tables--Connecticut Municipal Money Market and
Massachusetts
Municipal Money Market Funds.......................................... 46
Performance Reporting................................................... 47
MISCELLANEOUS............................................................. 48
FINANCIAL STATEMENTS...................................................... 49
APPENDIX A................................................................ A-1
</TABLE>

ii
<PAGE>
GENERAL INFORMATION

This Statement of Additional Information should be read in conjunction with
a current Prospectus. This Statement of Additional Information relates to the
Prospectuses for Retail A Shares, Retail B Shares and Trust Shares of the Money
Market Fund, Retail A Shares and Trust Shares of each of the Government, U.S.
Treasury and Tax-Exempt Funds, and Shares of each of the Institutional
Government Money Market, Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds. No investment in shares of the Funds should be
made without reading a Prospectus.

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 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 an
unlimited number of shares in each of the 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), each series representing interests in
the Government Fund; Class E Shares (Retail A Shares) and Class E--Special
Series 1 Shares (Trust Shares), each series representing interests in the
Tax-Exempt Fund; Class F Shares (Retail A Shares) and Class F-- Special Series 1
Shares (Trust Shares), each series representing interests in the U.S. Treasury
Fund; Class S Shares representing interests in the Institutional Government
Money Market 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 Investment Company Act of 1940, as
amended (the "1940 Act"). The Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds are classified as non-diversified
investment companies under the 1940 Act.

1
<PAGE>
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.

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.
Each series of shares (i.e., Retail A Shares, Retail B Shares and Trust Shares)
bear pro rata the same expenses and are entitled equally to a Fund's dividends
and distributions except as follows. Each series will bear the expenses of any
distribution and/or shareholder servicing plans applicable to such series. For
example, as described below, holders of Retail A Shares will bear the expenses
of the Shareholder Services Plan for Retail A Shares and Trust Shares (which is
currently applicable only to Retail A Shares) and holders of Retail B Shares
will bear the expenses of the Distribution and Services Plan for Retail B
Shares. In addition, each series may incur differing transfer agency fees and
may have differing sales charges. Standardized yield and total return quotations
are computed separately for each series of shares. The differences in expenses
paid by the respective series will affect their performance. See "Shareholder
Services Plan" and Distribution and Services Plan" below.

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 shares of a
particular series of a Fund will be entitled to vote on matters submitted to a
vote of shareholders pertaining to any distribution and/or shareholder servicing
plan for such series (e.g., 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 Shares and Trust Shares and only
Retail B Shares of the Money Market Fund will be entitled to vote on matters
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 a
fundamental investment policy would be effectively acted upon with respect to a
Fund only if approved by a majority of the outstanding shares of such Fund
(irrespective of series designation). However, the Rule also provides that the
ratification of the appointment of independent public accountants, the approval
of principal underwriting contracts, and the election of trustees may be
effectively acted upon by shareholders of Galaxy voting without regard to class
or series.

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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.

INVESTMENT STRATEGIES, POLICIES AND RISKS

Fleet Investment Advisors Inc. ("Fleet"), the Fund's investment adviser,
will use its best efforts to achieve each Fund's investment objective, although
such achievement cannot be assured. The investment objective of a Fund, as
described in its Prospectus(es), 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. The following investment strategies, policies and
risks supplement those set forth in the Funds' Prospectuses.

MONEY MARKET FUND

Instruments in which the Money Market Fund invests have remaining maturities
of 397 days or less (except for certain variable and floating rate notes and
securities underlying certain repurchase agreements). For more information,
including applicable quality requirements, see "Other Investment Policies and
Risk Considerations" below.

GOVERNMENT FUND

Instruments in which the Government Fund invests have remaining maturities
of 397 days or less (except for certain variable and floating rate notes and
securities underlying certain repurchase agreements). See "Other Investment
Policies and Risk Considerations" below.

U.S. TREASURY FUND

Instruments in which the U.S. Treasury Fund invests 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 and
Federal Farm Credit Banks. 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

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<PAGE>
the Fund's capital gain and other income, if any, when so distributed will be
subject to the state's income tax. See "Taxes."

Portfolio securities held by the Fund have remaining maturities of 397 days
or less (with certain exceptions). The Fund may also invest in certain variable
and floating rate instruments. For more information, including applicable
quality requirements, see "Other Investment Policies and Risk Considerations"
below.

TAX-EXEMPT FUND

Municipal Securities in which the Tax-Exempt Fund invests present minimal
credit risk and meet the rating criteria described under "Other Investment
Policies and Risk Considerations--Quality Requirements" below. Municipal
Securities, as that term is used in this Statement of Additional Information,
are 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.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its assets in Municipal
Securities. The Fund's investments in private activity bonds 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.

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.

The Fund's portfolio securities will generally have remaining maturities of
397 days or less (except for certain variable and floating rate notes and
securities underlying certain repurchase agreements). See "Other Investment
Policies and Risk Considerations" below.

INSTITUTIONAL GOVERNMENT MONEY MARKET FUND

Instruments in which the Institutional Government Money Market Fund invests
have remaining maturities of 397 days or less (except for certain variable and
floating rate notes and securities underlying certain repurchase agreements).
See "Other Investment Policies and Risk Considerations" below.

CONNECTICUT MUNICIPAL MONEY MARKET FUND

The Connecticut Municipal Money Market Fund attempts to achieve its
objective by investing in a portfolio of 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
Connecticut state income tax on individuals, trusts and estates ("Connecticut
Municipal Securities") with remaining maturities of 397 days or less at the time
of purchase (with certain exceptions). Examples of Connecticut Municipal
Securities include, but are not limited to, municipal commercial paper and other
short-term notes; variable rate demand notes; municipal bonds (including bonds
having remaining maturities of less than 397 days without demand features); and
tender option bonds. See "Other Investment Policies and Risk Considerations"

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<PAGE>
below. 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.

MASSACHUSETTS MUNICIPAL MONEY MARKET FUND

The Massachusetts Municipal Money Market Fund attempts to achieve its
objective by investing in a portfolio of debt obligations issued by or on behalf
of the Commonwealth of Massachusetts and its political subdivisions and
financing authorities, and obligations of other states, territories and
possessions of the United States, including the District of Columbia, and any
political sub-division or financing authority of any of these, the interest
income from which is, in the opinion of qualified legal counsel, exempt from
federal regular income tax and the income taxes imposed by the Commonwealth of
Massachusetts upon non-corporate taxpayers ("Massachusetts Municipal
Securities") with remaining maturities of 397 days or less at the time of
purchase (with certain exceptions). 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 397 days without demand features); and
tender option bonds. See "Other Investment Policies and Risk Considerations"
below. 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.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

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 IBCA, Inc. ("Fitch IBCA") 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 securities, 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 will 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

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<PAGE>
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 three
highest rating categories assigned by a Rating Agency with respect to other bond
issues. Fleet also considers other relevant information in its evaluation of
unrated short-term securities.

U.S. GOVERNMENT OBLIGATIONS

U.S. Treasury securities 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 Federal Home Loan Mortgage
Corporation, 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 Funds.

The U.S. Treasury Fund 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.

MONEY MARKET INSTRUMENTS

"Money market" instruments include bank obligations and corporate
obligations, including commercial paper and corporate bonds with remaining
maturities of 397 days or less.

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
("FDIC"), or by a savings and loan association or savings bank that is insured
by the FDIC. Bank obligations also include U.S. dollar-denominated obligations
of foreign branches of U.S. banks or of U.S. branches of foreign banks, all of
the same type as domestic bank obligations. Investments in bank obligations are
limited to the obligations of financial institutions having more than $1 billion
in total assets at the time of purchase. Investments in non-negotiable time
deposits are limited to no more than 5% of the Money Market Fund's total assets
at the time of purchase. For the purposes of the Money Market Fund's

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<PAGE>
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.

Domestic and foreign banks are subject to extensive but different government
regulations which may limit the amount and types of their loans and the interest
rates that may be charged. In addition, the profitability of the banking
industry is largely dependent upon the availability and cost of funds to finance
lending operations and the quality of underlying bank assets.

Investments in obligations of foreign branches of U.S. banks and of U.S.
branches of foreign banks may subject a Fund to additional investment risks,
including future political and economic developments, the possible imposition of
withholding taxes on interest income, possible seizure or nationalization of
foreign deposits, the possible establishment of exchange controls, or the
adoption of other foreign governmental restrictions which might adversely affect
the payment of principal and interest on such obligations. In addition, foreign
branches of U.S. banks and U.S. branches of foreign banks may be subject to less
stringent reserve requirements and to different accounting, auditing, reporting
and recordkeeping standards than those applicable to domestic branches of U.S.
banks. Investments in the obligations of U.S. branches of foreign banks or
foreign branches of U.S. banks will be made only when 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 who make a market
in Section 4(2) Paper, thus providing liquidity. For purposes of each Fund's 10%
limitation on purchases of illiquid instruments described below, Section 4(2)
Paper will not be considered illiquid if Fleet has determined, in accordance
with guidelines approved by the Board of Trustees, that an adequate trading
market exists for such securities. The Money Market Fund and each Tax-Exempt
Money Market Fund may also purchase Rule 144A securities. See "Investment
Limitations" below.

MUNICIPAL SECURITIES

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

The two principal classifications of Municipal Securities that may be held
by the Tax-Exempt Money Market Funds are "general obligation" securities and
"revenue" securities. General obligation securities are secured by the issuer's
pledge of its full faith, credit and taxing power for the payment of principal
and interest. Revenue securities are payable only from the revenues derived from
a particular facility or class of facilities or, in some cases, from the
proceeds of a special excise tax or other specific revenue source such as the
user of the facility being financed. Private activity bonds are in most cases
revenue securities and are not payable from the unrestricted revenues of the
issuer. Consequently, the credit quality of private activity 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

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

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

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.

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 Rating Agency, such as
Moody's, S&P and Fitch IBCA described in Appendix A hereto, represent such
Rating Agency's 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.

The payment of principal and interest on most securities purchased by the
Tax-Exempt Money Market 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
Money Market 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

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<PAGE>
interest on and principal of its Municipal Securities may be materially
adversely affected by litigation or other conditions.

Among other instruments, the Tax-Exempt Money Market 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 Money Market
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 Prospectuses for the Funds including applicable maturity
restrictions.

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 Money Market Funds and the liquidity
and value of their respective portfolios. In such an event, a 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 Money Market Funds nor Fleet will review the proceedings relating to
the issuance of Municipal Securities or the bases for such opinions.

MUNIPREFERRED SECURITIES. The Connecticut Municipal Money Market and
Massachusetts Municipal 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 Funds, with liquidity and income exempt from federal regular income tax and
some state income taxes.

STAND-BY COMMITMENTS

Each Tax-Exempt Money Market 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 a Fund, at the 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.

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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. 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 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.

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 a 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 issued or
guaranteed by the U.S. Government or its agencies or instrumentalities are
similar in form but may have a more active secondary market. Substantial
holdings of variable and floating rate instruments could reduce portfolio
liquidity.

If a variable or floating rate instrument is not rated, Fleet 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.

Long-term variable and floating rate obligations held by the Funds may have
maturities of more than 397 days, 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).

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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.

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. 11 and 16
under "Investment Limitations" below with respect to the Money Market,
Government, U.S. Treasury, Institutional Government Money Market and Tax-Exempt
Funds, and to the 10% limit described under "Investment Limitations" below with
respect to the Connecticut Municipal Money Market and Massachusetts Municipal
Money Market Funds.

The 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 1940 Act.

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.

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.

WHEN-ISSUED AND DELAYED SETTLEMENT TRANSACTIONS

Each Fund may purchase securities on a "when-issued" or "delayed settlement"
basis. When-issued transactions, which involve a commitment by a Fund to
purchase particular securities with payment and delivery taking place at a
future date (perhaps one or two months later) permit the Fund to lock in a price
or yield on a security it intends to purchase, regardless of future changes in
interest rates. Delayed settlement describes settlement of a securities
transaction in the secondary market sometime in the future. When-issued and
delayed settlement transactions involve the risk, however, that the yield or
price obtained

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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.

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. 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
securities on a when-issued or delayed settlement basis exceeded 25% of the
value of its assets.

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 securities
purchased on a when-issued or delayed settlement basis is calculated from the
date of settlement of the purchase to the maturity date.

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.

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.

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.

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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."

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 the Fund's experiencing difficulty in valuing
or liquidating such securities. For these reasons, under certain circumstances,
asset-backed securities may be considered illiquid securities.

INVESTMENT COMPANY SECURITIES--TAX-EXEMPT MONEY MARKET FUNDS AND THE
INSTITUTIONAL GOVERNMENT MONEY MARKET FUND

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. Such securities may be acquired
by a Fund within the limits prescribed by the 1940 Act. Except as otherwise
permitted under 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.

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The Institutional Government Money Market Fund may invest up to 5% of its
total assets in securities issued by other open-end investment companies that
invest in the types of obligations in which the Fund may invest 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. 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.

NON-DIVERSIFICATION--CONNECTICUT MUNICIPAL MONEY MARKET AND MASSACHUSETTS
MUNICIPAL MONEY MARKET FUNDS

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, entails 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 of 1986, as amended (the "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.

CONNECTICUT INVESTMENT RISKS

The following information is a brief summary of factors affecting the
economies and financial strengths of the State of Connecticut, its
municipalities and its political subdivisions and does not purport to be a
complete description of such factors. Other factors will affect issuers. The
summary is based primarily upon one or more publicly available offering
statements relating to debt offerings of the State of Connecticut that were
available prior to the date of this Statement of Additional Information. The
accuracy and completeness of the information contained in such offering
statements have not been independently verified.

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

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fabricated metals, non-electrical machinery, and electrical equipment. As a
result of a rise in employment in service-related industries and a decline in
manufacturing employment, however, manufacturing accounted for only 17.09% of
total non-agricultural employment in Connecticut in 1997. Defense-related
business represents a relatively high proportion of the manufacturing sector. On
a per capita basis, defense awards to Connecticut have traditionally been among
the highest in the nation, and reductions in defense spending have had a
substantial adverse impact on Connecticut's economy.

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<PAGE>
license, permit and fee revenues pledged therefor and credited to the Special
Transportation Fund, which was established to budget and account for such
revenues.

The State's general obligation bonds are rated Aa3 by Moody's and AA by
Fitch. On October 8, 1998, Standard & Poor's upgraded its ratings of the State's
general obligation bonds from AA- to AA.

The State, its officers and its employees are defendants in numerous
lawsuits. Although it is not possible to determine the outcome of these
lawsuits, the Attorney General has opined that an adverse decision in any of the
following cases might have a significant impact on the State's financial
position: (i) a class action by the Connecticut Criminal Defense Lawyers
Association claiming a campaign of illegal surveillance activity and seeking
damages and injunctive relief; (ii) an action on behalf of all persons with
traumatic brain injury who have been placed in certain State hospitals, and
other persons with acquired brain injury who are in the custody of the
Department of Mental Health and Addiction Services, claiming that their
constitutional rights are violated by placement in State hospitals alleged not
to provide adequate treatment and training, and seeking placement in community
residential settings with appropriate support services; (iii) litigation
involving claims by Indian tribes to portions of the State's land area; and (iv)
an action by certain students and municipalities claiming that the State's
formula for financing public education violates the State's Constitution and
seeking a declaratory judgment and injunctive relief.

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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.

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 determine that it is appropriate for the Fund to 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
("SEC").

INVESTMENT LIMITATIONS

In addition to each Fund's investment objective as stated in its
Prospectus(es), 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").

Each of the Money Market, Government, U.S. Treasury, Tax-Exempt and
Institutional Government Money Market Funds may not:

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

2. 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.

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3. 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.

4. 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.

5. 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.

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

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

8. Invest in companies for the purpose of exercising management or
control.

9. 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 Government
Money Market Funds may acquire such securities in accordance with the 1940
Act; and provided, further, that the Institutional Government 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.

Each of the Money Market, Government, U.S. Treasury and Institutional
Government Money Market Funds may not:

10. 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 a Fund's total assets at the time of such
borrowing (provided that the Money Market and Government Funds may borrow
pursuant to reverse repurchase agreements in accordance with their
investment policies and in amounts not in excess of 10% of the value of
their respective total assets at the time of such borrowing); or mortgage,
pledge, or hypothecate any assets except in connection with any such
borrowing and in amounts not in excess of the lesser of the dollar amounts
borrowed or 10% of the value of a Fund's total assets at the time of such
borrowing. A Fund will not purchase securities while borrowings (including
reverse repurchase agreements with respect to the Money Market and
Government Funds) in excess of 5% of its total assets are outstanding.

11. Invest more than 10% of the value of its total assets in illiquid
securities, including, with respect to the Money Market, Government and U.S.
Treasury Funds, 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. 10 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 Limitation No. 11 above, the Institutional
Government Money Market Fund intends to limit investments in illiquid securities
to not more than 10% of the value of its net assets.

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

12. Purchase securities of any one issuer 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 the 5%
limitation; notwithstanding the foregoing restriction, each Fund may invest
without regard to the 5% limitation in U.S. Government obligations and as
otherwise permitted in accordance with Rule 2a-7 under the 1940 Act or any
successor rule.

With respect to Investment Limitation No. 12 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.

The Money Market Fund may not:

13. 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.

The Government Fund may not:

14. 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.

The Tax-Exempt Fund may not:

15. 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.

16. 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.

17. 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,
territory or possession of the U.S. Government, the District of Columbia, or
any of their authorities, agencies, instrumentalities, or political
subdivisions.

18. 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.

The Institutional Government Money Market Fund may not:

19. 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).

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The Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds may not:

20. 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.

21. 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.

22. 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. Neither 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. Neither Fund will purchase any securities
while borrowings in excess of 5% of its total assets are outstanding.

23. 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
its total assets at the time of purchase.

24. 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.

25. Purchase or sell commodities, commodity contracts, or commodity
futures contracts.

26. 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.

27. Lend any of its assets except that a Fund may acquire publicly or
non-publicly issued Connecticut or Massachusetts Municipal Securities or
temporary investments or enter into repurchase agreements, in accordance
with their respective investment objectives, policies, limitations and
Galaxy's Declaration of Trust.

28. With respect to at least 50% of its total assets, invest more than
5% of its total assets in the securities of a single issuer and 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 and 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
non-governmental 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.

29. 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 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.

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30. Invest more than 10% of its net assets in securities subject to
restrictions on resale under the Securities Act of 1933.

The following investment limitations 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):

31. Neither Fund will invest more than 5% of its 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.

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

The 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 Funds
limit their investments to instruments that, in the opinion of the Board of
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 Funds
will meet these same criteria and will have investment policies consistent
with Rule 2a-7 of the 1940 Act.

33. Neither 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.

34. Neither Fund may purchase or sell interests in oil, gas, or other
mineral exploration or development programs or leases.

35. Neither 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.

36. Neither 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.

37. Neither Fund may invest more than 10% 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.

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 such Fund will limit its purchase, together
with other securities considered to be illiquid, to 10% of its net assets.

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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); (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; and (c) the Institutional
Government Money Market 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 there is no limitation
with respect to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.

Each Fund may follow non-fundamental operating policies that are more
restrictive than its fundamental investment limitations, as set forth in the
Prospectuses and this Statement of Additional Information, in order to comply
with applicable laws and regulations, including the provisions of and
regulations under the 1940 Act. In particular, each Fund will comply with the
various requirements of Rule 2a-7 under the 1940 Act which regulates money
market funds. In accordance with Rule 2a-7, the Money Market Fund is subject to
the 5% limitation contained in Investment Limitation No. 12 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. Adherence by a Fund to the diversification
requirements of Rule 2a-7 is deemed to constitute adherence to the
diversification requirements of Investment Limitation No. 12 above. Each Fund
will determine the effective maturity of its respective investments, as well as
its ability to consider a security as having received the requisite short-term
ratings by Rating Agencies, according to Rule 2a-7. A Fund may change these
operating policies to reflect changes in the laws and regulations without the
approval of its shareholders.

Rule 144A under the 1933 Act 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. Investment by the Money Market Fund or any Tax-Exempt Money Market Fund
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 securities 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.

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The Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds do not intend to borrow money in excess of 5% of the value of their
respective assets or to invest more than 5% of their respective total assets in
securities of foreign issuers during the next twelve months.

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 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 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 397 days 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.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

PURCHASES OF RETAIL SHARES AND SHARES OF THE INSTITUTIONAL GOVERNMENT MONEY
MARKET FUND

GENERAL

Investments in Retail A Shares of the Money Market, Government, U.S.
Treasury and Tax-Exempt Funds ("Retail A Shares"), Shares of the Connecticut
Municipal Money Market and Massachusetts

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Municipal Money Market Funds ("Shares") (collectively, Retail A Shares, Shares
and Retail B Shares of the Money Market Fund may be referred to as "Retail
Shares"), and Shares of the Institutional Government Money Market Fund
("Institutional Shares") are not subject to any sales charge. Investments in
Retail B Shares of the Money Market 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." See "Applicable Sales Charge--Retail B Shares" below.
RETAIL B SHARES OF THE MONEY MARKET FUND HAVE HIGHER OPERATING EXPENSES THAN
RETAIL A SHARES OF THE FUND AND MAY NOT BE APPROPRIATE FOR INVESTORS THAT DO NOT
PLAN TO EXCHANGE INTO RETAIL B SHARES OF CERTAIN OF GALAXY'S NON-MONEY MARKET
PORTFOLIOS.

FD Distributors has established procedures to enable different types of
investors to purchase Retail Shares and Institutional Shares. Retail Shares and
Institutional Shares may be purchased by FIS 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 on behalf of their customers. Retail Shares may
also be purchased by individuals, corporations or other entities, who submit a
purchase application to Galaxy, purchasing directly for their own accounts or
for the accounts of others. Purchases of Retail Shares and Institutional Shares
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.

CUSTOMERS OF INSTITUTIONS

Retail Shares and Institutional Shares purchased by institutions on behalf
of their customers will normally be held of record by the institution and
beneficial ownership of Retail Shares and Institutional 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 and Institutional 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 and Institutional Shares
established by institutions in connection with the requirements of their
customer accounts may apply. Customers wishing to purchase Retail Shares or
Institutional Shares through their institution should contact such entity
directly for appropriate purchase instructions.

OTHER PURCHASE INFORMATION

APPLICABLE SALES CHARGES--RETAIL B SHARES

The public offering price for Retail B Shares of the Money Market Fund is
the net asset value of the Retail B Shares purchased. Although investors 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 of Galaxy's non-money market
portfolios. 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 the
Fund. Such compensation

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<PAGE>
will not represent an additional expense to the Fund or its shareholders, since
it will be paid from the assets of Fleet's affiliates. The contingent deferred
sales charge on Retail B Shares is based on the lesser of the offering price or
the net asset value of the Shares on the redemption date. As a result, no sales
charge is imposed on any increase in the principal value of an investor'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.

EXEMPTIONS FROM THE CONTINGENT DEFERRED SALES CHARGE. Certain types of
redemptions may also qualify for an exemption from the contingent deferred sales
charge. In addition to the sales charge exemptions described in the applicable
Prospectus, the contingent deferred sales charge with respect to Retail B Shares
is not assessed on: (i) 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 Code; (ii) 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; (iii) redemptions effected pursuant to the
Money Market 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; (iv) redemptions in connection with the combination of the Money
Market Fund with any other investment company registered under the 1940 Act by
merger, acquisition of assets, or by any other transaction; (v) redemptions
resulting from a tax-free return of an excess contribution pursuant to Section
408(d)(4) or (5) of the Code; or (vi) any redemption of Retail B Shares held by
an investor, provided the investor was the beneficial owner of shares of the
Money Market Fund (or any of the other portfolios offered by Galaxy or otherwise
advised by Fleet or its affiliates) before December 1, 1995. In addition to the
foregoing exemptions, no contingent deferred sales charge will be imposed on
redemptions made pursuant to the Systematic Withdrawal Plan, subject to the
limitations set forth under "Investor Programs--Retail Shares--Automatic
Investment Program and Systematic Withdrawal Plan" below.

Six years after purchase, Retail B Shares of the Money Market 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. The conversion from Retail B Shares to Retail
A Shares takes place at net asset value, as a result of which an investor
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 Retail B Shares are purchased. Upon conversion, an
investor would hold Retail A Shares subject to the operating expenses for Retail
A Shares.

Retail B Shares of the Money Market Fund acquired through a reinvestment of
dividends or distributions 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 an investor makes a one-time purchase of Retail B
Shares of the Fund, and subsequently acquires additional Retail B Shares of the
Fund only through reinvestment of dividends and/or distributions, all of such
investor'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.

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<PAGE>
PURCHASES OF TRUST SHARES

Trust Shares of the Money Market, Government, U.S. Treasury and Tax-Exempt
Funds are sold to investors maintaining qualified accounts at bank and trust
institutions, including subsidiaries of Fleet Financial Group, Inc. and, with
respect to each Fund other than the Tax-Exempt Fund, to participants in
employer-sponsored defined contribution plans (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. 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 ("Trust Business
Days"). If an Institution accepts a purchase order from its Customer on a
non-Trust Business Day, the order will not be executed until it is received and
accepted by FD Distributors on a Trust Business Day in accordance with the
foregoing procedures.

REDEMPTION OF RETAIL A SHARES, RETAIL B SHARES AND TRUST 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. On a Business
Day or Trust Business Day when the Exchange closes early due to a partial
holiday or otherwise, Galaxy will advance the time at which redemption orders
must be received in order to be processed on that Business Day or Trust Business
Day. Galaxy may require any information reasonably necessary to ensure that a
redemption has been duly authorized. When redeeming Retail Shares in the Money
Market Fund, investors should indicate whether they are redeeming Retail A
Shares or Retail B Shares of the Fund. If an 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 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.

With respect to Institutional Shares, Galaxy requires that an institution
maintain an average balance of $2,000,000 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. In addition, 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 1940 Act.
See "Net Asset Value" above for examples of when such redemptions might be
appropriate.

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 SEC, exists making disposal of a Fund's
investments or determination of its net asset value not reasonably practicable;
(b) the Exchange is closed (other than customary weekend and holiday closings);
or (c) the SEC by order has permitted such suspension.

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<PAGE>
INVESTOR PROGRAMS

The following information supplements the description in the applicable
Prospectus as to various Investor Programs available to holders of Retail Shares
and Institutional Shares.

EXCHANGE PRIVILEGE--RETAIL SHARES AND INSTITUTIONAL SHARES

The minimum initial investment to establish a new account in another
eligible fund by exchange, except for the Institutional Government Money Market
Fund, is $2,500, unless, with respect to Retail Shares, (i) the Retail Shares
being redeemed were purchased through a registered representative who is a Fleet
Bank employee, in which event there is no minimum investment requirement, or
(ii) at the time of the exchange the 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
Government Money Market Fund is $2 million.

An exchange involves a redemption of all or a portion of Retail Shares or
Institutional Shares and the investment of the redemption proceeds in 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 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, investors
should call Investor Services Group at 1-877-BUY-GALAXY (1-877-289-4252).
Customers of institutions should call their institution for such information.
Investors exercising the exchange privilege into other portfolios should request
and review the prospectuses for these portfolios prior to making an exchange.
Telephone 1-877-BUY-GALAXY (1-877-289-4252) for a prospectus or to make an
exchange.

RETIREMENT PLANS--RETAIL SHARES

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 traditional, Roth and
Education IRAs and "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).

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<PAGE>
SIMPLIFIED EMPLOYEE PENSION PLANS ("SEPS"), a form of retirement plan for
sole proprietors, partnerships and corporations. The minimum initial investment
for a SEP account is $500.

MULTI-EMPLOYEE RETIREMENT PLANS ("MERPS"), a retirement vehicle established
by employers for their employees which is qualified under Sections 401(k) and
403(b) of the 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 in the applicable
Prospectus. Detailed information concerning eligibility, service fees and other
matters related to these plans, and the form of application, is available from
FD Distributors (call 1-877-BUY-GALAXY (1-877-289-4252)) with respect to IRAs,
SEPs and Keogh Plans and from Fleet Securities, Inc. (call 1-800-221-8210) with
respect to MERPs.

AUTOMATIC INVESTMENT PROGRAM AND SYSTEMATIC WITHDRAWAL PLAN--RETAIL SHARES

The Automatic Investment Program permits an investor to purchase Retail
Shares of a Fund each month or each quarter. Provided an investor's financial
institution allows automatic withdrawals, Retail Shares are purchased by
transferring funds from the 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 Shares will be purchased on a monthly
or quarterly basis, on any Business Day designated by the 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 ("ACH")
member may be so designated.

The Systematic Withdrawal Plan permits an investor to automatically redeem
Retail Shares on a monthly, quarterly, semi-annual, or annual basis on any
Business Day designated by the investor. 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). No contingent deferred sales
charge will be assessed on redemptions of Retail B Shares of the Money Market
Fund made through the Systematic Withdrawal Plan that do not exceed 12% of an
account's net asset value on an annualized basis. For example, monthly,
quarterly and semi-annual Systematic Withdrawal Plan redemptions of Retail B
Shares will not be subject to the contingent deferred sales charge if they do
not exceed 1%, 3% and 6%, respectively, of an account's net asset value on the
redemption date. Systematic Withdrawal Plan redemptions of Retail B Shares in
excess of this limit are still subject to the applicable contingent deferred
sales charge.

COLLEGE INVESTMENT PROGRAM--RETAIL SHARES

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CHECKWRITING--RETAIL SHARES

Checkwriting is available for investors in Retail Shares. A charge for use
of the checkwriting privilege may be imposed by Galaxy. There is no limit to the
number of checks an investor may write per month in an amount per check of $250
or more. To obtain checks, an investor must complete the signature card that
accompanies the account application. To establish this checkwriting service
after opening an account in a Fund, investors must contact FD Distributors by
telephone 1-877-BUY-GALAXY (1-877-289-4252) or mail to obtain a signature card.
A signature guarantee may be required. An investor will receive the daily
dividends declared on the Retail Shares to be redeemed up to the day that a
check is presented to Galaxy's custodian for payment. Upon 30 days' written
notice to 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--RETAIL SHARES

TAXES

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."

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.

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.

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<PAGE>
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
shares of the Fund.

An investment in a Tax-Exempt Money Market Fund is not intended to
constitute a balanced investment program. Shares of the Funds would not be
suitable for tax-exempt institutions and may not be suitable for retirement
plans qualified under Section 401 of the Code, H.R. 10 plans and individual
retirement accounts because such plans and accounts are generally tax-exempt
and, therefore, not only would the shareholder not gain any additional benefit
from the Funds' dividends being tax-exempt, but such dividends would be
ultimately taxable to the beneficiaries when distributed. In addition, the Funds
may not be an appropriate investment for entities which are "substantial users"
of facilities financed by "private activity bonds" or "related persons" thereof.
"Substantial user" is defined under U.S. Treasury Regulations to include a
non-exempt person who (i) regularly uses a part of such facilities in his or her
trade or business and whose gross revenues derived with respect to the
facilities financed by the issuance of bonds are more than 5% of the total
revenues derived by all users of such facilities, (ii) occupies more than 5% of
the usable area of such facilities or (iii) are persons for whom such facilities
or a part thereof were specifically constructed, reconstructed or acquired.
"Related persons" include certain related natural persons, affiliated
corporations, a partnership and its partners and an S corporation and its
shareholders.

In order for the 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.

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 imposed on resident and nonresident
individuals, trusts and estates to the extent that they are derived from
Connecticut Municipal Securities (as defined above). Other Fund dividends and
distributions, whether received in cash or additional shares, are subject to
this tax, except that, in the case of shareholders who hold their shares as
capital assets, distributions treated as capital gain dividends for federal
income tax purposes are not subject to the tax to the extent that they are
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. 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

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

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

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

MISCELLANEOUS

Shareholders will be advised at least annually as to the federal income tax
consequences of distributions made each year. Shareholders of the Connecticut
Municipal Money Market and Massachusetts Municipal Money Market Funds will also
be advised as to the Connecticut personal income tax and Massachusetts personal
income tax consequences, respectively, of distributions made each year.

31
<PAGE>
TRUSTEES AND OFFICERS

John T. O'Neill ....................... President, Executive Vice President and CFO, Hasbro, Inc. (toy
Hasbro, Inc. Treasurer & and game manufacturer); Trustee, The Galaxy VIP Fund;
1011 Newport Avenue Trustee Trustee, Galaxy Fund II.
Pawtucket, RI 02862
Age 54

James M. Seed ......................... Trustee Chairman and President, The Astra Projects,
The Astra Ventures, Inc. Incorporated (land development); President, The Astra
One Citizens Plaza Ventures, Incorporated (previously, Buffinton Box
Providence, RI 02903 Company -manufacturer of cardboard boxes);
Age 57 Commissioner, Rhode Island Investment Commission;
Trustee, The Galaxy VIP Fund; Trustee, Galaxy Fund II.

32
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
POSITIONS WITH DURING PAST 5 YEARS
NAME AND ADDRESS THE GALAXY FUND AND OTHER AFFILIATIONS
- --------------------------------------- ---------------- ------------------------------------------------------
<S> <C> <C>
W. Bruce McConnel, III ................ Secretary Partner of the law firm Drinker Biddle & Reath LLP,
Philadelphia National Philadelphia, Pennsylvania.
Bank Building
1345 Chestnut Street.
Philadelphia, PA 19107
Age 56

William Greilich ...................... Vice President Vice President, Investor Services Group, Inc.,
First Data Investor Services 1991-96; Vice President and Division Manager, First
Group, Inc. Data Investor Services Group, Inc., 1996-present.
4400 Computer Drive
Westborough, MA 01581-5108
Age 45
</TABLE>

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

(1) May be deemed to be an "interested person" within the definition set forth
in Section 2(a)(19) of the 1940 Act.

33
<PAGE>
No employee of Investor Services Group 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.

<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS TOTAL COMPENSATION
AGGREGATE ACCRUED AS PART FROM GALAXY AND
COMPENSATION FROM OF FUND FUND COMPLEX PAID
NAME OF PERSON/POSITION GALAXY EXPENSES TO TRUSTEES
- -------------------------------------------------------- ------------------ --------------- -------------------
<S> <C> <C> <C>
Bradford S. Wellman ....................................
Trustee [______] None [______]

Dwight E. Vicks, Jr. ...................................
Chairman and Trustee [______] None [______]

Donald B. Miller** .....................................
Trustee [______] None [______]

Rev. Louis DeThomasis ..................................
Trustee [______] None [______]

John T. O'Neill ........................................
President, Treasurer and Trustee [______] None [______]

James M. Seed** ........................................
Trustee [______] None [______]
</TABLE>

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

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

** Deferred compensation (including interest) in the amounts of [______] and
[______] accrued during Galaxy's fiscal year ended October 31, 1998 for
Messrs. Miller and Seed, respectively.

SHAREHOLDER AND TRUSTEE LIABILITY

34
<PAGE>
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.

INVESTMENT ADVISER

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;

- 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; and

- with respect to the Institutional Government Money Market Fund, .20% of
the average daily net assets of the Fund.

Fleet has advised Galaxy that, with respect to the Money Market, Government
and Tax-Exempt Funds, it 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.

During the last three fiscal years, Galaxy paid advisory fees (net of fee
waivers and/or expense reimbursements) to Fleet as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
FUND 1998 1997 1996
- -------------------------------------------------------------------------- ---------- ------------ ------------
<S> <C> <C> <C>
Money Market.............................................................. $ [_____] $ 9,458,596 $ 6,802,258
Government................................................................ $ [_____] $ 4,214,959 $ 3,790,727
U. S. Treasury............................................................ $ [_____] $ 3,439,391 $ 2,715,959
Tax-Exempt................................................................ $ [_____] $ 1,275,727 $ 1,270,800
Institutional Government Money Market..................................... $ [_____] $ 350,902 $ 487,246
Connecticut Municipal Money Market........................................ $ [_____] $ 497,713 $ 386,073(1)
Massachusetts Municipal Money Market...................................... $ [_____] $ 251,050 $ 154,616(1)
</TABLE>

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

(1) For the period from December 4, 1995 to October 31, 1996. For the period
from November 1, 1995 to December 3, 1995, Shawmut Bank, N.A., the
investment adviser for the Predecessor Funds, earned the following advisory
fees: $43,242 and $17,003 with respect to the Predecessor Connecticut
Municipal Money Market Fund and Predecessor Massachusetts Municipal Money
Market Fund, respectively, none of which was voluntarily waived.

35
<PAGE>
During the last three fiscal years, Fleet waived advisory fees as set forth
below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
FUND 1998 1997 1996
- ----------------------------------------------------------------------------- ---------- ---------- ----------
<S> <C> <C> <C>
Money Market................................................................. $ [_____] $ 922,657 $ 543,180
Government................................................................... $ [_____] $ 173,566 $ 113,057
U. S. Treasury............................................................... $ [_____] $ 0 $ 0
Tax-Exempt................................................................... $ [_____] $ 0 $ 0
Institutional Government Money Market........................................ $ [_____] $ 350,901 $ 484,786
Connecticut Municipal Money Market........................................... $ [_____] $ 0 $ 0
Massachusetts Municipal Money Market......................................... $ [_____] $ 0 $ 0
</TABLE>

During the last three fiscal years, Fleet reimbursed expenses as follows:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED
OCTOBER 31:
FUND 1998 1997 1996
- --------------------------------------------------------------------------- ---------- --------- ---------
<S> <C> <C> <C>
Money Market............................................................... $ [_____] $ 17 $ 85,430
Government................................................................. $ [_____] $ 542 $ 13,713
U. S. Treasury............................................................. $ [_____] $ 25,108 $ 828
Tax-Exempt................................................................. $ [_____] $ 15,751 $ 16,727
Institutional Government Money Market...................................... $ [_____] $ 18,206 $ 31,826
Connecticut Municipal Money Market......................................... $ [_____] $ 62,664 $ 93,862(1)
Massachusetts Municipal Money Market....................................... $ [_____] $ 54,862 $ 90,548(1)
</TABLE>

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

36
<PAGE>
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 such banking laws and regulations 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

<TABLE>
<CAPTION>
COMBINED AVERAGE DAILY NET ASSETS ANNUAL RATE
- -------------------------------------------------------------------------------- ------------
<S> <C>
Up to $2.5 billion.............................................................. 0.090%
From $2.5 to $5 billion......................................................... 0.085%
From $5 to $12 billion.......................................................... 0.075%
From $12 to $15 billion......................................................... 0.065%
From $15 to $18 billion......................................................... 0.060%
Over $18 billion................................................................ 0.0575%
</TABLE>

In addition, Investor Services Group also receives a separate annual fee
from each Galaxy portfolio for certain fund accounting services.

From time to time, Investor Services Group may waive voluntarily all or a
portion of the administration fee payable to it by the Funds. For the fiscal
year ended October 31, 1998, the Money Market, Government, Tax-Exempt, U.S.
Treasury, Connecticut Municipal Money Market and Massachusetts

37
<PAGE>
Municipal Money Market Funds paid Investor Services Group administration fees at
the effective annual rate of [___]% of each Fund's average daily net assets, and
the Institutional Government Money Market Fund paid Investor Services Group
administration fees (after fee waivers) at the effective annual rate of [___]%
of the Fund's average daily net assets.

During the last three fiscal years, Investor Services Group received
administration fees (net of fee waivers) as set forth below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER 31:
FUND 1998 1997 1996
- ----------------------------------------------------- ---------- ------------ ------------
<S> <C> <C> <C>
Money Market......................................... $ [_____] $ 2,118,433 $ 1,556,983
Government........................................... $ [_____] $ 895,995 $ 828,248
U.S. Treasury........................................ $ [_____] $ 720,691 $ 577,419
Tax-Exempt........................................... $ [_____] $ 263,643 $ 273,302
Institutional Government Money Market(1)............. $ [_____] $ 173,799 $ 243,008
Connecticut Municipal Money Market................... $ [_____] $ 101,578 $ 81,178(2)
Massachusetts Municipal Money Market................. $ [_____] $ 51,212 $ 32,643(2)
</TABLE>

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

(1) For the fiscal years ended October 31, 1998, October 31, 1997 and October
31, 1996, Investor Services Group waived administration fees of $[_____],
$142,012 and $174,704, respectively, with respect to the Institutional
Government Money Market Fund.

(2) For the period from December 4, 1995 through October 31, 1996. For the
period from November 1, 1995 to December 3, 1995, Federated Administrative
Services, a subsidiary of Federated Investors, served as administrator of
the Predecessor Funds and earned the following administrative fees: $12,973,
and $5,101 with respect to the Predecessor Connecticut Municipal Money
Market Fund and Predecessor Massachusetts Municipal Money Market Fund,
respectively, none of which was voluntarily waived.

CUSTODIAN AND TRANSFER AGENT

38
<PAGE>
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.

Investor Services Group, a wholly-owned subsidiary of First Data
Corporation, serves as the Funds' transfer and dividend disbursing agent,
pursuant to a Transfer Agency and Services Agreement (the "Transfer Agency
Agreement"). Communications to Investor Services Group should be directed to
Investor Services Group at P.O. Box 5108, 4400 Computer Drive, Westborough,
Massachusetts 01581. Under the Transfer Agency Agreement, Investor Services
Group 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.

Investor Services Group may enter into agreements with one or more entities,
including affiliates of Fleet, pursuant to which such entities agree to 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. Such entities are compensated by Investor Services Group 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 Investor Services Group 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.

Fleet Bank, an affiliate of Fleet, is paid a fee for Sub-Account Services
performed with respect to Trust Shares of the Money Market, Government and U.S.
Treasury Funds held by defined contribution plans. Pursuant to an agreement
between Fleet Bank and Investor Services Group, Fleet Bank is paid $21.00 per
year for each defined contribution plan participant account. For the fiscal year
ended October 31, 1998, Fleet Bank received $[_____] for Sub-Account Services.
Investor Services Group 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 Investor Services Group for transfer agency services.

EXPENSES

39
<PAGE>
PORTFOLIO TRANSACTIONS

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.

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.
During the fiscal year ended October 31, 1998, (1) the [_____] Fund held [_____]
with a value of $[_____]; (2) the [_____] Fund held [_____] with a value of
$[_____] and held [_____] with a value of $[_____]; (3) the [_____] Fund held
[_____] with a value of $[_____]. [_____] and [_____] are considered "regular
brokers or dealers" of Galaxy.

Investment decisions for each Fund are made independently from those for the
other Funds and portfolios of Galaxy 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 Galaxy's other Funds and
portfolios, or other investment companies or accounts in order to obtain best
execution.

SHAREHOLDER SERVICES PLAN

Galaxy has adopted a Shareholder Services Plan with respect to each Fund
other than the Institutional Government Money Market Fund pursuant to which
Galaxy intends to enter into servicing agreements with institutions (including
Fleet Bank and its affiliates). Pursuant to these servicing agreements,
institutions 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/Shares of a Fund beneficially owned by
such customers. Services under the Shareholder Services Plan may include:
aggregating and processing purchase and redemption

40
<PAGE>
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/ Shares; providing sub-accounting with
respect to Retail A Shares/Shares or the information necessary for
sub-accounting; and providing periodic mailings to customers. Such services are
intended to supplement the services provided by Investor Services Group as
administrator and transfer agent.

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
Statement of Additional Information, Galaxy intends to enter into servicing
agreements under the Shareholder Services Plan only with respect to Retail A
Shares/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/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/Shares. As of October 31, 1998, Galaxy
had entered into Servicing Agreements only with Fleet Bank and affiliates.

During the last three fiscal years, Galaxy made payments to Service
Organizations 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 as shown in the table
below:

<TABLE>
<CAPTION>
FOR THE FISCAL YEAR ENDED OCTOBER
31:
FUND 1998 1997 1996
- ------------------------------------------------------- ---------- ------------ ----------
<S> <C> <C> <C>
Money Market........................................... $ [_____] $ 1,430,359 $ 765,457
Government............................................. $ [_____] $ 346,517 $ 320,372
U.S. Treasury.......................................... $ [_____] $ 507,400 $ 348,084
Tax-Exempt............................................. $ [_____] $ 133,048 $ 125,962
Connecticut Municipal Money Market..................... $ [_____] $ 111,361 $ 104,877(1)
Massachusetts Municipal Money Market................... $ [_____] $ 58,905 $ 38,441(1)
</TABLE>

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

(1) For the period from December 4, 1995 through October 31, 1996.

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. (Shares of the Connecticut Municipal Money Market
and Massachusetts Municipal Money Market Funds). 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").

41
<PAGE>
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 pursuant to Rule 12b-1
under the 1940 Act ( the "Rule") with respect to Retail B Shares of the Money
Market Fund (the "12b-1 Plan"). Under the 12b-1
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 12b-1 Plan, 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, (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 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.

Payments for distribution expenses under the 12b-1 Plan are subject to the
Rule. The Rule defines distribution expenses to include the cost of "any
activity which is primarily intended to result in the sale of shares issued by"
Galaxy. 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 (the "12b-1 Trustees"), by vote cast in person at a meeting
called for the purpose of considering such amendments.

42
<PAGE>
During the last two fiscal years, Retail B Shares of the Money Market Fund
bore distribution fees and shareholder servicing fees under the 12b-1 Plan as
set forth in the table below:

<TABLE>
<CAPTION>
DISTRIBUTION SHAREHOLDER SERVICES
FOR THE FISCAL YEAR ENDED OCTOBER 31: FEES FEES
- -------------------------------------------------------------------------- ---------------- --------------------
<S> <C> <C>
1998...................................................................... $ [_____] $ [_____]
1997...................................................................... $ 1,869 $ 288
</TABLE>

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

(1) For the period from March 6, 1997 (commencement of operations) through
October 31, 1997.

During this period, 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 Money Market Fund and holders of
Retail B Shares. The 12b-1 Plan is subject to annual reapproval by a majority of
the 12b-1Trustees and is terminable at any time with respect to the Fund by a
vote of a majority of the 12b-1 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 12b-1 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 the 12b-1 Trustees.

DISTRIBUTOR

FD Distributors is entitled to the payment of contingent deferred sales
charges upon the redemption of Retail B Shares of the Money Market Fund. For the
fiscal year ended October 31, 1998, and for the period March 6, 1997 (initial
public offering date) through October 31, 1997, FD Distributors received
contingent deferred sales charges of $[_____] and $655, respectively, in
connection with Retail B Share redemptions in the Money Market Fund.

43
<PAGE>
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, 1998:

<TABLE>
<CAPTION>
BROKERAGE
NET UNDERWRITING COMPENSATION ON COMMISSIONS IN
DISCOUNTS AND REDEMPTION AND CONNECTION WITH OTHER
FUND COMMISSIONS(1) REPURCHASE(2) FUND TRANSACTIONS COMPENSATION(3)
- ----------------------------------------- ---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Money Market............................. $ [_____] $ [_____] $ 0 $ [_____]
Government............................... N/A N/A $ 0 $ [_____]
Tax-Exempt............................... N/A N/A $ 0 $ [_____]
U.S. Treasury............................ N/A N/A $ 0 $ [_____]
Institutional Government Money Market.... N/A N/A $ 0 N/A
Connecticut Municipal Money Market....... N/A N/A $ 0 $ [_____]
Massachusetts Municipal Money Market..... N/A N/A $ 0 $ [_____]
</TABLE>

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

(1) Represents amounts received from 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.

AUDITORS

[__________], independent certified public accountants, with offices at
[___________], 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 [_______] into
this Statement of Additional Information for the respective fiscal periods ended
October 31 of each calendar year have been audited by [________] for the periods
included in their report thereon which appears therein.

COUNSEL

PERFORMANCE AND YIELD INFORMATION

The standardized annualized seven-day yields for the Funds are computed by:
(1) determining the net change, exclusive of capital changes and income other
than investment income, 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-

44
<PAGE>
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.

In addition, the Tax-Exempt, Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds may calculate a "tax equivalent
yield." The tax equivalent yield is computed by dividing that portion of a
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%. Tax equivalent yields of the Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds assume 32.50% and 40.00%
combined federal and state tax rates, respectively, and indicate what each Fund
would have had to earn to equal its actual yield, assuming that income earned by
a Fund is 100% tax-exempt.

The current yields for the Funds may be obtained by calling FD Distributors
at 1-877-BUY GALAXY (1-877-289-4252).

For the seven-day period ended October 31, 1998, the annualized yields and
effective yields for Retail A Shares of the Money Market, Government, U.S.
Treasury and Tax-Exempt Funds and Shares of the Connecticut Municipal Money
Market, Massachusetts Municipal Money Market and Institutional Government Money
Market Funds, and the tax-equivalent yield for Retail A Shares of the Tax-Exempt
Fund and Shares of the Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds were as set forth below:

<TABLE>
<CAPTION>
TAX-
ANNUALIZED EFFECTIVE EQUIVALENT
FUND YIELD YIELD YIELD
- ------------------------------------------------------------------------------ ----------- --------- -----------
<S> <C> <C> <C>
Money Market.................................................................. [_____]% [_____]% *
Government.................................................................... [_____]% [_____]% *
U. S. Treasury................................................................ [_____]% [_____]% *
Tax-Exempt.................................................................... [_____]% [_____]% [_____]%
Institutional Government Money Market......................................... [_____]% [_____]% *
Connecticut Municipal Money Market............................................ [_____]% [_____]% [_____]%
Massachusetts Municipal Money Market.......................................... [_____]% [_____]% [_____]%
</TABLE>

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

* Not applicable

For the seven-day period ended October 31, 1998, the annualized yields and
effective yields for Trust Shares of the Money Market, Government, U.S. Treasury
and Tax-Exempt Funds, and the tax-equivalent yield for Trust Shares of the
Tax-Exempt Fund were as set forth below:

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

* Not applicable

45
<PAGE>
For the seven-day period ended October 31, 1998, the annualized yield and
effective yield for Retail B Shares of the Money Market Fund were [_____]% and
[_____]%, respectively.

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 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 the Fund's yield which is tax-exempt by one minus a stated income tax
rate. Based on the foregoing calculation and assuming, for purposes of
illustration, state income tax rates of 3%, 7% and 11%, the state flow through
yields for the seven-day period ended October 31, 1998 for Retail A Shares and
Trust Shares of the U.S. Treasury Fund were as set forth below:

<TABLE>
<CAPTION>
SERIES 3% 7% 11%
- ------------------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
Retail A Shares................................................................ [_____]% [_____]% [_____]%
Trust Shares................................................................... [_____]% [_____]% [_____]%
</TABLE>

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 remains free from federal regular income tax, and from the
regular personal income tax imposed by Connecticut and Massachusetts. Some
portion of either Fund's income may, however, be subject to the federal
alternative minimum tax and state and local regular or alternative minimum
taxes. As the tables below indicate, "tax-free" investments may be attractive
choices for investors, particularly in times of narrow spreads between
"tax-free" and taxable yields.

The charts below are for illustrative purposes only and use tax brackets
that were in effect beginning January 1, 1998. These are not indicators of past
or future performance of the Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds.

Note: The maximum marginal tax rate for each bracket was used in calculating
the taxable yield equivalent for each chart. Furthermore, additional state and
local taxes paid on comparable taxable investments were not used to increase
federal deductions. Moreover, the charts do not reflect the possible effect of
all items relating to the effective marginal tax rate, such as alternative
minimum tax, personal exemptions, tax credits, the phase-out of exemptions or
credits, itemized deductions (including the federal deduction for state taxes
paid) or the possible partial disallowance of deductions.

Connecticut Note: The charts below do not address taxable equivalent yields
applicable to married taxpayers filing separate returns or heads of households.

Investors are urged to consult their own tax advisors as to these matters.

TAXABLE YIELD EQUIVALENT FOR 1998
STATE OF CONNECTICUT

<TABLE>
<S> <C> <C> <C> <C> <C>
Federal Tax Bracket: 15.00% 28.00% 31.00% 36.00% 39.60%
Combined Federal and
State: 19.50% 32.50% 35.50% 40.50% 44.10%
Joint Return: $1-41,200 $41,201-99,600 $99,601-151,750 $151,751-271,050 Over $271,050
Single Return: $1-24,650 $24,651-59,750 $59,751-124,650 $124,651-271,050 Over $271,050
Tax-Exempt Yield:
</TABLE>

46
<PAGE>
TAXABLE YIELD EQUIVALENT

TAXABLE YIELD EQUIVALENT FOR 1998
STATE OF MASSACHUSETTS

<TABLE>
<S> <C> <C> <C> <C> <C>
Federal Tax Bracket: 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: $1-42,350 $42,350-102,300 $102,300-155,950 $155,950-278,450 Over $278,450
Single Return: $1-25,350 $25,350-61,400 $61,400-128,100 $128,100-278,450 Over $278,450
Tax-Exempt Yield:
</TABLE>

TAXABLE YIELD EQUIVALENT

PERFORMANCE REPORTING

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-REGISTERED TRADEMARK-, 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
performance of the Money Market, Government, U.S. Treasury and Institutional
Government Money Market Funds 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.

47
<PAGE>
The yield of a Fund refers to the income generated over a seven-day period
identified in the advertisement and is calculated as described above. Each Fund
may also advertise its "effective yield" which is calculated as described above.
The "effective yield" will be slightly higher because of the compounding effect
of the assumed reinvestment. Also, each Tax-Exempt Money Market Fund may from
time to time advertise a "tax-equivalent yield" to demonstrate the level of
taxable yield necessary to produce an after-tax yield equivalent to that
achieved by the Fund. The "tax-equivalent yield" is computed as described above.
The U.S. Treasury Fund may also advertise a "state flow through yield," as
discussed above.

The Funds' yields will fluctuate and any quotation of yield should not be
considered as representative of the 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 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 of January [__], 1999, 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: [_________].

48
<PAGE>
As of January [__], 1999, 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: [____________].

FINANCIAL STATEMENTS

Galaxy's Annual Report to Shareholders with respect to the Funds for the
fiscal year ended October 31, 1998 has been filed with the SEC. The financial
statements in such Annual Report (the "Financial Statements") are [_________]
into this Statement of Additional Information. The Financial Statements included
in the Annual Report for the Funds for the fiscal year ended October 31, 1998
have been audited by Galaxy's independent accountants, [_________], whose report
thereon also appears in such Annual Report and is [_________]. The Financial
Statements in such Annual Report have been [_________] in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

49
<PAGE>
APPENDIX A

DESCRIPTION OF SECURITIES RATINGS

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

CORPORATE AND TAX-EXEMPT BOND RATINGS

The five highest ratings of D&P for tax-exempt and corporate fixed-income
securities are AAA, AA, A, BBB and BB. Securities rated AAA are of the highest
credit quality. The risk factors are considered to be negligible, being only
slightly more than for risk-free U.S. Treasury debt. Securities rated AA are of
high credit quality. Protection factors are strong. Risk is modest but may vary
slightly from time to time because of economic conditions. Securities that are
rated "A" have protection factors that are average but adequate. However, risk
factors are more variable and greater in periods of economic stress. Securities
that are rated "BBB" have below average protection factors but are still
considered sufficient for prudent investment. Considerable variability in risk
is present during economic cycles. Securities that are rated "BB" are considered
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 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 uncertainties or exposure to adverse business, financial or economic
conditions which could lead to inadequate capacity to meet timely interest and
principal

A-1
<PAGE>
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.

CORPORATE AND TAX-EXEMPT COMMERCIAL PAPER RATINGS

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

A-2
<PAGE>
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.

TAX-EXEMPT NOTE RATINGS

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

A-3
<PAGE>
THE GALAXY FUND

FORM N-1A

PART C. OTHER INFORMATION

Item 23. Exhibits

(a) (1) Declaration of Trust dated March 31, 1986.(4)

(2) Amendment No. 1 to the Declaration of Trust dated as of
April 26, 1988.(4)

(3) Certificate pertaining to Classification of Shares dated
May 5, 1986 pertaining to Class A and Class B shares.(4)

(4) Certificate of Classification of Shares dated December 9,
1987 pertaining to Class C, Class D and Class E
shares.(4)

(5) Certificate of Classification of Shares dated November 8,
1989 pertaining to Class C - Special Series 1 and Class D
- Special Series 1 shares.(4)

(6) Certificate of Classification of Shares dated August 16,
1990 pertaining to Class F shares; Class G - Series 1
shares; Class G - Series 2 shares; Class H - Series 1
shares; Class H - Series 2 shares; Class I - Series 1
shares; Class I - Series 2 shares; Class J - Series 1
shares; and Class J - Series 2 shares.(4)

(7) Certificate of Classification of Shares dated December
10, 1991 pertaining to Class K - Series 1 shares; Class K
- Series 2 shares; Class L - Series 1 shares; Class L -
Series 2 shares; Class M - Series 1 shares; Class M -
Series 2 shares; Class N - Series 1 shares; Class N -
Series 2 shares; Class O - Series 1 shares; and Class O -
Series 2 shares.(4)

(8) Certificate of Classification of Shares dated February
22, 1993 pertaining to Class P - Series 1 shares; Class P
- Series 2 shares; Class Q - Series 1 shares; Class Q -
Series 2 shares; Class R - Series 1 shares; Class R -
Series 2 shares; and Class S shares.(4)

(9) Certificate of Classification of Shares dated December 7,
1994 pertaining to Class T - Series 1 shares and Class T
- Series 2 shares.(4)

-1-
<PAGE>

(10) Certificate of Classification of Shares pertaining to
Class U - Series 1 shares and Class U - Series 2 shares;
Class V shares; Class W shares; and Class X - Series 1
shares and Class X - Series 2 shares.

(11) Certificate of Classification of Shares pertaining to
Class C - Special Series 2 shares; Class H - Series 3
shares; Class J - Series 3 shares; Class K - Series 3
shares; Class L - Series 3 shares; Class M - Series 3
shares; Class N - Series 3 shares; and Class U - Series 3
shares.

(12) Certificate of Classification of Shares pertaining to
Class A - Special Series 2 shares.

(13) Certificate of Classification of Shares pertaining to
Class Y - Series 1 shares and Class Y - Series 2 shares;
Class Z - Series 1 shares, Class Z - Series 2 shares and
Class Z - Series 3 shares; and Class AA - Series 1
shares, Class AA - Series 2 shares and Class AA - Series
3 shares.

(14) Certificate of Classification of Shares pertaining to
Class BB; Class CC and Class DD shares.

(15) Certificate of Classification of Shares pertaining to
Class C - Special Series 3 shares; Class C - Special
Series 4 shares; Class D - Special Series 3 shares; Class
D - Special Series 4 shares; Class G - Series 4 shares;
Class G - Series 5 shares; Class H - Series 4 shares;
Class H - Series 5 shares; Class I - Series 4 shares;
Class I - Series 5 shares; Class J - Series 4 shares;
Class J - Series 5 shares; Class K - Series 4 shares;
Class K - Series 5 shares; Class L - Series 4 shares;
Class L - Series 5 shares; Class M - Series 4 shares;
Class M - Series 5 shares; Class N - Series 4 shares;
Class N - Series 5 shares; Class U - Series 4 shares;
Class U - Series 5 shares; Class X - Series 4 shares;
Class X - Series 5 shares; Class AA - Series 4 shares;
and Class AA - Series 5 shares.

(16) Certificate of Classification of Shares pertaining to
Class D - Special Series 2 shares; Class G - Series 3
shares; Class I -

-2-
<PAGE>

Series 3 shares; and Class X - Series 3 shares.

(b) Code of Regulations.(4)

(c) Article V, Section 5.1, and Article VIII, Section 8.1, of
Registrant's Declaration of Trust is incorporated herein
by reference as Exhibit (a)(1), and Amendment No. 1 to
Registrant's Declaration of Trust is incorporated herein
by reference as Exhibit (a)(2).

(d) (1) Advisory Agreement between the Registrant and Fleet
Investment Advisors Inc. with respect to the Money
Market, Government, U.S. Treasury, Tax-Exempt,
Institutional Government Money Market (formerly
Institutional Treasury Money Market), Short-Term Bond,
Intermediate Government Income (formerly Intermediate
Bond), Corporate Bond, High Quality Bond, Tax-Exempt
Bond, New York Municipal Bond, Connecticut Municipal
Bond, Massachusetts Municipal Bond, Rhode Island
Municipal Bond, Equity Value, Equity Growth, Equity
Income, International Equity, Small Company Equity and
Asset Allocation Funds dated as of May 19, 1994.(2)

(2) Addendum No. 1 to Advisory Agreement between the
Registrant and Fleet Investment Advisors Inc. with
respect to the Connecticut Municipal Money Market,
Massachusetts Municipal Money Market, Growth and Income
and Small Cap Value Funds dated as of December 1, 1995.(1)

(3) Addendum No. 2 to Advisory Agreement between the
Registrant and Fleet Investment Advisors Inc. with
respect to the New Jersey Municipal Bond Fund, MidCap
Equity Fund and Strategic Equity Fund dated as of
March 3, 1998.(5)

(4) Addendum No. 3 to Advisory Agreement dated September 18,
1998 between the Registrant and Fleet Investment Advisors
Inc. with respect to the Prime Reserves, Government
Reserves and Tax-Exempt Reserves.

(5) Sub-Advisory Agreement between Fleet Investment Advisors
Inc. and Oechsle International Advisors, LLC with respect
to the International Equity Fund dated as of October 8,
1998.

-3-
<PAGE>

(e) (1) Distribution Agreement between the Registrant and First
Data Distributors, Inc. dated as of June 1, 1997.(3)

(2) Amendment No. 1 dated March 3, 1998 to Distribution
Agreement between the Registrant and First Data
Distributors, Inc. with respect to the New Jersey
Municipal Bond Fund, MidCap Equity Fund and Strategic
Equity Fund.(5)

(3) Amendment No. 2 dated September 18, 1998 to Distribution
Agreement between the Registrant and First Data
Distributors, Inc. with respect to the Prime Reserves,
Government Reserves and Tax-Exempt Reserves.

(4) Amendment No. 3 dated December 3, 1998 to Distribution
Agreement between the Registrant and First Data
Distributors, Inc.

(f) The Galaxy Fund/The Galaxy VIP Fund/Galaxy Fund II
Deferred Compensation Plan and Related Agreement
effective as of January 1, 1997.(2)

(g) (1) Global Custody Agreement between the Registrant and The
Chase Manhattan Bank dated as of November 1, 1991.(4)

(2) Form of Amendment to Global Custody Agreement between the
Registrant and The Chase Manhattan Bank with respect to
the New Jersey Municipal Bond, MidCap Equity and
Strategic Equity Funds.(3)

(3) Form of Amendment to Global Custody Agreement between the
Registrant and The Chase Manhattan Bank with respect to
the Prime Reserves, Government Reserves and Tax-Exempt
Reserves.(5)

(4) Consent to Assignment of Global Custody Agreement between
the Registrant, The Chase Manhattan Bank, N.A. and 440
Financial Group of Worcester, Inc. to The Shareholder
Services Group, Inc. d/b/a 440 Financial dated March 31,
1995.(4)

(h) (1) Administration Agreement between the Registrant and First
Data Investor Services Group, Inc. dated as of June 1,
1997.(3)

-4-
<PAGE>

(2) Amendment No. 1 dated March 3, 1998 to Administration
Agreement between the Registrant and First Data Investor
Services Group, Inc. with respect to the New Jersey
Municipal Bond Fund, MidCap Equity Fund and Strategic
Equity Fund.(5)

(3) Amendment No. 2 dated as of March 5, 1998 to
Administration Agreement between the Registrant and First
Data Investor Services Group, Inc.(6)

(4) Amendment No. 3 dated as of September 18, 1998 to
Administration Agreement between the Registrant and First
Data Investor Services Group, Inc. with respect to the
Prime Reserves, Government Reserves and Tax-Exempt
Reserves Fund.

(5) Form of Amendment No. 4 to Administration Agreement
Between the Registrant and First Data Investor Services
Group, Inc.(6)

(6) Transfer Agency and Services Agreement between the
Registrant and First Data Investor Services Group, Inc.
dated as of June 1, 1997.(3)

(7) Amendment No. 1 dated March 3, 1998 to Transfer Agency
and Services Agreement between the Registrant and First
Data Investor Services Group, Inc. with respect to the
New Jersey Municipal Bond Fund, MidCap Equity Fund and
Strategic Equity Fund.(5)

(8) Amendment No. 2 dated as of March 5, 1998 to Transfer
Agency and Services Agreement between the Registrant and
First Data Investor Services Group, Inc.(6)

(9) Amendment No. 3 dated as of September 18, 1998 to
Transfer Agency and Services Agreement between the
Registrant and First Data Investor Services Group, Inc.
with respect to the Prime Reserves, Government Reserves
and Tax-Exempt Reserves Fund.

(10) Form of Amendment No. 4 to Transfer Agency and Services
Agreement between Registrant and First Data Investor
Services Group, Inc.(6)

(11) Shareholder Services Plan for Trust Shares and Retail A
Shares and Related Forms of Servicing Agreements.(3)

-5-
<PAGE>

(i) (1) Opinion of counsel dated February 27, 1998 that shares
will be validly issued, fully paid and non-assessable.(4)

(2) Opinion of counsel dated June 30, 1998 that shares will
be validly issued, fully paid and non-assessable.(5)

(3) Opinion of counsel dated September 11, 1998 that shares
will be validly issued, fully paid and non-assessable.(6)

(4) Opinion of counsel dated October 5, 1998 that shares will
be validly issued, fully paid and non-assessable.(7)

(j) (1) Consent of Drinker Biddle & Reath LLP.

(2) Consent of Independent Accountants to be filed by
Amendment.

(k) None.

(l) (1) Purchase Agreement between the Registrant and Shearson
Lehman Brothers Inc. dated July 24, 1986.(4)

(2) Purchase Agreement between the Registrant and Shearson
Lehman Brothers Inc. dated October 11, 1990 with respect
to the Treasury, Equity Growth, Equity Income,
International Equity and High Quality Bond Funds.(4)

(3) Purchase Agreement between the Registrant and SMA
Equities, Inc. dated December 30, 1991 with respect to
the Small Company Equity Fund, Short-Term Bond Fund,
Tax-Exempt Bond Fund, Asset Allocation Fund, and New York
Municipal Bond Fund.(4)

(4) Purchase Agreement between the Registrant and Allmerica
Investments, Inc. dated February 22, 1993 with respect to
the Connecticut Municipal Bond, Massachusetts Municipal
Bond, Rhode Island Municipal Bond and Institutional
Government Money Market (formerly Institutional Treasury
Money Market) Funds.(4)

(5) Purchase Agreement between the Registrant and 440
Financial Distributors, Inc. dated May 19, 1994 with
respect to the Corporate Bond Fund.(4)

-6-
<PAGE>

(6) Purchase Agreement between the Registrant and First Data
Investor Services, Inc. dated February 28, 1996 with
respect to the Connecticut Municipal Money Market,
Massachusetts Municipal Money Market Money, Growth and
Income and Small Cap Value Funds.(4)

(7) Purchase Agreement between the Registrant and First Data
Distributors, Inc. with respect to the New Jersey
Municipal Bond Fund.(5)

(8) Form of Purchase Agreement between the Registrant and
First Data Distributors, Inc. with respect to the MidCap
Equity Fund.(3)

(9) Purchase Agreement between the Registrant and First Data
Distributors, Inc. with respect to the Strategic Equity
Fund.(5)

(10) Form of Purchase Agreement between the Registrant and
First Data Distributors, Inc. dated? with respect to the
Prime Reserves, Government Reserves and Tax-Exempt
Reserves.(5)

(m) (1) Distribution and Services Plan for Retail B Shares and
Related Form of Servicing Agreement.(6)

(2) Distribution and Services Plan and Related Form of
Servicing Agreement with respect to the Prime Reserves,
Government Reserves and Tax-Exempt Reserves.(5)

(3) Distribution Plan for A Prime Shares.(6)

(4) Distribution and Services Plan for B Prime Shares and
Related Form of Servicing Agreement.(6)

(n) To be filed by amendment.

(o) Amended and Restated Plan Pursuant to Rule 18f-3 for
Operation of a Multi-Class System.(6)

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

(1) Filed electronically as an Exhibit and incorporated herein by reference to
Post-Effective Amendment No. 27 to the Registrant's Registration Statement
on Form N-1A (File Nos. 33-4806 and 811-4636) on March 4, 1996.

(2) Filed electronically as an Exhibit and incorporated herein by reference to
Post-Effective Amendment No. 29 to the

-7-
<PAGE>

Registrant's Registration Statement on Form N-1A as filed with the
Commission on December 30, 1996.

(3) Filed electronically as an Exhibit and incorporated herein by reference to
Post-Effective Amendment No. 31 to the Registrant's Registration Statement
on Form N-1A as filed with the Commission on December 15, 1997.

(4) Filed electronically as an Exhibit and incorporated herein by reference to
Post-Effective Amendment No. 32 to the Registrant's Registration Statement
on Form N-1A as filed with the Commission on February 27, 1998.

(5) Filed electronically as an Exhibit and incorporated herein by reference to
Post-Effective Amendment No. 33 to the Registrant's Registration Statement
on Form N-1A as filed with the Commission on June 30, 1998.

(6) Filed electronically as an Exhibit and incorporated herein by reference to
Post-Effective Amendment No. 34 to the Registrant's Registration Statement
on Form N-1A as filed with the Commission on September 11, 1998.

(7) Filed electronically as an Exhibit and incorporated herein by reference to
Post-Effective Amendment No. 35 to the Registrant's Registration Statement
on Form N-1A as filed with the Commission on October 5, 1998.

-8-
<PAGE>

Item 24. Persons Controlled By or Under Common Control with
Registrant

Registrant is controlled by its Board of Trustees.

Item 25. Indemnification

Indemnification of the Registrant's principal underwriter, custodian and
transfer agent against certain losses is provided for, respectively, in Section
1.19 of the Distribution Agreement incorporated herein by reference as Exhibit
(e)(1), in Section 12 of the Global Custody Agreement incorporated herein by
reference as Exhibit (g)(1) and in Article 10 of the Transfer Agency and
Services Agreement incorporated herein by reference as Exhibit (h)(6). The
Registrant has obtained from a major insurance carrier a directors' and
officers' liability policy covering certain types of errors and omissions. In
addition, Section 9.3 of the Registrant's Declaration of Trust dated March 31,
1986, incorporated herein by reference as Exhibit (a)(1), provides as follows:

9.3 INDEMNIFICATION OF TRUSTEES, REPRESENTATIVES AND EMPLOYEES. The Trust
shall indemnify each of its Trustees against all liabilities and
expenses (including amounts paid in satisfaction of judgments, in
compromise, as fines and penalties, and as counsel fees) reasonably
incurred by him in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, in which
he may be involved or with which he may be threatened, while as a
Trustee or thereafter, by reason of his being or having been such a
Trustee EXCEPT with respect to any matter as to which he shall have
been adjudicated to have acted in bad faith, willful misfeasance,
gross negligence or reckless disregard of his duties, PROVIDED that as
to any matter disposed of by a compromise payment by such person,
pursuant to a consent decree or otherwise, no indemnification either
for said payment or for any other expenses shall be provided unless
the Trust shall have received a written opinion from independent legal
counsel approved by the Trustees to the effect that if either the
matter of willful misfeasance, gross negligence or reckless disregard
of duty, or the matter of bad faith had been adjudicated, it would in
the opinion of such counsel have been adjudicated in favor of such
person. The rights accruing to any person under these provisions
shall not exclude any other right to which he may be lawfully
entitled, PROVIDED that no person may satisfy any right of indemnity
or reimbursement hereunder except out of the property of the Trust.
The Trustees may make advance payments in connection with the
indemnification under this Section 9.3, PROVIDED that the indemnified
person shall have given a written

-9-
<PAGE>

undertaking to reimburse the Trust in the event it is subsequently
determined that he is not entitled to such indemnification.

The Trustees shall indemnify representatives and employees of the
Trust to the same extent that Trustees are entitled to indemnification
pursuant to this Section 9.3.

Insofar as indemnification for liability arising under the Securities
Act of 1933, as amended, may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant
will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.

Item 26. (a) Business and Other Connections of Investment Adviser

Fleet Investment Advisors Inc. ("Fleet") is an investment adviser
registered under the Investment Advisers Act of 1940 (the
"Advisers Act").

The list required by this Item 28 of officers and directors of
Fleet, together with information as to any business profession,
vocation or employment of a substantial nature engaged in by such
officers and directors during the past two years is incorporated
herein by reference to Schedules A and D of Form ADV filed by
Fleet pursuant to the Advisers Act (SEC File No. 801-20312).

(b) Business and Other Connections of Sub-Adviser

Oechsle International Advisors, LLC. ("Oechsle") is an investment
adviser registered under the Investment Advisers Act of 1940 (the
"Advisers Act").

-10-
<PAGE>

The list required by this Item 28 of the officers of Oechsle,
together with information as to any business profession, vocation
or employment of a substantial nature engaged in by such officers
during the past two years, is incorporated herein by reference to
Schedules A and D of Form ADV filed by Oechsle pursuant to the
Advisers Act (SEC File No. 801-28111).

Item 27. Principal Underwriter

(a) In addition to The Galaxy Fund, First Data Distributors, Inc.
(the "Distributor") currently acts as distributor for The Galaxy
VIP Fund, Galaxy Fund II, Allegheny Funds, Wilshire Target Funds,
Inc., Panorama Trust, Undiscovered Managers Funds, LKCM Funds,
ABN Amro Funds, First Choice Funds Trust, Forward Funds, Inc.,
IBJ Funds Trust, ICM Series Trust, Light Revolution Funds, Inc.
and BT Insurance Funds Trust. The Distributor is registered with
the Securities and Exchange Commission as a broker-dealer and is
a member of the National Association of Securities Dealers. The
Distributor is a wholly-owned subsidiary of First Data Investor
Services Group, Inc., 4400 Computer Drive, Westborough
01581-5108.

(b) The information required by this Item 29 (b) with respect to each
director, officer, or partner of the Distributor, is incorporated
by reference to Schedule A of Form BD filed by the Distributor,
with the Securities and Exchange Commission pursuant to the
Securities Act of 1934 (File No. 8-45467).

(c) The Distributor receives no compensation from the Registrant for
distribution of its shares other than payments for distribution
assistance pursuant to Registrant's Distribution and Services
Plan for Retail B Shares, Distribution and Services Plan for the
Prime Reserves, Government Reserves and Tax-Exempt Reserves,
Distribution Plan for A Prime Shares and Distribution and
Services Plan for B Prime Shares. The Distributor is an
affiliated person of First Data Investor Services Group, Inc.,
the Registrant's administrator, which receives administration,
fund accounting and transfer agency fees as described in parts A
and B.

-11-
<PAGE>

Item 28. Location of Accounts and Records

(1) Fleet Investment Advisors Inc., 75 State Street, Boston,
Massachusetts 02109 (records relating to its functions as
investment adviser to all of the Registrant's Funds).

(2) Oechsle International Advisors, LLC., One International Place,
Boston, Massachusetts 02210 (records relating to its functions as
sub-investment adviser to the International Equity Fund).

(3) First Data Distributors, Inc., 4400 Computer Drive, Westborough,
Massachusetts 01581-5108 (records relating to its functions as
distributor).

(4) First Data Investor Services Group, Inc. 53 State Street, Mail
Stop BOS 425, Boston, MA 02109 (records relating to its
functions as administrator).

(5) First Data Investor Services Group, Inc. 4400 Computer Drive,
Westborough, MA 01581-5108 (records relating to its functions as
transfer agent).

(6) Drinker Biddle & Reath LLP, Philadelphia National Bank Building,
1345 Chestnut Street, Philadelphia, Pennsylvania 19107
(Registrant's Declaration of Trust, Code of Regulations and
Minute Books).

(7) The Chase Manhattan Bank, 1211 Avenue of the Americas, New York,
New York 10036 (records relating to its functions as custodian).

Item 29. Management Services

Inapplicable.

Item 30. Registrant undertakes to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest available Annual
Reports to Shareholders which includes Management's Discussion of the
Registrant's performance, upon request and without charge.

-12-

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and the
Investment Company Act of 1940, as amended, Registrant has duly caused this
Post-Effective Amendment No. 36 to the Registration Statement to be signed on
its behalf by the undersigned, thereto duly authorized, in the City of
Pawtucket, State of Rhode Island, on the 30th day of December, 1998.

THE GALAXY FUND
Registrant

/s/John T. O'Neill
------------------
President
John T. O'Neill

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 36 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.

Signature Title Date
- --------- ----- ----

/s/John T. O'Neill Trustee, President December 30, 1998
- ------------------------ and Treasurer
John T. O'Neill

*/s/Dwight E. Vicks, Jr. Chairman of the Board December 30, 1998
- ------------------------ of Trustees
Dwight E. Vicks, Jr.

*/s/Donald B. Miller Trustee December 30, 1998
- ------------------------
Donald B. Miller

*/s/Louis DeThomasis Trustee December 30, 1998
- ------------------------
Louis DeThomasis

*/s/Bradford S. Wellman Trustee December 30, 1998
- ------------------------
Bradford S. Wellman

*/s/James M. Seed Trustee December 30, 1998
- ------------------------
James M. Seed

*By:/s/John T. O'Neill
--------------------
John T. O'Neill
Attorney-In-Fact

-13-
<PAGE>

THE GALAXY FUND

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned hereby appoints
John T. O'Neill and W. Bruce McConnel, III, and either of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in his capacity as
trustee or officer, or both, of The Galaxy Fund (the "Trust"), to execute any
and all amendments to the Trust's Registration Statement on Form N-1A pursuant
to the Investment Company Act of 1940, as amended, and the Securities Act of
1933, as amended (the "Acts"), and all instruments necessary or incidental in
connection therewith pursuant to said Acts and any rules, regulations, or
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same with the Securities and Exchange Commission, and either of said
attorneys shall have full power and authority, to do and perform in the name and
on behalf of the undersigned in any and all capacities, every act whatsoever
requisite or necessary to be done, as fully and to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys, or either of them, may lawfully do or cause to be done by virtue
hereof.

Dated: December 5, 1996 /s/James M. Seed
-----------------
James M. Seed

<PAGE>

THE GALAXY FUND

POWER OF ATTORNEY

Dated: December 5, 1996 /s/Bradford S. Wellman
----------------------
Bradford S. Wellman

<PAGE>

THE GALAXY FUND

POWER OF ATTORNEY

Dated: December 5, 1996 /s/Brother Louis DeThomasis
---------------------------
Brother Louis DeThomasis

<PAGE>

THE GALAXY FUND

POWER OF ATTORNEY

Dated: December 5, 1996 /s/Donald B. Miller
---------------------
Donald B. Miller

<PAGE>

THE GALAXY FUND

POWER OF ATTORNEY

Dated: December 4, 1996 /s/Dwight E. Vicks, Jr.
--------------------------
Dwight E. Vicks, Jr.

<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
(a)(10) Certificate of Classification of Shares
pertaining to Class U - Series 1 shares
and Class U - Series 2 shares; Class V
shares; Class W shares; and Class X -
Series 1 shares and Class X - Series 2
shares.

(a)(11) Certificate of Classification of Shares
pertaining to Class C - Special Series 2
shares; Class H - Series 3 shares; Class
J - Series 3 shares; Class K - Series 3
shares; Class L - Series 3 shares; Class
M - Series 3 shares; Class N - Series 3
shares; and Class U - Series 3 shares.

(a)(12) Certificate of Classification of Shares
pertaining to Class A - Special Series 2
shares.

(a)(13) Certificate of Classification of Shares
pertaining to Class Y - Series 1 shares
and Class Y - Series 2 shares; Class Z -
Series 1 shares, Class Z - Series 2
shares and Class Z - Series 3 shares;
and Class AA - Series 1 shares, Class AA
- Series 2 shares and Class AA - Series
3 shares.

(a)(14) Certificate of Classification of Shares
pertaining to Class BB; Class CC and
Class DD shares.

(a)(15) Certificate of Classification of Shares
pertaining to Class C - Special Series 3
shares; Class C - Special Series 4
shares; Class D - Special Series 3
shares; Class D - Special Series 4
shares; Class G - Series 4 shares; Class
G - Series 5 shares; Class H - Series 4
shares; Class H - Series 5 shares; Class
I - Series 4 shares; Class I - Series 5
shares; Class J - Series 4 shares; Class
J - Series 5 shares; Class K - Series 4
shares; Class K - Series 5 shares; Class
L - Series 4 shares; Class L - Series 5
shares; Class M - Series 4 shares; Class
M - Series 5 shares; Class N - Series 4
shares; Class N - Series 5 shares; Class
U - Series 4 shares; Class U - Series 5
shares; Class X - Series 4 shares; Class
X - Series 5 shares; Class AA - Series 4
shares; and Class AA - Series 5 shares.

<PAGE>

(a)(16) Certificate of Classification of Shares
pertaining to Class D - Special Series 2
shares; Class G - Series 3 shares; Class
I - Series 3 shares; and Class X -
Series 3 shares.

(d)(4) Amendment No. 3 dated as of September
18, 1998 to Advisory Agreement between
the Registrant and Fleet Investment
Advisors Inc.

(d)(5) Sub-Advisory Agreement dated October 8,
1998 between Fleet Investment Advisors
Inc. and Oechsle International Advisors,
LLC with respect to the International
Equity Fund.

(e)(3) Amendment No. 2 dated as of September
18, 1998 to Distribution Agreement
between the Registrant and First Data
Distributors, Inc.

(e)(4) Amendment No. 3 dated December 3, 1998
to Distribution Agreement between the
Registrant and First Data Distributors,
Inc.

(h)(4) Amendment No. 3 dated as of September
18, 1998 to Administration Agreement
between the Registrant and First Data
Investor Services Group, Inc.

(h)(9) Amendment No. 3 dated as of September
18, 1998 to Transfer Agency and Services
Agreement between the Registrant and
First Data Investor Services Group, Inc.

(j)(1) Consent of Drinker Biddle & Reath LLP.
</TABLE>

<PAGE>

Exhibit (a)(10)

THE GALAXY FUND

(A Massachusetts Business Trust)

CERTIFICATE OF CLASSIFICATION OF SHARES

I, W. Bruce McConnel, III, do hereby certify as follows:

(1) That I am the duly elected Secretary of The Galaxy Fund ("Galaxy");

(2) That in such capacity I have examined the record of actions taken by
the Board of Trustees of Galaxy at a Special Meeting of the Board held on
June 12, 1995 (the "Meeting");

(3) That the following resolutions were duly adopted at the Meeting by the
Board of Trustees of Galaxy:

1. CREATION OF TWO SERIES OF CLASS U SHARES (GROWTH AND INCOME FUND).

RESOLVED, that pursuant to Section 5.1 of Galaxy's Declaration of
Trust, an unlimited number of authorized and unissued shares of beneficial
interest in Galaxy be, and hereby is, classified into a new class of shares
denominated as Class U shares, consisting of two separate series of shares
of beneficial interest designated as Class U - Series 1 shares and Class U
- Series 2 shares, both series representing interests in the Growth and
Income Fund;

FURTHER RESOLVED, that all consideration received by Galaxy for the
issue or sale of Class U - Series 1 shares shall be invested and reinvested
with the consideration received by Galaxy for the issue and sale of Class U
- Series 2 shares and any other shares of beneficial interest in Galaxy
hereafter designated as Class U shares (irrespective of whether said shares
have been designated as part of a series of said class and, if so
designated, irrespective of the particular series designation), together
with all income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, any funds
or payments derived from any reinvestment of such proceeds in whatever form
the same may be, and any general assets of Galaxy allocated to Class U
shares (irrespective of series designation) by the Board of Trustees in
accordance with Galaxy's Declaration of Trust, and each Class U - Series 1
share and Class U - Series 2 share shall share in proportion to their
respective net asset values with each such other share in such

<PAGE>

consideration and other assets, income, earnings, profits and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any assets derived from any reinvestment of such
proceeds in whatever form;

FURTHER RESOLVED, that each Class U - Series 1 share and Class U -
Series 2 share shall have, upon its issuance, all of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption accorded
shares of beneficial interest in Galaxy now or hereinafter designated as
Class U shares (irrespective of series designation); and

FURTHER RESOLVED, that each Class U - Series 1 share and each Class U
- Series 2 share shall be charged in proportion to their respective net
asset values with each other share of beneficial interest in Galaxy now or
hereafter designated as a Class U share (irrespective of whether said share
has been designated as part of a series of said class and, if so
designated, irrespective of the particular series designation) with the
expenses and liabilities of Galaxy in respect of Class U shares
(irrespective of series designation) and in respect of any general expenses
and liabilities of Galaxy allocated to Class U shares by the Board of
Trustees in accordance with Galaxy's Declaration of Trust; PROVIDED,
HOWEVER, that to the extent permitted by rule or order of the Securities
and Exchange Commission and as the Board of Trustees may from time to time
determine:

(a) only Class U - Series 2 shares shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services exclusively with respect to shares
of Class U - Series 2, as well as any other expenses and liabilities
directly attributable to Class U - Series 2 shares which the Board of
Trustees determines should be borne solely by shares of such Series;

(b) Class U - Series 2 shares shall not bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services with respect to Class U shares other
than shares of its Series 2, as well as any other expenses and
liabilities directly attributable to shares of Class U other than
Class U - Series 2 shares which the Board of Trustees determines

-2-
<PAGE>

should be borne exclusively by such other shares;

(c) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (a) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, only Class U - Series 2 shares shall be
entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Galaxy other than Class U - Series 2 shares,
such other affected shares in Galaxy shall also be entitled to vote
and, in such case, Class U - Series 2 shares shall be voted in the
aggregate together with such other affected shares and not by class or
series, except where otherwise required by law or permitted by the
Board of Trustees of Galaxy; and (ii) if said matter does not affect
Class U - Series 2 shares, said shares shall not be entitled to vote
(except where otherwise required by law or permitted by the Board of
Trustees) even though the matter is submitted to a vote of the holders
of shares of beneficial interest in Galaxy other than Class U -
Series 2 shares;

(d) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (b) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, Class U - Series 2 shares shall not be
entitled to vote, except where otherwise required by law or permitted
by the Board of Trustees of Galaxy, and except that if said matter
affects Class U - Series 2 shares, such shares shall be entitled to
vote and, in such case, Class U - Series 2 shares shall be voted in
the aggregate together with all other shares of beneficial interest in
Galaxy voting on the matter and not by class or series, except where
otherwise required by law or permitted by the Board of Trustees.

2. CREATION OF CLASS V SHARES (CONNECTICUT MUNICIPAL MONEY MARKET FUND).

-3-
<PAGE>

FURTHER RESOLVED, that each Class V share created pursuant to the
foregoing resolution shall have all of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption that are set forth in
Galaxy's Declaration of Trust with respect to any class of shares of
Galaxy.

3. CREATION OF CLASS W SHARES (MASSACHUSETTS MUNICIPAL MONEY MARKET FUND).

FURTHER RESOLVED, that each Class W share created pursuant to the
foregoing resolution shall have all of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption that are set forth in
Galaxy's Declaration of Trust with respect to any class of shares of
Galaxy.

4. CREATION OF TWO SERIES OF CLASS X SHARES (SMALL CAP VALUE FUND).

RESOLVED, that pursuant to Section 5.1 of Galaxy's Declaration of
Trust, an unlimited number of authorized and unissued shares of beneficial
interest in Galaxy be, and hereby are, classified into a new class of
shares denominated as Class X shares, consisting of two separate series of
shares of beneficial interest designated as Class X - Series 1 shares and
Class X - Series 2 shares, both series representing interests in the Small
Cap Value Fund;

FURTHER RESOLVED, that all consideration received by Galaxy for the
issue or sale of Class X - Series 1 shares shall be invested and reinvested
with the consideration received by Galaxy for the issue and sale of Class X
- Series 2 shares and any other shares of beneficial interest in Galaxy
hereafter designated as Class X shares (irrespective of whether said shares
have been designated as part of a series of said class and, if so
designated, irrespective of the particular series designation), together
with all income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or

-4-
<PAGE>

liquidation thereof, any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, and any general assets of
Galaxy allocated to Class X shares (irrespective of series designation) by
the Board of Trustees in accordance with Galaxy's Declaration of Trust, and
each Class X - Series 1 share and Class X - Series 2 share shall share in
proportion to their respective net asset values with each such other share
in such consideration and other assets, income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation thereof, and any assets derived from any reinvestment of such
proceeds in whatever form;

FURTHER RESOLVED, that each Class X - Series 1 share and Class X -
Series 2 share shall have, upon its issuance, all of the preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption accorded
shares of beneficial interest in Galaxy now or hereinafter designated as
Class X shares (irrespective of series designation); and

FURTHER RESOLVED, that each Class X - Series 1 share and each Class X
- Series 2 share shall be charged in proportion to their respective net
asset values with each other share of beneficial interest in Galaxy now or
hereafter designated as a Class X share (irrespective of whether said share
has been designated as part of a series of said class and, if so
designated, irrespective of the particular series designation) with the
expenses and liabilities of Galaxy in respect of Class X shares
(irrespective of series designation) and in respect of any general expenses
and liabilities of Galaxy allocated to Class X shares by the Board of
Trustees in accordance with Galaxy's Declaration of Trust; PROVIDED,
HOWEVER, that to the extent permitted by rule or order of the Securities
and Exchange Commission and as the Board of Trustees may from time to time
determine:

(a) only Class X - Series 2 shares shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services exclusively with respect to shares
of Class X - Series 2, as well as any other expenses and liabilities
directly attributable to Class X - Series 2 shares which the Board of
Trustees determines should be borne solely by shares of such Series;

(b) Class X - Series 2 shares shall not bear the

-5-
<PAGE>

expenses and liabilities relating to any agreements or arrangements
entered into by or on behalf of Galaxy pursuant to which an
organization or other person agrees to provide services with respect
to Class X shares other than shares of its Series 2, as well as any
other expenses and liabilities directly attributable to shares of
Class X other than Class X - Series 2 shares which the Board of
Trustees determines should be borne exclusively by such other shares;

(c) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (a) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, only Class X - Series 2 shares shall be
entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Galaxy other than Class X - Series 2 shares,
such other affected shares in Galaxy shall also be entitled to vote
and, in such case, Class X - Series 2 shares shall be voted in the
aggregate together with such other affected shares and not by class or
series, except where otherwise required by law or permitted by the
Board of Trustees of Galaxy; and (ii) if said matter does not affect
Class X - Series 2 shares, said shares shall not be entitled to vote
(except where otherwise required by law or permitted by the Board of
Trustees) even though the matter is submitted to a vote of the holders
of shares of beneficial interest in Galaxy other than Class X -
Series 2 shares;

(d) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (b) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, Class X - Series 2 shares shall not be
entitled to vote, except where otherwise required by law or permitted
by the Board of Trustees of Galaxy, and except that if said matter
affects Class X - Series 2 shares, such shares shall be entitled to
vote and, in such case, Class X - Series 2 shares shall be voted in
the aggregate together with all other shares of beneficial interest in
Galaxy voting on the matter and not by class or series, except where
otherwise required by law or permitted by the Board of Trustees.

-6-
<PAGE>

The foregoing resolutions remain in full force and effect as of the
date hereof.

/s/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III
Secretary

Dated: June 12, 1995

Subscribed and sworn to before
me this 11th day of June, 1995

/s/ Dorothea A. Natale
- -----------------------
Notary Public or Commissioner of Deeds
My Commission Expires: September 4, 2000

-7-

<PAGE>

Exhibit (a)(11)
THE GALAXY FUND

(A Massachusetts Business Trust)

CERTIFICATE OF CLASSIFICATION OF SHARES

I, W. Bruce McConnel, III, do hereby certify as follows:

(1) That I am the duly elected Secretary of The Galaxy Fund ("Galaxy");

(2) That in such capacity I have examined the record of actions taken by
the Board of Trustees of Galaxy at a Regular Meeting of the Board held on
September 7, 1995 (the "Meeting");

(3) That the following resolutions were duly adopted at the Meeting by the
Board of Trustees of Galaxy:

1. CLASSIFICATION OF SHARES.

RESOLVED, that pursuant to Section 5.1 of Galaxy's Declaration of
Trust, an unlimited number of authorized, unissued and unclassified shares
of beneficial interest of Galaxy be, and hereby are, classified into each
of 8 additional separate series of shares which shall be designated,
respectively, Class C-Special Series 2, Class H-Series 3, Class J-Series 3,
Class K-Series 3, Class L-Series 3, Class M-Series 3, Class N-Series 3 and
Class U-Series 3;

FURTHER RESOLVED, that (a) Class C-Special Series 2 shares of
beneficial interest shall represent interests in the Equity Value Fund, (b)
Class H-Series 3 shares of beneficial interest shall represent interests in
the Equity Growth Fund, (c) Class J-Series 3 shares of beneficial interest
shall represent interests in the High Quality Bond Fund, (d) Class K-Series
3 shares of beneficial interest shall represent interests in the Small
Company Equity Fund, (e) Class L-Series 3 shares of beneficial interest
shall represent interests in the Short-Term Bond Fund, (f) Class M-Series 3
shares of beneficial interest shall represent interests in the Tax-Exempt
Bond Fund, (g) Class N-Series 3 shares of beneficial interest shall
represent interests in the Asset Allocation Fund, and (h) Class U-Series 3
shares of beneficial interest shall represent interests in the Growth and
Income Fund;

FURTHER RESOLVED, that each share of Class C-Special Series 2, Class
H-Series 3, Class J-Series 3, Class K-Series

<PAGE>

3, Class L-Series 3, Class M-Series 3, Class N-Series 3 and Class U-Series
3 newly classified hereby shall have all of the following preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption:

(1) ASSETS BELONG TO A CLASS. All consideration received by Galaxy
for the issue or sale of shares of Class C-Special Series 2, Class
H-Series 3, Class J-Series 3, Class K-Series 3, Class L-Series 3,
Class M-Series 3, Class N-Series 3 and Class U-Series 3 shall be
invested and reinvested with the consideration received by Galaxy for
the issue and sale of all other shares now or hereafter classified as
shares of Class C, Class H, Class J, Class K, Class L, Class M, Class
N and Class U, respectively (irrespective of whether said shares have
been classified as part of a series of said Class and if so classified
as part of a series, irrespective of the particular series
classification), together with all income, earnings, profits, and
proceeds derived from the investment thereof, including any proceeds
derived from the sale, exchange, or liquidation of such investment,
any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, and any general assets of Galaxy
allocated to Class C, Class H, Class J, Class K, Class L, Class M,
Class N and Class U (including the Class C, Class H, Class J, Class K,
Class L, Class M, Class N and Class U shares formerly classified,
Class C-Special Series 2, Class H-Series 3, Class J-Series 3, Class
K-Series 3, Class L-Series 3, Class M-Series 3, Class N-Series 3 and
Class U-Series 3 shares herein classified or such other shares with
respect to such Class C, Class H, Class J, Class K, Class L, Class M,
Class N and Class U) by the Board of Trustees in accordance with
Galaxy's Declaration of Trust. All income, earnings, profits, and
proceeds, including any profits derived from the sale, exchange or
liquidation of such shares of Class C, Class H, Class J, Class K,
Class L, Class M, Class N and Class U, and any assets derived from any
reinvestment of such proceeds in whatever form shall be allocated to
the Class C-Special Series 2 shares, Class H-Series 3 shares, Class
J-Series 3 shares, Class K-Series 3 shares, Class L-Series 3 shares,
Class M-Series 3 shares, Class N-Series 3 shares and Class U-Series 3
shares in the proportion that the net asset value of such Special
Series 2 shares or Series 3 shares, as the case may be, of such Class
bears to the total net asset value of all shares of such Class C,
Class H, Class J, Class K,

-2-
<PAGE>

Class L, Class M, Class N and Class U (irrespective of whether said
shares have been classified as part of a series of said Class and,
if so classified as part of a series, irrespective of the particular
series classification).

(2) LIABILITIES BELONGING TO A CLASS. All the liabilities (including
expenses) of Galaxy in respect of Class C, Class H, Class J, Class K,
Class L, Class M, Class N and Class U shall be allocated to the Class
C - Special Series 2 shares, Class H-Series 3 shares, Class J-Series 3
shares, Class K-Series 3 shares, Class L-Series 3 shares, Class
M-Series 3 shares, Class N-Series 3 shares and Class U-Series 3 shares
hereby classified of such Class C, Class H, Class J, Class K, Class L,
Class M, Class N and Class U in the proportion that the net asset
value of such Special Series 2 shares or Series 3 shares, as the case
may be, of such Class bears to the total net asset value of all shares
of such Class C, Class H, Class J, Class K, Class L, Class M, Class N
and Class U (irrespective of whether said shares have been classified
as a part of a series of said Class and, if so classified as a part of
a series, irrespective of the particular series classification),
except that to the extent that may be from time to time determined by
the Board of Trustees to allocate the following expenses to such Class
C - Special Series 2 shares, Class H-Series 3 shares, Class J-Series 3
shares, Class K-Series 3 shares, Class L-Series 3 shares, Class
M-Series 3 shares, Class N-Series 3 shares and Class U - Series 3
shares (or any other series of shares of such Class):

(a) only the Special Series 2 shares of Class C and the
Series 3 shares of Class H, Class J, Class K, Class M, Class N
and Class U shall bear: (i) the expenses and liabilities of
payments to institutions under any agreements entered into by or
on behalf of Galaxy which provide for services by the
institutions exclusively for their customers who own of record or
beneficially such Special Series 2 shares or Series 3 shares, as
the case may be; and (ii) such other expenses and liabilities as
the Board of Trustees may from time to time determine are
directly attributable to such shares and which therefore should
be borne solely by the Special Series 2 shares of Class C and the
Series 3 shares of Class H, Class J, Class K, Class M, Class N
and Class U; and

-3-
<PAGE>

(b) no Special Series 2 shares of Class C or Series 3
shares of Class H, Class J, Class K, Class L, Class M, Class N
and Class U shall bear (i) the expenses and liabilities of
payments to institutions under any agreements entered into by or
on behalf of Galaxy which provide for services by the
institutions exclusively for their customers who own of record or
beneficially shares of Class C other than Special Series 2 shares
of such Class C or shares of Class H, Class J, Class K, Class L,
Class M, Class N and Class U other than Series 3 shares of such
Class H, Class J, Class K, Class L, Class M, Class N and Class U;
and (ii) such other expenses and liabilities as the Board of
Trustees may from time to time determine are directly
attributable to shares of Class C other than the Special Series 2
shares of such Class C or shares of Class H, Class J, Class K,
Class L, Class M, Class N and Class U other than Series 3 shares
of such Class H, Class J, Class K, Class L, Class M, Class N and
Class U and which therefore should be borne solely by such other
shares of Class C, Class H, Class J, Class K, Class L, Class M,
Class N and Class U and not the Special Series 2 shares of such
Class C or Series 3 shares of such Class H, Class J, Class K,
Class L, Class M, Class N and Class U.

(3) PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS,
RESTRICTIONS, LIMITATIONS, QUALIFICATIONS, AND TERMS AND
CONDITIONS OF REDEMPTION. Except as provided hereby, each
Special Series 2 share of Class C and each Series 3 share of
Class H, Class J, Class K, Class L, Class M, Class N and Class U
shall have the same preferences, conversion, and other rights,
voting powers, restrictions, limitations, qualifications, and
terms and conditions of redemption applicable to all other shares
as set forth in Galaxy's Declaration of Trust and shall also have
the same preferences, conversion, and other rights, voting
powers, restrictions, limitations, qualifications, and terms and
conditions of redemption as each other share formerly, now or
hereafter classified as a share of Class C, Class H, Class J,
Class K, Class L, Class M, Class N and Class U (irrespective of
whether said share has been classified as a part of a series of
said Class and, if so classified as a part of a series,
irrespective of the particular

-4-
<PAGE>

series classification) except that:

(a) On any matter that pertains to the agreements or
expenses and liabilities described under Section (2), clause
(a) above (or to any plan or other document adopted by
Galaxy relating to said agreements, expenses, or
liabilities) and is submitted to a vote of shareholders of
Galaxy, only the Special Series 2 shares of Class C and the
Series 3 shares of Class H, Class J, Class K, Class L, Class
M, Class N and Class U (excluding the other shares
classified as a series of such Class other than Special
Series 2 or Series 3, as the case may be) shall be entitled
to vote, except that:

(i) if said matter affects shares in Galaxy other than the
Special Series 2 shares of Class C and the Series 3 shares
of Class H, Class J, Class K, Class L, Class M, Class N and
Class U, such other affected shares in Galaxy shall also be
entitled to vote, and in such case, such Special Series 2
shares of such Class C and such Series 3 shares of such
Class H, Class J, Class K, Class L, Class M, Class N and
Class U shall be voted in the aggregate together with such
other affected shares and not by class or series except
where otherwise required by law or permitted by the Board of
Trustees of Galaxy; and

(ii) if said matter does not affect the Special Series 2
shares of Class C and Series 3 shares of Class H, Class J,
Class K, Class L, Class M, Class N and Class U, such shares
shall not be entitled to vote (except where required by law
or permitted by the Board of Trustees) even though the
matter is submitted to a vote of the holders of shares in
Galaxy other than said Special Series 2 shares of such Class
C and such Series 3 shares of Class H, Class J, Class K,
Class L, Class M, Class N and Class U.

(b) With respect to each such series of shares, the first
sentence of Section 5.1B(9) shall not apply, and the
following shall apply instead:

-5-
<PAGE>

To the extent of the assets of the Trust legally available
for such redemptions, a Shareholder of the Trust shall have
the right to require the Trust to redeem his full and
fractional Shares of any class out of assets belonging to
the classes with the same alphabetical designation as such
class at a redemption price equal to the net asset value per
Share for such Shares being redeemed next determined after
receipt of a request to redeem in proper form as determined
by the Trustees, less such deferred sales charge, redemption
fee or other charge, if any, as may be fixed by the
Trustees, subject to the right of the Trustees to suspend
the right of redemption of Shares or postpone the date of
payment of such redemption price in accordance with the
provisions of applicable law.

(c) Class C-Special Series 2, Class H-Series 3, Class J-Series
3, Class K-Series 3, Class L-Series 3, Class M-Series 3,
Class N-Series 3 and Class U-Series 3 shares shall be
convertible into Class C-Special Series 1, Class H-Series 2,
Class J-Series 2, Class K-Series 2, Class L-Series 2, Class
M-Series 2, Class N-Series 2 and Class U-Series 2 shares,
respectively, on the basis of the relative net asset values
of the shares converted and the shares into which such
shares are converted, and otherwise after such time or
times, and upon such conditions and pursuant to such
procedures, as shall be determined by the Trustees from time
to time in connection with the sale and issuance of such
shares.

-6-
<PAGE>

The foregoing resolutions remain in full force and effect as of the
date hereof.

/S/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III
Secretary

Dated: September 7, 1995

Subscribed and sworn to before
me this 5th day of September, 1995

/S/ Dorothea A. Natale
- ----------------------
Notary Public or Commissioner of Deeds
My Commission Expires: September 4, 2000

-7-

<PAGE>

EXHIBIT (a)(12)

THE GALAXY FUND

(A Massachusetts Business Trust)

CERTIFICATE OF CLASSIFICATION OF SHARES

I, W. Bruce McConnel, III, do hereby certify as follows:

(1) That I am the duly elected Secretary of The Galaxy Fund
("Galaxy");

(2) That in such capacity I have examined the record of actions taken
by the Board of Trustees of Galaxy at a Regular Meeting of the Board
held on December 5, 1996 (the "Meeting");

(3) That the following resolutions were duly adopted at the Meeting
by the Board of Trustees of Galaxy:

1. CLASSIFICATION OF SHARES.

FURTHER RESOLVED, that Class A-Special Series 2 shares of
beneficial interest shall represent interests in the Money Market
Fund;

FURTHER RESOLVED, that each share of Class A-Special Series
newly classified hereby shall have all of the following preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption:

(1) Assets Belong to a Class. All consideration received
by Galaxy for the issue or sale of shares of Class A-Special Series 2
shall be invested and reinvested with the consideration received by
Galaxy for the issue and sale of all other shares now or hereafter
classified as shares of Class A (irrespective of whether said shares
have been classified as part of a series of said Class and if so
classified as part of a series, irrespective of the particular series
classification), together with all income, earnings, profits, and
proceeds derived from the investment thereof, including any proceeds
derived from the sale, exchange, or liquidation of such investment,
any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, and any general assets of Galaxy
allocated to Class A (including the Class A shares and Class A-Special
Series I shares formerly classified, Class A-Special Series 2 shares
herein

<PAGE>

classified or such other shares with respect to such Class A) by the
Board of Trustees in accordance with Galaxy's Declaration of Trust.
All income, earnings, profits, and proceeds including any profits
derived from the sale, exchange or liquidation of such shares of Class
A, and any assets derived from any reinvestment of such proceeds in
whatever form, shall be allocated to the Class A-Special Series 2
shares in the proportion that the net asset value of such Special
Series 2 shares of such Class bears to the total net value of all
shares of such Class A (irrespective of whether said shares have been
classified as part of a series of said Class and, if so classified as
part of a series, irrespective of the particular series
classification).

(2) Liabilities Belonging to a Class. All the liabilities
(including expenses) of Galaxy in respect of Class A shall be
allocated to the Class A-Special Series 2 shares hereby classified of
such Class A in the proportion that the net asset value of such
Special Series 2 shares of such Class bears to the total net asset
value of all shares of such Class A (irrespective of whether said
shares have been classified as a part of a series of said Class and,
if so classified as a part of a series, (irrespective of the
particular series classification), except that to the extent that may
be from time to time determined by the Board of Trustees to allocate
the following expenses to such Class A- Special Series 2 shares (or
any other series of shares of such Class):

(a) only the Special Series 2 shares of Class A shall
bear: (i) the expenses an liabilities of payments to institutions
under an agreements entered into by or on-behalf of Galaxy which
provide for services by the institutions exclusively for their
customers who own of record or beneficially such Special Series 2
shares; and (ii) such other expenses and liabilities as the Board of
Trustees may from time to time determine are directly attributable to
such shares and which therefore should be borne solely by the Special
Series 2 shares of Class A; and

(b) no Special Series 2 shares of Class A shall bear
the expenses and liabilities of payments to institutions under any
agreements entered into by or on behalf Galaxy which provide for
services by the institutions exclusively total their customers who own
of record or beneficially shares of Class A other than Special Series
2 shares of such Class A; and (ii) such other expenses and liabilities
as the Board of Trustees may from time to time determine are directly
attributable to shares of Class A other than the Special Series 2
shares of such Class A and which therefore should be borne solely by
such other shares of Class A and not the Special Series 2 shares of
such Class A.

(3) Preferences, Conversion and Other Rights, Voting
Powers, Restrictions, Limitations, Qualifications, and Terms and
Conditions of Redemption. Except as provided hereby, each Special
Series 2 share of Class A shall have the same preferences, conversion,
and other rights, voting powers, restrictions, limitations,
qualifications, and terms and conditions of redemption

-2-
<PAGE>

applicable to all other shares as set forth in Galaxy's Declaration of
Trust and shall also have the same preferences, conversion, and other
rights, voting powers, restrictions, limitations, qualifications, and
terms and conditions of redemption as each other share formerly, now
or hereafter classified as a share of Class A (irrespective of whether
said share has been classified as a part of a series of said Class
and, if so classified as a part of a series, irrespective of the
particular series classification) except that:

(a) On any matter that pertains to the agreements
or expenses and liabilities described under Section (2),
clause (a) above (or to any plan or other document adopted
by Galaxy relating to said agreements, expenses, or
liabilities and is submitted to a vote of shareholders of
Galaxy, only the Special Series 2 shares of Class A
(excluding the other shares classified as a series of such
Class other than Special Series 2) shall be entitled to
vote, except that:

(i) if said matter affects shares in Galaxy
other than the Special Series 2 shares of Class A, such
other affected shares in Galaxy shall also be entitled to
vote, and in such case, such Special Series 2 shares of such
Class A shall be voted in the aggregate together with such
other affected shares and not by class or series except
where otherwise required by law or permitted by the Board of
Trustees of Galaxy; and

(ii) if said matter does not affect the
Special Series 2 shares of Class A such shares shall not be
entitled to vote (except where required by law or permitted
by the Board of Trustees) even though the matter is
submitted to a vote of the holders of shares in Galaxy other
than said Special Series 2 shares of such Class A.

(b) With respect to the Special Series 2 shares
of Class A, the first sentence of Section 5.1B(9) shall not
apply, and the following shall apply instead:

-3-
<PAGE>

redeem in proper form as determined by the
Trustees, less such deferred sales charge,
redemption fee or other charge, if any, as
may be fixed by the Trustees, subject to the
right of the Trustees to suspend the right of
redemption of Shares or postpone the date of
payment of such redemption price in
accordance with the provisions of applicable
law.

(c) Class A-Special Series 2 shares shall be
convertible into Class A shares on the basis of the relative net
asset values of the shares converted and the shares into which
such shares are converted, and otherwise after such time or
times, and upon such conditions and pursuant to such procedures,
as shall be determined by the Trustees from time to time in
connection with the sale and issuance of such shares. The
foregoing resolutions remain in full force and effect as of the
date hereof.

/s/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III
Secretary

Dated: December 5, 1996

Subscribed and sworn to before
me this 4th day of December, 1996

/s/ Dorothea A. Natale
- -----------------------------------------
Notary Public or Commissioner of Deeds
My Commission Expires: September 4, 2000

-4-

<PAGE>

Exhibit (a) (13)

THE GALAXY FUND
(A Massachusetts Business Trust)

CERTIFICATE OF CLASSIFICATION OF SHARES

I, W. Bruce McConnel, III, do hereby certify as follows:

(1) That I am the duly elected Secretary of The Galaxy Fund ("Galaxy");

(2) That in such capacity I have examined the record of actions taken by
the Board of Trustees of Galaxy at a Regular Meeting of the Board held on
December 4, 1997 (the "Meeting");

(3) That the following resolutions were duly adopted at the Meeting by the
Board of Trustees of Galaxy:

1. CREATION OF TWO SERIES OF CLASS Y SHARES REPRESENTING INTERESTS IN THE
NEW JERSEY MUNICIPAL BOND FUND.

RESOLVED, that pursuant to Section 5.1 of Galaxy's Declaration of
Trust, an unlimited number of authorized and unissued shares of
beneficial interest in Galaxy be, and hereby are, classified into a
new class of shares denominated as Class Y shares, consisting of two
separate series of shares of beneficial interest designated as Class Y
- Series 1 shares and Class Y - Series 2 shares, both series
representing interests in the New Jersey Municipal Bond Fund;

FURTHER RESOLVED, that all consideration received by Galaxy for
the issue or sale of Class Y - Series 1 shares shall be invested and
reinvested with the consideration received by Galaxy for the issue and
sale of Class Y - Series 2 shares and any other shares of beneficial
interest in Galaxy hereafter designated as Class Y shares
(irrespective of whether said shares have been designated as part of a
series of said class and, if so designated, irrespective of the
particular series designation), together with all income, earnings,
profits and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation thereof, any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may
be, and any general assets of Galaxy allocated to Class Y shares
(irrespective of series designation) by the Board of Trustees in
accordance with Galaxy's Declaration of Trust, and each Class Y -
Series 1 share and Class Y - Series 2 share shall share in proportion
to their respective net asset values with each such other share in
such consideration and other assets, income, earnings, profits and
proceeds thereof,

-1-
<PAGE>

including any proceeds derived from the sale, exchange or liquidation
thereof, and any assets derived from any reinvestment of such proceeds
in whatever form;

FURTHER RESOLVED, that each Class Y - Series 1 share and Class Y
- Series 2 share newly classified hereby shall have all of the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions
of redemption accorded shares of beneficial interest in Galaxy now or
hereinafter designated as Class Y shares (irrespective of series
designation); and

FURTHER RESOLVED, that each Class Y - Series 1 share and each
Class Y - Series 2 share shall be charged in proportion to their
respective net asset values with each other share of beneficial
interest in Galaxy now or hereafter designated as a Class Y share
(irrespective of whether said share has been designated as part of a
series of said class and, if so designated, irrespective of the
particular series designation) with the expenses and liabilities of
Galaxy in respect of Class Y shares (irrespective of series
designation) and in respect of any general expenses and liabilities of
Galaxy allocated to Class Y shares by the Board of Trustees in
accordance with Galaxy's Declaration of Trust; PROVIDED, HOWEVER, that
to the extent permitted by rule or order of the Securities and
Exchange Commission and as the Board of Trustees may from time to time
determine:

(1) only Class Y - Series 1 shares shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services exclusively with respect to shares
of Class Y - Series 1, as well as any other expenses and liabilities
directly attributable to Class Y - Series 1 shares which the Board of
Trustees determines should be borne solely by shares of such Series;

(2) only Class Y - Series 2 shares shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services exclusively with respect to shares
of Class Y - Series 2, as well as any other expenses and liabilities
directly attributable to Class Y - Series 2 shares which the Board of
Trustees determines should be borne solely by shares of such Series;

-2-
<PAGE>

(3) Class Y - Series 1 shares shall not bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services with respect to Class Y shares other
than shares of its Series 1, as well as any other expenses and
liabilities directly attributable to shares of Class Y other than
Class Y - Series 1 shares which the Board of Trustees determines
should be borne exclusively by such other shares;

(4) Class Y - Series 2 shares shall not bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services with respect to Class Y shares other
than shares of its Series 2, as well as any other expenses and
liabilities directly attributable to shares of Class Y other than
Class Y - Series 2 shares which the Board of Trustees determines
should be borne exclusively by such other shares;

(5) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (a) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, only Class Y - Series 1 shares shall be
entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Galaxy other than Class Y - Series 1 shares,
such other affected shares in Galaxy shall also be entitled to vote
and, in such case, Class Y - Series 1 shares shall be voted in the
aggregate together with such other affected shares and not by class or
series, except where otherwise required by law or permitted by the
Board of Trustees of Galaxy; and (ii) if said matter does not affect
Class Y -Series 1 shares, said shares shall not be entitled to vote
(except where otherwise required by law or permitted by the Board of
Trustees) even though the matter is submitted to a vote of the holders
of shares of beneficial interest in Galaxy other than Class Y -
Series 1 shares; and

(6) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (b) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, only Class Y - Series 2 shares shall be
entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Galaxy other than Class Y -

-3-
<PAGE>

Series 2 shares, such other affected shares in Galaxy shall also
be entitled to vote and, in such case, Class Y - Series 2 shares
shall be voted in the aggregate together with such other affected
shares and not by class or series, except where otherwise required
by law or permitted by the Board of Trustees of Galaxy; and (ii) if
said matter does not affect Class Y -Series 2 shares, said shares
shall not be entitled to vote (except where otherwise required by
law or permitted by the Board of Trustees) even though the matter
is submitted to a vote of the holders of shares of beneficial
interest in Galaxy other than Class Y - Series 2 shares; and

(7) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (b) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, Class Y - Series 1 shares shall not be
entitled to vote, except where otherwise required by law or permitted
by the Board of Trustees of Galaxy, and except that if said matter
affects Class Y - Series 1 shares, such shares shall be entitled to
vote, and in such case, Class Y - Series 1 shares shall be voted in
the aggregate together with all other shares of beneficial interest in
Galaxy voting on the matter and not by class or series, except where
otherwise required by law or permitted by the Board of Trustees; and

(8) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (a) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, Class Y - Series 2 shares shall not be
entitled to vote, except where otherwise required by law or permitted
by the Board of Trustees of Galaxy, and except that if said matter
affects Class Y - Series 2 shares, such shares shall be entitled to
vote, and in such case, Class Y - Series 2 shares shall be voted in
the aggregate together with all other shares of beneficial interest in
Galaxy voting on the matter and not by class or series, except where
otherwise required by law or permitted by the Board of Trustees.

2. CREATION OF THREE SERIES OF CLASS Z SHARES REPRESENTING INTERESTS IN
THE MIDCAP EQUITY FUND.

RESOLVED, that pursuant to Section 5.1 of Galaxy's Declaration of
Trust, an unlimited number of authorized

-4-
<PAGE>

and unissued shares of beneficial interest in Galaxy be, and hereby
are, classified into a new class of shares denominated as Class Z
shares, consisting of three separate series of shares of beneficial
interest designated as Class Z - Series 1 shares, Class Z - Series 2
shares and Class Z - Series 3 shares, all series representing
interests in the MidCap Equity Fund;

FURTHER RESOLVED, that all consideration received by Galaxy for
the issue or sale of Class Z - Series 1 shares shall be invested and
reinvested with the consideration received by Galaxy for the issue and
sale of Class Z - Series 2 shares and Class Z - Series 3 shares and
any other shares of beneficial interest in Galaxy hereafter designated
as Class Z shares (irrespective of whether said shares have been
designated as part of a series of said class and, if so designated,
irrespective of the particular series designation), together with all
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, and any general assets of Galaxy allocated to
Class Z shares (irrespective of series designation) by the Board of
Trustees in accordance with Galaxy's Declaration of Trust, and each
Class Z - Series 1 share, Class Z - Series 2 share and Class Z -
Series 3 share shall share in proportion to their respective net asset
values with each such other share in such consideration and other
assets, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, and
any assets derived from any reinvestment of such proceeds in whatever
form;

FURTHER RESOLVED, that each Class Z - Series 1 share, each Class
Z - Series 2 share and each Class Z - Series 3 share newly classified
hereby shall have all of the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption accorded shares
of beneficial interest in Galaxy now or hereinafter designated as
Class Z shares (irrespective of series designation) except that:

(a) with respect to Class Z - Series 3 shares, the first sentence of
Section 5.1B(9) of Galaxy's Declaration of Trust shall not apply, and
the following shall apply instead:

To the extent of the assets of the Trust legally available for such
redemptions, a Shareholder of the Trust shall have the right to
require the Trust to

-5-
<PAGE>

redeem his full and fractional Shares of any class out of assets
belonging to the classes with the same alphabetical designation as
such class at a redemption price equal to the net asset value per
Share for such Shares being redeemed next determined after receipt of
a request to redeem in proper form as determined by the Trustees, less
such deferred sale charge, redemption fee or other charge, if any, as
may be fixed by the Trustees, subject to the right of the Trustees to
suspend the right of redemption of shares or postpone the date of
payment of such redemption price in accordance with the provisions of
applicable law.

(b) Class Z - Series 3 shares shall be convertible into Class Z -
Series 2 shares on the basis of the relative net asset values of the
shares converted and the shares into which such shares are converted,
and otherwise after such time or times, and upon such conditions and
pursuant to such procedures, as shall be determined by the trustees
from time to time in connection with the sale and issuance of such
shares;

FURTHER RESOLVED, that each Class Z - Series 1 share, each
Class Z - Series 2 share and each Class Z -Series 3 share shall be
charged in proportion to their respective net asset values with each
other share of beneficial interest in Galaxy now or hereafter
designated as a Class Z share (irrespective of whether said share has
been designated as part of a series of said class and, if so
designated, irrespective of the particular series designation) with
the expenses and liabilities of Galaxy in respect of Class Z shares
(irrespective of series designation) and in respect of any general
expenses and liabilities of Galaxy allocated to Class Z shares by the
Board of Trustees in accordance with Galaxy's Declaration of Trust;
PROVIDED, HOWEVER, that to the extent permitted by rule or order of
the Securities and Exchange Commission and as the Board of Trustees
may from time to time determine:

(a) only Class Z - Series 1 shares shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services exclusively with respect to shares
of Class Z - Series 1, as well as any other expenses and liabilities
directly attributable to Class Z - Series 1 shares which the Board of
Trustees determines should be borne solely by shares of such series;

(b) only Class Z - Series 2 shares shall bear the expenses and
liabilities relating to any agreements or

-6-
<PAGE>

arrangements entered into by or on behalf of Galaxy pursuant to which
an organization or other person agrees to provide services exclusively
with respect to shares of Class Z - Series 2, as well as any other
expenses and liabilities directly attributable to Class Z - Series 2
shares which the Board of Trustees determines should be borne solely
by shares of such series;

(c) only Class Z - Series 3 shares shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services exclusively with respect to shares
of Class Z - Series 3, as well as any other expenses and liabilities
directly attributable to Class Z - Series 3 shares which the Board of
Trustees determines should be borne solely by shares of such series;

(d) Class Z - Series 1 shares shall not bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services with respect to Class Z shares other
than shares of its Series 1, as well as any other expenses and
liabilities directly attributable to shares of Class Z other than
Class Z - Series 1 shares which the Board of Trustees determines
should be borne exclusively by such other shares;

(e) Class Z - Series 2 shares shall not bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services with respect to Class Z shares other
than shares of its Series 2, as well as any other expenses and
liabilities directly attributable to shares of Class Z other than
Class Z - Series 2 shares which the Board of Trustees determines
should be borne exclusively by such other shares;

(f) Class Z - Series 3 shares shall not bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services with respect to Class Z shares other
than shares of its Series 3, as well as any other expenses and
liabilities directly attributable to shares of Class Z other than
Class Z - Series 3 shares which the Board of Trustees determines
should be borne exclusively by such other shares;

(g) on any matter that pertains to the agreements,

-7-
<PAGE>

arrangements, expenses or liabilities described in clause (a) above
(or to any plan or other document adopted by Galaxy relating to said
agreements, arrangements, expenses or liabilities) and that is
submitted to a vote of shareholders of Galaxy, only Class Z - Series 1
shares shall be entitled to vote, except that: (i) if said matter
affects shares of beneficial interest in Galaxy other than Class Z -
Series 1 shares, such other affected shares in Galaxy shall also be
entitled to vote and, in such case, Class Z - Series 1 shares shall be
voted in the aggregate together with such other affected shares and
not by class or series, except where otherwise required by law or
permitted by the Board of Trustees of Galaxy; and (ii) if said matter
does not affect Class Z -Series 1 shares, said shares shall not be
entitled to vote (except where otherwise required by law or permitted
by the Board of Trustees) even though the matter is submitted to a
vote of the holders of shares of beneficial interest in Galaxy other
than Class Z - Series 1 shares;

(h) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (b) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, only Class Z - Series 2 shares shall be
entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Galaxy other than Class Z - Series 2 shares,
such other affected shares in Galaxy shall also be entitled to vote
and, in such case, Class Z - Series 2 shares shall be voted in the
aggregate together with such other affected shares and not by class or
series, except where otherwise required by law or permitted by the
Board of Trustees of Galaxy; and (ii) if said matter does not affect
Class Z -Series 2 shares, said shares shall not be entitled to vote
(except where otherwise required by law or permitted by the Board of
Trustees) even though the matter is submitted to a vote of the holders
of shares of beneficial interest in Galaxy other than Class Z -
Series 2 shares;

-8-
<PAGE>

Series 3 shares, such other affected shares in Galaxy shall also be
entitled to vote and, in such case, Class Z - Series 3 shares shall
be voted in the aggregate together with such other affected shares
and not by class or series, except where otherwise required by law
or permitted by the Board of Trustees of Galaxy; and (ii) if said
matter does not affect Class Z -Series 3 shares, said shares shall
not be entitled to vote (except where otherwise required by law or
permitted by the Board of Trustees) even though the matter is
submitted to a vote of the holders of shares of beneficial interest
in Galaxy other than Class Z - Series 3 shares;

(j) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (b) or clause (c) above
(or to any plan or other document adopted by Galaxy relating to said
agreements, arrangements, expenses or liabilities) and that is
submitted to a vote of shareholders of Galaxy, Class Z - Series 1
shares shall not be entitled to vote, except where otherwise required
by law or permitted by the Board of Trustees of Galaxy, and except
that if said matter affects Class Z - Series 1 shares, such shares
shall be entitled to vote and, in such case, Class Z - Series 1 shares
shall be voted in the aggregate together with all other shares of
beneficial interest in Galaxy voting on the matter and not by class or
series, except where otherwise required by law or permitted by the
Board of Trustees;

(k) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (a) or clause (c) above
(or to any plan or other document adopted by Galaxy relating to said
agreements, arrangements, expenses or liabilities) and that is
submitted to a vote of shareholders of Galaxy, Class Z - Series 2
shares shall not be entitled to vote, except where otherwise required
by law or permitted by the Board of Trustees of Galaxy, and except
that if said matter affects Class Z - Series 2 shares, such shares
shall be entitled to vote and, in such case, Class Z - Series 2 shares
shall be voted in the aggregate together with all other shares of
beneficial interest in Galaxy voting on the matter and not by class or
series, except where otherwise required by law or permitted by the
Board of Trustees; and

-9-
<PAGE>

Class Z - Series 3 shares shall not be entitled to vote, except where
otherwise required by law or permitted by the Board of Trustees of
Galaxy, and except that if said matter affects Class Z - Series 3
shares, such shares shall be entitled to vote and, in such case, Class
Z - Series 3 shares shall be voted in the aggregate together with all
other shares of beneficial interest in Galaxy voting on the matter and
not by class or series, except where otherwise required by law or
permitted by the Board of Trustees.

3. CREATION OF THREE SERIES OF CLASS AA SHARES REPRESENTING INTERESTS IN
THE SPECIAL EQUITY FUND.

RESOLVED, that pursuant to Section 5.1 of Galaxy's Declaration of
Trust, an unlimited number of authorized and unissued shares of
beneficial interest in Galaxy be, and hereby are, classified into a
new class of shares denominated as Class AA shares, consisting of
three separate series of shares of beneficial interest designated as
Class AA - Series 1 shares, Class AA - Series 2 shares and Class AA -
Series 3 shares, all series representing interests in the Special
Equity Fund;

FURTHER RESOLVED, that all consideration received by Galaxy for
the issue or sale of Class AA - Series 1 shares shall be invested and
reinvested with the consideration received by Galaxy for the issue and
sale of Class AA - Series 2 shares and Class AA - Series 3 shares and
any other shares of beneficial interest in Galaxy hereafter designated
as Class AA shares (irrespective of whether said shares have been
designated as part of a series of said class and, if so designated,
irrespective of the particular series designation), together with all
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be, and any general assets of Galaxy allocated to
Class AA shares (irrespective of series designation) by the Board of
Trustees in accordance with Galaxy's Declaration of Trust, and each
Class AA - Series 1 share, Class AA - Series 2 share and Class AA -
Series 3 share shall share in proportion to their respective net asset
values with each such other share in such consideration and other
assets, income, earnings, profits and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation thereof, and
any assets derived from any reinvestment of such proceeds in whatever
form;

-10-
<PAGE>

FURTHER RESOLVED, that each Class AA - Series 1 share, Class AA -
Series 2 share and Class AA - Series 3 share newly classified hereby
shall have all of the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and
terms and conditions of redemption accorded shares of beneficial
interest in Galaxy now or hereinafter designated as Class AA shares
(irrespective of series designation) except that:

(a) with respect to Class AA - Series 3 shares, the first sentence of
Section 5.1B(9) of Galaxy's Declaration of Trust shall not apply, and
the following shall apply instead:

To the extent of the assets of the Trust legally available for such
redemptions, a Shareholder of the Trust shall have the right to
require the Trust to redeem his full and fractional Shares of any
class out of assets belonging to the classes with the same
alphabetical designation as such class at a redemption price equal to
the net asset value per Share for such Shares being redeemed next
determined after receipt of a request to redeem in proper form as
determined by the Trustees, less such deferred sale charge, redemption
fee or other charge, if any, as may be fixed by the Trustees, subject
to the right of the Trustees to suspend the right of redemption of
shares or postpone the date of payment of such redemption price in
accordance with the provisions of applicable law.

(b) Class AA - Series 3 shares shall be convertible into Class AA -
Series 2 shares on the basis of the relative net asset values of the
shares converted and the shares into which such shares are converted,
and otherwise after such time or times, and upon such conditions and
pursuant to such procedures, as shall be determined by the trustees
from time to time in connection with the sale and issuance of such
shares;

FURTHER RESOLVED, that each Class AA - Series 1 share, each
Class AA - Series 2 share and each Class AA - Series 3 share shall be
charged in proportion to their respective net asset values with each
other share of beneficial interest in Galaxy now or hereafter
designated as a Class AA share (irrespective of whether said share has
been designated as part of a series of said class and, if so
designated, irrespective of the particular series designation) with
the expenses and liabilities of Galaxy in respect of Class AA shares
(irrespective of series designation) and in respect of any general
expenses and liabilities of Galaxy allocated to Class AA shares by the
Board of Trustees in accordance with Galaxy's Declaration of Trust;

-11-
<PAGE>

PROVIDED, HOWEVER, that to the extent permitted by rule or order of
the Securities and Exchange Commission and as the Board of Trustees
may from time to time determine:

(a) only Class AA - Series 1 shares shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services exclusively with respect to shares
of Class AA - Series 1, as well as any other expenses and liabilities
directly attributable to Class AA - Series 1 shares which the Board of
Trustees determines should be borne solely by shares of such series;

(b) only Class AA - Series 2 shares shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services exclusively with respect to shares
of Class AA - Series 2, as well as any other expenses and liabilities
directly attributable to Class AA - Series 2 shares which the Board of
Trustees determines should be borne solely by shares of such series;

(c) only Class AA - Series 3 shares shall bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services exclusively with respect to shares
of Class AA - Series 3, as well as any other expenses and liabilities
directly attributable to Class AA - Series 3 shares which the Board of
Trustees determines should be borne solely by shares of such series;

(d) Class AA - Series 1 shares shall not bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services with respect to Class AA shares
other than shares of its Series 1, as well as any other expenses and
liabilities directly attributable to shares of Class AA other than
Class AA - Series 1 shares which the Board of Trustees determines
should be borne exclusively by such other shares;

(e) Class AA - Series 2 shares shall not bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person

-12-
<PAGE>

agrees to provide services with respect to Class AA shares other than
shares of its Series 2, as well as any other expenses and liabilities
directly attributable to shares of Class AA other than Class AA -
Series 2 shares which the Board of Trustees determines should be borne
exclusively by such other shares;

(f) Class AA - Series 3 shares shall not bear the expenses and
liabilities relating to any agreements or arrangements entered into by
or on behalf of Galaxy pursuant to which an organization or other
person agrees to provide services with respect to Class AA shares
other than shares of its Series 3, as well as any other expenses and
liabilities directly attributable to shares of Class AA other than
Class AA - Series 3 shares which the Board of Trustees determines
should be borne exclusively by such other shares;

(g) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (a) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, only Class AA - Series 1 shares shall be
entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Galaxy other than Class AA - Series 1 shares,
such other affected shares in Galaxy shall also be entitled to vote
and, in such case, Class AA - Series 1 shares shall be voted in the
aggregate together with such other affected shares and not by class or
series, except where otherwise required by law or permitted by the
Board of Trustees of Galaxy; and (ii) if said matter does not affect
Class AA -Series 1 shares, said shares shall not be entitled to vote
(except where otherwise required by law or permitted by the Board of
Trustees) even though the matter is submitted to a vote of the holders
of shares of beneficial interest in Galaxy other than Class AA -
Series 1 shares;

-13-
<PAGE>

Class AA - Series 2 shares shall be voted in the aggregate together
with such other affected shares and not by class or series, except
where otherwise required by law or permitted by the Board of Trustees
of Galaxy; and (ii) if said matter does not affect Class AA -Series 2
shares, said shares shall not be entitled to vote (except where
otherwise required by law or permitted by the Board of Trustees) even
though the matter is submitted to a vote of the holders of shares of
beneficial interest in Galaxy other than Class AA - Series 2 shares;

(i) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (c) above (or to any plan
or other document adopted by Galaxy relating to said agreements,
arrangements, expenses or liabilities) and that is submitted to a vote
of shareholders of Galaxy, only Class AA - Series 3 shares shall be
entitled to vote, except that: (i) if said matter affects shares of
beneficial interest in Galaxy other than Class AA - Series 3 shares,
such other affected shares in Galaxy shall also be entitled to vote
and, in such case, Class AA - Series 3 shares shall be voted in the
aggregate together with such other affected shares and not by class or
series, except where otherwise required by law or permitted by the
Board of Trustees of Galaxy; and (ii) if said matter does not affect
Class AA -Series 3 shares, said shares shall not be entitled to vote
(except where otherwise required by law or permitted by the Board of
Trustees) even though the matter is submitted to a vote of the holders
of shares of beneficial interest in Galaxy other than Class AA -
Series 3 shares;

(j) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (b) or clause (c) above
(or to any plan or other document adopted by Galaxy relating to said
agreements, arrangements, expenses or liabilities) and that is
submitted to a vote of shareholders of Galaxy, Class AA - Series 1
shares shall not be entitled to vote, except where otherwise required
by law or permitted by the Board of Trustees of Galaxy, and except
that if said matter affects Class AA - Series 1 shares, such shares
shall be entitled to vote and, in such case, Class AA - Series 1
shares shall be voted in the aggregate together with all other shares
of beneficial interest in Galaxy voting on the matter and not by class
or series, except where otherwise required by law or permitted by the
Board of Trustees;

(k) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in

-14-
<PAGE>

clause (a) or clause (c) above (or to any plan or other document
adopted by Galaxy relating to said agreements, arrangements, expenses
or liabilities) and that is submitted to a vote of shareholders of
Galaxy, Class AA - Series 2 shares shall not be entitled to vote,
except where otherwise required by law or permitted by the Board of
Trustees of Galaxy, and except that if said matter affects Class AA -
Series 2 shares, such shares shall be entitled to vote and, in such
case, Class AA - Series 2 shares shall be voted in the aggregate
together with all other shares of beneficial interest in Galaxy voting
on the matter and not by class or series, except where otherwise
required by law or permitted by the Board of Trustees; and

(l) on any matter that pertains to the agreements, arrangements,
expenses or liabilities described in clause (a) or clause (b) above
(or to any plan or other document adopted by Galaxy relating to said
agreements, arrangements, expenses or liabilities) and that is
submitted to a vote of shareholders of Galaxy, Class AA - Series 3
shares shall not be entitled to vote, except where otherwise required
by law or permitted by the Board of Trustees of Galaxy, and except
that if said matter affects Class AA - Series 3 shares, such shares
shall be entitled to vote and, in such case, Class AA - Series 3
shares shall be voted in the aggregate together with all other shares
of beneficial interest in Galaxy voting on the matter and not by class
or series, except where otherwise required by law or permitted by the
Board of Trustees.

-15-
<PAGE>

The foregoing resolutions remain in full force and effect as of the
date hereof.

/s/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III
Secretary

Dated: December 4, 1997

Subscribed and sworn to before
me this 4th day of December, 1997

/s/ Dorothea A. Natale
- ----------------------
Notary Public or Commissioner of Deeds
My Commission Expires: September 4, 2000

-16-

<PAGE>

Exhibit (a)(14)

THE GALAXY FUND
(A Massachusetts Business Trust)

CERTIFICATE OF CLASSIFICATION OF SHARES

I, W. Bruce McConnel, III, do hereby certify as follows:

(1) That I am the duly elected Secretary of The Galaxy Fund (the
"Trust");

(2) That in such capacity I have examined the records of actions
taken by the Board of Trustees of the Trust at the regular meeting of the Board
held on May 28, 1998;

(3) That the following resolutions were duly adopted at the
meeting by the Board of Trustees of the Trust:

1. CREATION OF CLASS BB SHARES REPRESENTING INTERESTS IN THE PRIME
RESERVES.

FURTHER RESOLVED, that each Class BB share created pursuant to
the foregoing resolution shall have all of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption that are set forth in
Galaxy's Declaration of Trust with respect to any class of shares of
Galaxy; and

FURTHER RESOLVED, that Class BB shares shall represent interests
in the Prime Reserves.

2. CREATION OF CLASS CC SHARES REPRESENTING INTERESTS IN THE
GOVERNMENT RESERVES.

FURTHER RESOLVED, that each Class CC share created pursuant to
the foregoing resolution shall have all of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications

<PAGE>

and terms and conditions of redemption that are set forth in Galaxy's
Declaration of Trust with respect to any class of shares of Galaxy; and

FURTHER RESOLVED, that Class CC shares shall represent interests
in the Government Reserves.

3. CREATION OF CLASS DD SHARES REPRESENTING INTERESTS IN THE
TAX-EXEMPT RESERVES.

FURTHER RESOLVED, that each Class DD share created pursuant to
the foregoing resolution shall have all of the preferences, conversion and
other rights, voting powers, restrictions, limitations as to dividends,
qualifications and terms and conditions of redemption that are set forth in
Galaxy's Declaration of Trust with respect to any class of shares of
Galaxy; and

FURTHER RESOLVED, that Class DD shares shall represent interests
in the Tax-Exempt Reserves.

(4) That the foregoing resolutions remain in full force and
effect on the date hereof.

/s/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III
Secretary

Dated: May 28, 1998

Subscribed and sworn to before
me this 28th day of May, 1998

/s/ Dorothea A. Natale
- ----------------------------------------
Notary Public or Commissioner of Deeds
My Commission Expires: September 4, 2000

<PAGE>
Exhibit (a)(15)

THE GALAXY FUND
(A Massachusetts Business Trust)

CERTIFICATE OF CLASSIFICATION OF SHARES

I, W. Bruce McConnel, III, do hereby certify as follows:

(1) That I am the duly elected Secretary of The Galaxy Fund (the
"Trust");

(2) That in such capacity I have examined the records of actions
taken by the Board of Trustees of the Trust (a) at the regular meeting of the
Board held on May 28, 1998 and (b) by unanimous written consent dated as of
August 28, 1998;

(3) That the following resolutions were duly adopted by the Board of
Trustees of the Trust at the regular meeting of the Board held on May 28, 1998:

1. Creation of New Series of Shares, i.e. A Prime Shares, in Certain of the
Equity and Bond Portfolios: (the Short-Term Bond Fund, Intermediate Government
Income Fund, High Quality Bond Fund, Tax-Exempt Bond Fund, Equity Value Fund,
Equity Growth Fund, Equity Income Fund, International Equity Fund, Asset
Allocation Fund, Small Company Equity Fund, Small Cap Value Fund, Growth and
Income Fund and Strategic Equity Fund)

CLASSIFICATION OF SHARES.

RESOLVED, that pursuant to Section 5.1 of Galaxy's Declaration
of Trust, an unlimited number of authorized, unissued and
unclassified shares of beneficial interest of Galaxy be, and hereby
are, classified into each of thirteen additional separate series of
shares which shall be designated, respectively, Class C-Special
Series 3, Class D-Special Series 3, Class G-Series 4, Class
H-Series 4, Class I-Series 4, Class J-Series 4, Class K -Series 4,
Class L-Series 4, Class M-Series 4, Class N-Series 4, Class
U-Series 4, Class X-Series 4 and Class AA-Series 4;

FURTHER RESOLVED, that (a) Class C-Special Series 3 shares of
beneficial interest shall represent interests in the Equity Value
Fund, (b) Class D-Special Series 3 shares of beneficial interest
shall represent interests in the Intermediate Government Income
Fund, (c) Class G-Series 4 shares of beneficial interest shall
represent interests in the International Equity Fund, (d) Class
H-Series 4 shares of beneficial interest shall represent interests
in the Equity Growth Fund, (e) Class I-Series 4 shares of
beneficial interest shall represent interests in the Equity Income
Fund, (f) Class J-Series 4 shares of beneficial interest shall

<PAGE>

represent interests in the High Quality Bond Fund, (g) Class
K-Series 4 shares of beneficial interest shall represent interests
in the Small Company Equity Fund, (h) Class L-Series 4 shares of
beneficial interest shall represent interests in the Short-Term
Bond Fund, (i) Class M -Series 4 shares of beneficial interest
shall represent interests in the Tax-Exempt Bond Fund, (j) Class N
-Series 4 shares of beneficial interest shall represent interests
in the Asset Allocation Fund, (k) Class U-Series 4 shares of
beneficial interest shall represent interests in the Growth and
Income Fund, (l) Class X-Series 4 shares of beneficial interest
shall represent interests in the Small Cap Value Fund and (m) Class
AA-Series 4 shares of beneficial interest shall represent interests
in the Strategic Equity Fund;

FURTHER RESOLVED, that each share of Class C-Special Series 3,
Class D-Special Series 3, Class G-Series 4, Class H-Series 4, Class
I-Series 4, Class J-Series 4, Class K-Series 4, Class L-Series 4,
Class M-Series 4, Class N-Series 4, Class U-Series 4, Class
X-Series 4 and Class AA-Series 4 newly classified hereby shall have
all of the following preferences, conversion and other rights,
voting powers, restrictions, limitations, qualifications and terms
and conditions of redemption:

(1) ASSETS BELONG TO A CLASS. All consideration received by
Galaxy for the issue or sale of shares of Class C-Special Series 3,
Class D-Special Series 3, Class G-Series 4, Class H-Series 4, Class
I-Series 4, Class J-Series 4, Class K-Series 4, Class L-Series 4,
Class M-Series 4, Class N-Series 4, Class U-Series 4, Class
X-Series 4 and Class AA-Series 4 shall be invested and reinvested
with the consideration received by Galaxy for the issue and sale of
all other shares now or hereafter classified as shares of Class C,
Class D, Class G, Class H, Class I, Class J, Class K, Class L,
Class M, Class N, Class U, Class X and Class AA, respectively
(irrespective of whether said shares have been classified as part
of a series of said Class and if so classified as part of a series,
irrespective of the particular series classification), together
with all income, earnings, profits, and proceeds derived from the
investment thereof, including any proceeds derived from the sale,
exchange, or liquidation of such investment, any funds or payments
derived from any reinvestment of such proceeds in whatever form the
same may be, and any general assets of Galaxy allocated to Class C,
Class D, Class G, Class H, Class I, Class J, Class K, Class L,
Class M, Class N, Class U, Class X and Class AA (including the
Class C, Class D, Class G, Class H, Class I, Class J, Class K,
Class L, Class M, Class N, Class U, Class X and Class AA shares
formerly classified, Class C-Special Series 3, Class D-Special
Series 3, Class G-Series 4, Class H-Series 4, Class I-Series 4,
Class J-Series 4, Class K-Series 4, Class L-Series 4, Class
M-Series 4, Class N-Series 4, Class U-Series 4, Class X-Series 4
and Class AA-Series 4 shares herein classified or such other shares
with respect to such Class C, Class D, Class G, Class H, Class I,
Class J, Class K, Class L, Class M, Class N, Class U, Class X and
Class AA) by the Board of Trustees in accordance with Galaxy's
Declaration of Trust. All income, earnings, profits, and proceeds,
including any profits derived from the sale, exchange or

-2-
<PAGE>

liquidation of such shares of Class C, Class D, Class G, Class H,
Class I, Class J, Class K, Class L, Class M, Class N, Class U,
Class X and Class AA and any assets derived from any reinvestment
of such proceeds in whatever form shall be allocated to the Class
C-Special Series 3 shares, Class D-Special Series 3 shares, Class
G-Series 4 shares, Class H-Series 4 shares, Class I-Series 4
shares, Class J-Series 4 shares, Class K-Series 4 shares, Class
L-Series 4 shares, Class M-Series 4 shares, Class N-Series 4
shares, Class U-Series 4 shares, Class X-Series 4 shares and Class
AA-Series 4 shares in the proportion that the net asset value of
such Special Series 3 shares or Series 4 shares, as the case may
be, of such Class bears to the total net asset value of all shares
of such Class C, Class D, Class G, Class H, Class I, Class J, Class
K, Class L, Class M, Class N, Class U, Class X and Class AA
(irrespective of whether said shares have been classified as part
of a series of said Class and, if so classified as part of a
series, irrespective of the particular series classification).

(2) LIABILITIES BELONGING TO A CLASS. All the liabilities
(including expenses) of Galaxy in respect of Class C, Class D,
Class G, Class H, Class I, Class J, Class K, Class L, Class M,
Class N, Class U, Class X and Class AA shall be allocated to the
Class C-Special Series 3 shares, Class D-Special Series 3 shares,
Class G-Series 4 shares, Class H-Series 4 shares, Class I-Series 4
shares, Class J-Series 4 shares, Class K-Series 4 shares, Class
L-Series 4 shares, Class M-Series 4 shares, Class N-Series 4
shares, Class U-Series 4 shares, Class X-Series 4 shares and Class
AA-Series 4 shares hereby classified of such Class C, Class D,
Class G, Class H, Class I, Class J, Class K, Class L, Class M,
Class N, Class U, Class X and Class AA in the proportion that the
net asset value of such Special Series 3 shares or Series 4 shares,
as the case may be, of such Class bears to the total net asset
value of all shares of such Class C, Class D, Class G, Class H,
Class I, Class J, Class K, Class L, Class M, Class N, Class U,
Class X and Class AA (irrespective of whether said shares have been
classified as a part of a series of said Class and, if so
classified as a part of a series, irrespective of the particular
series classification), except that to the extent that may be from
time to time determined by the Board of Trustees to allocate the
following expenses to such Class C-Special Series 3 shares, Class
D-Special Series 3 shares, Class G-Series 4 shares, Class H-Series
4 shares, Class I-Series 4 shares, Class J-Series 4 shares, Class
K-Series 4 shares, Class L-Series 4 shares, Class M-Series 4
shares, Class N-Series 4 shares, Class U-Series 4, Class X-Series 4
and Class AA-Series 4 shares (or any other series of shares of such
Class):

(a) Only the Special Series 3 shares of Class C and
Class D and the Series 4 shares of, Class G, Class H, Class I,
Class J, Class K, Class M, Class N, Class U, Class X and Class AA
shall bear: (i) the expenses and liabilities of payments to
institutions under any agreements entered into by or on behalf of
Galaxy which provide for services by the institutions exclusively
for their customers who own of record or beneficially such Special
Series 3 shares or Series 4 shares, as the case may be; and (ii)
such other expenses and liabilities as

-3-
<PAGE>

the Board of Trustees may from time to time determine are directly
attributable to such shares and which therefore should be borne
solely by the Special Series 3 shares of Class C and Class D and
the Series 4 shares of Class G, Class H, Class I, Class J, Class K,
Class M, Class N, Class U, Class X and Class AA; and

(b) no Special Series 3 shares of Class C and Class D or
Series 4 shares of Class G, Class H, Class I, Class J, Class K,
Class L, Class M, Class N, Class U, Class X and Class AA shall bear
(i) the expenses and liabilities of payments to institutions under
any agreements entered into by or on behalf of Galaxy which provide
for services by the institutions exclusively for their customers
who own of record or beneficially shares of Class C and Class D
other than Special Series 3 shares of such Class C and Class D or
shares of Class G, Class H, Class I, Class J, Class K, Class L,
Class M, Class N, Class U, Class X and Class AA other than Series 4
shares of such Class G, Class H, Class I, Class J, Class K, Class
L, Class M, Class N, Class U, Class X and Class AA; and (ii) such
other expenses and liabilities as the Board of Trustees may from
time to time determine are directly attributable to shares of Class
C and Class D other than the Special Series 3 shares of such Class
C and Class D or shares of Class G, Class H, Class I, Class J,
Class K, Class L, Class M, Class N, Class U, Class X and Class AA
other than Series 4 shares of such Class G, Class H, Class I, Class
J, Class K, Class L, Class M, Class N, Class U, Class X and Class
AA and which therefore should be borne solely by such other shares
of Class C, Class D, Class G, Class H, Class I, Class J, Class K,
Class L, Class M, Class N, Class U, Class X and Class AA and not
the Special Series 3 shares of such Class C or Class D or Series 4
shares of such Class G, Class H, Class I, Class J, Class K, Class
L, Class M, Class N, Class U, Class X and Class AA.

(3) Preferences, Conversion and Other Rights, Voting Powers,
Restrictions, Limitations, Qualifications, and Terms and Conditions
of Redemption. Except as provided hereby, each Special Series 3
share of Class C and Class D and each Series 4 share of Class G,
Class H, Class I, Class J, Class K, Class L, Class M, Class N,
Class U, Class X and Class AA shall have the same preferences,
conversion, and other rights, voting powers, restrictions,
limitations, qualifications, and terms and conditions of redemption
applicable to all other shares as set forth in Galaxy's Declaration
of Trust and shall also have the same preferences, conversion, and
other rights, voting powers, restrictions, limitations,
qualifications, and terms and conditions of redemption as each
other share formerly, now or hereafter classified as a share of
Class C, Class D, Class G, Class H, Class I, Class J, Class K,
Class L, Class M, Class N, Class U, Class A and Class AA
(irrespective of whether said share has been classified as a part
of a series of said Class and, if so classified as a part of a
series, irrespective of the particular series classification)
except that:

-4-
<PAGE>

(a) On any matter that pertains to the agreements or
expenses and liabilities described under Section (2), clause (a)
above (or to any plan or other document adopted by Galaxy relating
to said agreements, expenses, or liabilities) and is submitted to a
vote of shareholders of Galaxy, only the Special Series 3 shares of
Class C and Class D and the Series 4 shares of Class G, Class H,
Class I, Class J, Class K, Class L, Class M, Class N, Class U,
Class X and Class AA (excluding the other shares classified as a
series of such Class other than Special Series 3 or Series 4, as
the case may be) shall be entitled to vote, except that:

(i) if said matter affects shares in Galaxy other than
the Special Series 3 shares of Class C and Class D and
the Series 4 shares of Class G, Class H, Class I, Class
J, Class K, Class L, Class M, Class N, Class U, Class X
and Class AA, such other affected shares in Galaxy shall
also be entitled to vote, and in such case, such Special
Series 3 shares of such Class C and Class D and such
Series 4 shares of such Class G, Class H, Class I, Class
J, Class K, Class L, Class M, Class N, Class U, Class X
and Class AA shall be voted in the aggregate together
with such other affected shares and not by class or
series except where otherwise required by law or
permitted by the Board of Trustees of Galaxy; and

(ii) if said matter does not affect the Special Series 3
shares of Class C and Class D and Series 4 shares of
Class G, Class H, Class I, Class J, Class K, Class L,
Class M, Class N, Class U, Class X and Class AA, such
shares shall not be entitled to vote (except where
required by law or permitted by the Board of Trustees)
even though the matter is submitted to a vote of the
holders of shares in Galaxy other than said Special
Series 3 shares of such Class C and Class D and such
Series 4 shares of Class G, Class H, Class I, Class J,
Class K, Class L, Class M, Class N, Class U, Class X and
Class AA.

(4) That the following resolutions were duly adopted by the Board of
Trustees of the Trust by unanimous written consent dated as of August 28, 1998:

1. Creation of New Series of Shares, i.e. B Prime Shares, in Certain of the
Equity and Bond Portfolios: (the Short-Term Bond Fund, Intermediate Government
Income Fund, High Quality Bond Fund, Tax-Exempt Bond Fund, Equity Value Fund,
Equity Growth Fund, Equity Income Fund, International Equity Fund, Asset
Allocation Fund, Small Company Equity Fund, Small Cap Value Fund, Growth and
Income Fund and Strategic Equity Fund)

CLASSIFICATION OF SHARES.

RESOLVED, that pursuant to Section 5.1 of Galaxy's Declaration of
Trust, an unlimited number of authorized, unissued and unclassified
shares of

-5-
<PAGE>

beneficial interest of Galaxy be, and hereby are, classified into each
of thirteen additional separate series of shares which shall be
designated, respectively, Class C-Special Series 4, Class D-Special
Series 4, Class G-Series 5, Class H-Series 5, Class I-Series 5, Class
J-Series 5, Class K-Series 5, Class L-Series 5, Class M-Series 5,
Class N-Series 5, Class U-Series 5, Class X-Series 5 and Class
AA-Series 5;

FURTHER RESOLVED, that (a) Class C-Special Series 4 shares of
beneficial interest shall represent interests in the Equity Value
Fund, (b) Class D-Special Series 4 shares of beneficial interest shall
represent interests in the Intermediate Government Income Fund,
(c) Class G -Series 5 shares of beneficial interest shall represent
interests in the International Equity Fund, (d) Class H-Series 5
shares of beneficial interest shall represent interests in the Equity
Growth Fund, (e) Class I-Series 5 shares of beneficial interest shall
represent interests in the Equity Income Fund, (f) Class J-Series 5
shares of beneficial interest shall represent interests in the High
Quality Bond Fund, (g) Class K-Series 5 shares of beneficial interest
shall represent interests in the Small Company Equity Fund, (h) Class
L-Series 5 shares of beneficial interest shall represent interests in
the Short-Term Bond Fund, (i) Class M-Series 5 shares of beneficial
interest shall represent interests in the Tax-Exempt Bond Fund, (j)
Class N-Series 5 shares of beneficial interest shall represent
interests in the Asset Allocation Fund, (k) Class U-Series 5 shares of
beneficial interest shall represent interests in the Growth and Income
Fund, (l) Class X-Series 5 shares of beneficial interest shall
represent interests in the Small Cap Value Fund and (m) Class
AA-Series 5 shares of beneficial interest shall represent interests in
the Strategic Equity Fund;

FURTHER RESOLVED, that each share of Class C-Special Series 4,
Class D-Special Series 4, Class G-Series 5, Class H-Series 5, Class
I-Series 5, Class J-Series 5, Class K-Series 5, Class L-Series 5,
Class M-Series 5, Class N-Series 5, Class U-Series 5, Class X-Series 5
and Class AA-Series 5 newly classified hereby shall have all of the
following preferences, conversion and other rights, voting powers,
restrictions, limitations, qualifications and terms and conditions of
redemption:

(1) ASSETS BELONG TO A CLASS. All consideration received by Galaxy
for the issue or sale of shares of Class C-Special Series 4, Class
D-Special Series 4, Class G-Series 5, Class H-Series 5, Class
I-Series 5, Class J-Series 5, Class K-Series 5, Class L-Series 5,
Class M-Series 5, Class N-Series 5, Class U-Series 5, Class
X-Series 5 and Class AA-Series 5 shall be invested and reinvested
with the consideration received by Galaxy for the issue and sale of
all other shares now or hereafter classified as shares of Class C,
Class D, Class G, Class H, Class I, Class J, Class K, Class L,
Class M, Class N, Class U, Class X and Class AA, respectively
(irrespective of whether said shares have been classified as part of
a series of said Class and if so classified as part of a series,
irrespective of the particular series classification), together with
all income, earnings, profits, and

-6-
<PAGE>

proceeds derived from the investment thereof, including any proceeds
derived from the sale, exchange, or liquidation of such investment,
any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, and any general assets of Galaxy
allocated to Class C, Class D, Class G, Class H, Class I, Class J,
Class K, Class L, Class M, Class N, Class U, Class X and Class AA
(including the Class C, Class D, Class G, Class H, Class I, Class J,
Class K, Class L, Class M, Class N, Class U, Class X and Class AA
shares formerly classified, Class C-Special Series 4, Class D-Special
Series 4, Class G-Series 5, Class H-Series 5, Class I-Series 5, Class
J-Series 5, Class K-Series 5, Class L-Series 5, Class M-Series 5,
Class N-Series 5, Class U-Series 5, Class X-Series 5 and Class
AA-Series 5 shares herein classified or such other shares with respect
to such Class C, Class D, Class G, Class H, Class I, Class J, Class K,
Class L, Class M, Class N, Class U, Class X and Class AA) by the Board
of Trustees in accordance with Galaxy's Declaration of Trust. All
income, earnings, profits, and proceeds, including any profits derived
from the sale, exchange or liquidation of such shares of Class C,
Class D, Class G, Class H, Class I, Class J, Class K, Class L, Class
M, Class N, Class U, Class X and Class AA and any assets derived from
any reinvestment of such proceeds in whatever form shall be allocated
to the Class C-Special Series 4 shares, Class D-Special Series 4
shares, Class G-Series 5 shares, Class H-Series 5 shares, Class
I-Series 5 shares, Class J-Series 5 shares, Class K-Series 5 shares,
Class L-Series 5 shares, Class M-Series 5 shares, Class N-Series 5
shares, Class U-Series 5 shares, Class X-Series 5 shares and Class
AA-Series 5 shares in the proportion that the net asset value of such
Special Series 4 shares or Series 5 shares, as the case may be, of
such Class bears to the total net asset value of all shares of such
Class C, Class D, Class G, Class H, Class I, Class J, Class K, Class
L, Class M, Class N, Class U, Class X and Class AA (irrespective of
whether said shares have been classified as part of a series of said
Class and, if so classified as part of a series, irrespective of the
particular series classification).

-7-
<PAGE>

series classification), except that to the extent that may be from
time to time determined by the Board of Trustees to allocate the
following expenses to such Class C-Special Series 4 shares, Class
D-Special Series 4 shares, Class G-Series 5 shares, Class H-Series 5
shares, Class I-Series 5 shares, Class J-Series 5 shares, Class
K-Series 5 shares, Class L-Series 5 shares, Class M-Series 5 shares,
Class N-Series 5 shares, Class U-Series 5 shares, Class X-Series 5
shares and Class AA-Series 5 shares (or any other series of shares of
such Class):

(a) only the Special Series 4 shares of Class C
and Class D and the Series 5 shares of Class G, Class H, Class I,
Class J, Class K, Class M, Class N, Class U, Class X and Class AA
shall bear: (i) the expenses and liabilities of payments to
institutions under any agreements entered into by or on behalf of
Galaxy which provide for services by the institutions exclusively
for their customers who own of record or beneficially such
Special Series 4 shares or Series 5 shares, as the case may be;
and (ii) such other expenses and liabilities as the Board of
Trustees may from time to time determine are directly
attributable to such shares and which therefore should be borne
solely by the Special Series 4 shares of Class C and Class D and
the Series 5 shares of Class G, Class H, Class I, Class J, Class
K, Class M, Class N, Class U, Class X and Class AA; and

(b) no Special Series 4 shares of Class C and
Class D or Series 5 shares of Class G, Class H, Class I, Class J,
Class K, Class L, Class M, Class N, Class U, Class X and Class AA
shall bear (i) the expenses and liabilities of payments to
institutions under any agreements entered into by or on behalf of
Galaxy which provide for services by the institutions exclusively
for their customers who own of record or beneficially shares of
Class C and Class D other than Special Series 4 shares of such
Class C and Class D or shares of Class G, Class H, Class I, Class
J, Class K, Class L, Class M, Class N, Class U, Class X and Class
AA other than Series 5 shares of such Class G, Class H, Class I,
Class J, Class K, Class L, Class M, Class N, Class U, Class X and
Class AA; and (ii) such other expenses and liabilities as the
Board of Trustees may from time to time determine are directly
attributable to shares of Class C and Class D other than the
Special Series 4 shares of such Class C and Class D or shares of
Class G, Class H, Class I, Class J, Class K, Class L, Class M,
Class N, Class U, Class X and Class AA other than Series 5 shares
of such Class G, Class H, Class I, Class J, Class K, Class L,
Class M, Class N, Class U, Class X and Class AA and which
therefore should be borne solely by such other shares of Class C,
Class D, Class G, Class H, Class I, Class J, Class K, Class L,
Class M, Class N, Class U, Class X and Class AA and not the
Special Series 4 shares of such Class C or Class D or Series 5
shares of such Class G, Class H, Class I, Class J, Class K, Class
L, Class M, Class N, Class U, Class X and Class AA.

-8-
<PAGE>

(3) PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS,
RESTRICTIONS, LIMITATIONS, QUALIFICATIONS, AND TERMS AND
CONDITIONS OF REDEMPTION. Except as provided hereby, each
Special Series 4 share of Class C and Class D and each Series 5
share of Class G, Class H, Class I, Class J, Class K, Class L,
Class M, Class N, Class U, Class X and Class AA shall have the
same preferences, conversion, and other rights, voting powers,
restrictions, limitations, qualifications, and terms and
conditions of redemption applicable to all other shares as set
forth in Galaxy's Declaration of Trust and shall also have the
same preferences, conversion, and other rights, voting powers,
restrictions, limitations, qualifications, and terms and
conditions of redemption as each other share formerly, now or
hereafter classified as a share of Class C, Class D, Class G,
Class H, Class I, Class J, Class K, Class L, Class M, Class N,
Class U, Class X and Class AA (irrespective of whether said share
has been classified as a part of a series of said Class and, if
so classified as a part of a series, irrespective of the
particular series classification) except that:

(a) On any matter that pertains to the agreements or expenses
and liabilities described under Section (2), clause (a) above (or
to any plan or other document adopted by Galaxy relating to said
agreements, expenses, or liabilities) and is submitted to a vote
of shareholders of Galaxy, only the Special Series 4 shares of
Class C and Class D and the Series 5 shares of Class G, Class H,
Class I, Class J, Class K, Class L, Class M, Class N, Class U,
Class X and Class AA (excluding the other shares classified as a
series of such Class other than Special Series 4 or Series 5, as
the case may be) shall be entitled to vote, except that:

(i) if said matter affects shares in Galaxy other than the
Special Series 4 shares of Class C and Class D and the
Series 5 shares of Class G, Class H, Class I, Class J, Class
K, Class L, Class M, Class N, Class U, Class X and Class AA,
such other affected shares in Galaxy shall also be entitled
to vote, and in such case, such Special Series 4 shares of
such Class C and Class D and such Series 5 shares of such
Class G, Class H, Class I, Class J, Class K, Class L, Class
M, Class N, Class U, Class X and Class AA shall be voted in
the aggregate together with such other affected shares and
not by class or series except where otherwise required by
law or permitted by the Board of Trustees of Galaxy; and

(ii) if said matter does not affect the Special Series 4
shares of Class C and Class D and Series 5 shares of Class
G, Class H, Class I, Class J, Class K, Class L, Class M,
Class N, Class U, Class X and Class AA, such shares shall
not be entitled to vote (except where required by law or
permitted by the Board of Trustees) even

-9-
<PAGE>

though the matter is submitted to a vote of the holders of
shares in Galaxy other than said Special Series 4 shares of
such Class C and Class D and such Series 5 shares of Class
G, Class H, Class I, Class J, Class K, Class L, Class M,
Class N, Class U, Class X and Class AA.

(b) With respect to each such series of shares, the first
sentence of Section 5.1B(9) shall not apply, and the following
shall apply instead:

(c) Class C-Special Series 4, Class D-Special Series 4, Class
G-Series 5, Class H-Series 5, Class I-Series 5, Class J-Series 5,
Class K-Series 5, Class L-Series 5, Class M-Series 5, Class
N-Series 5, Class U-Series 5, Class X-Series 5 and Class
AA-Series 5 shares shall be convertible into Class C-Special
Series 3, Class D-Special Series 3, Class G-Series 4, Class
H-Series 4, Class I-Series 4, Class J-Series 4, Class K-Series 4,
Class L-Series 4, Class M-Series 4, Class N-Series 4, Class
U-Series 4, Class X-Series 4 and Class AA-Series 4, shares
respectively, on the basis of the relative net asset values of
the shares converted and the shares into which such shares are
converted, and otherwise after such time or times, and upon such
conditions and pursuant to such procedures, as shall be
determined by the Trustees from time to time in connection with
the sale and issuance of such shares,

-10-
<PAGE>

(5) That the foregoing resolutions remain in full force and effect on
the date hereof.

/s/ W. Bruce McConnel, III
---------------------------
W. Bruce McConnel, III
Secretary

Dated: September 11, 1998

Subscribed and sworn to before
me this 11th day of September, 1998

/s/ Dorothea A. Natale
- -------------------------
Notary Public or Commissioner of Deeds
My Commission Expires: September 4, 2000

-11-

<PAGE>

Exhibit (a)(16)

THE GALAXY FUND
(A Massachusetts Business Trust)

CERTIFICATE OF CLASSIFICATION OF SHARES

I, W. Bruce McConnel, III, do hereby certify as follows:

(1) That I am the duly elected Secretary of The Galaxy Fund (the
"Trust");

(2) That in such capacity I have examined the records of actions
taken by the Board of Trustees of the Trust at the regular meeting of the Board
held on May 28, 1998;

(3) That the following resolutions were duly adopted at the
meeting by the Board of Trustees of the Trust:

CLASSIFICATION OF SHARES

FURTHER RESOLVED, that (a) Class D-Special Series 2 shares of
beneficial interest shall represent interests in the Intermediate
Government Income Fund, (b) Class G-Series 3 shares of beneficial
interest shall represent interests in the International Equity Fund,
(c) Class I-Series 3 shares of beneficial interest shall represent
interests in the Equity Income Fund and (d) Class X-Series 3 shares of
beneficial interest shall represent interests in the Small Cap Value
Fund;

FURTHER RESOLVED, that each share of Class D-Special Series 2,
Class G-Series 3, Class I-Series 3 and Class X-Series 3 newly
classified hereby shall have all of the following preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption:

(1) ASSETS BELONG TO A CLASS. All consideration received by Galaxy
for the issue or sale of shares of Class D-Special Series 2, Class
G-Series 3, Class I-

<PAGE>

Series 3 and Class X-Series 3 shall be invested and reinvested with
the consideration received by Galaxy for the issue and sale of all
other shares now or hereafter classified as shares of Class D, Class
G, Class I and Class X, respectively (irrespective of whether said
shares have been classified as part of a series of said Class and if
so classified as part of a series, irrespective of the particular
series classification), together with all income, earnings, profits,
and proceeds derived from the investment thereof, including any
proceeds derived from the sale, exchange, or liquidation of such
investment, any funds or payments derived from any reinvestment of
such proceeds in whatever form the same may be, and any general assets
of Galaxy allocated to Class D, Class G, Class I and Class X
(including the Class D, Class G, Class I and Class X shares formerly
classified, Class D-Special Series 2, Class G-Series 3, Class I-Series
3 and Class X-Series 3 shares herein classified or such other shares
with respect to such Class D, Class G, Class I and Class X) by the
Board of Trustees in accordance with Galaxy's Declaration of Trust.
All income, earnings, profits, and proceeds, including any profits
derived from the sale, exchange or liquidation of such shares of Class
D, Class G, Class I and Class X and any assets derived from any
reinvestment of such proceeds in whatever form shall be allocated to
the Class D-Special Series 2 shares, Class G-Series 3 shares, Class
I-Series 3 shares and Class X-Series 3 shares in the proportion that
the net asset value of such Special Series 2 shares or Series 3
shares, as the case may be, of such Class bears to the total net asset
value of all shares of such Class D, Class G, Class I and Class X
(irrespective of whether said shares have been classified as part of a
series of said Class and, if so classified as part of a series,
irrespective of the particular series classification).

(2) LIABILITIES BELONGING TO A CLASS. All the liabilities
(including expenses) of Galaxy in respect of Class D, Class G, Class I
and Class X shall be allocated to the Class D-Special Series 2 shares,
Class G-Series 3 shares, Class I-Series 3 shares and Class X-Series 3
shares hereby classified of such Class D, Class G, Class I and Class X
in the proportion that the net asset value of such Special Series 2
shares or Series 3 shares, as the case may be, of such Class bears to
the total net asset value of all shares of such Class D, Class G,
Class I and Class X (irrespective of whether said shares have been
classified as a part of a series of said Class and, if so classified
as a part of a series, irrespective of the particular series
classification), except that to the extent that may be from time to
time determined by

-2-
<PAGE>

the Board of Trustees to allocate the following expenses to such Class
D-Special Series 2 shares, Class G-Series 3 shares, Class I-Series 3
shares and Class X-Series 3 shares (or any other series of shares of
such Class):

(a) only the Special Series 2 shares of Class D and
the Series 3 shares of Class G, Class I and Class X shall bear:
(i) the expenses and liabilities of payments to institutions
under any agreements entered into by or on behalf of Galaxy which
provide for services by the institutions exclusively for their
customers who own of record or beneficially such Special Series 2
shares or Series 3 shares, as the case may be; and (ii) such
other expenses and liabilities as the Board of Trustees may from
time to time determine are directly attributable to such shares
and which therefore should be borne solely by the Special Series
2 shares of Class D and the Series 3 shares of Class G, Class I
and Class X; and

(b) no Special Series 2 shares of Class D or Series 3
shares of Class G, Class I and Class X shall bear (i) the
expenses and liabilities of payments to institutions under any
agreements entered into by or on behalf of Galaxy which provide
for services by the institutions exclusively for their customers
who own of record or beneficially shares of Class D other than
Special Series 2 shares of such Class D or shares of Class G,
Class I and Class X other than Series 3 shares of such Class G,
Class I and Class X; and (ii) such other expenses and liabilities
as the Board of Trustees may from time to time determine are
directly attributable to shares of Class D other than the Special
Series 2 shares of such Class D or shares of Class G, Class I and
Class X other than Series 3 shares of such Class G, Class I and
Class X and which therefore should be borne solely by such other
shares of Class D, Class G, Class I and Class X and not the
Special Series 2 shares of such Class D or Series 3 shares of
such Class G, Class I and Class X.

(3) PREFERENCES, CONVERSION AND OTHER RIGHTS, VOTING POWERS,
RESTRICTIONS, LIMITATIONS, QUALIFICATIONS, AND TERMS AND
CONDITIONS OF REDEMPTION. Except as provided hereby, each
Special Series 2 share of Class D and each Series 3 share of
Class G, Class I and Class X shall have the same preferences,
conversion, and other rights, voting powers, restrictions,
limitations, qualifications, and terms and conditions of
redemption applicable to

-3-
<PAGE>

all other shares as set forth in Galaxy's Declaration of Trust
and shall also have the same preferences, conversion, and other
rights, voting powers, restrictions, limitations, qualifications,
and terms and conditions of redemption as each other share
formerly, now or hereafter classified as a share of Class D,
Class G, Class I and Class X (irrespective of whether said share
has been classified as a part of a series of said Class and, if
so classified as a part of a series, irrespective of the
particular series classification) except that:

(a) On any matter that pertains to the agreements or expenses
and liabilities described under Section (2), clause (a) above (or
to any plan or other document adopted by Galaxy relating to said
agreements, expenses, or liabilities) and is submitted to a vote
of shareholders of Galaxy, only the Special Series 2 shares of
Class D and the Series 3 shares of Class G, Class I and Class X
(excluding the other shares classified as a series of such Class
other than Special Series 2 or Series 3, as the case may be)
shall be entitled to vote, except that:

(i) if said matter affects shares in Galaxy other than the
Special Series 2 shares of Class D and the Series 3 shares
of Class G, Class I and Class X, such other affected shares
in Galaxy shall also be entitled to vote, and in such case,
such Special Series 2 shares of such Class D and such Series
3 shares of such Class G, Class I and Class X shall be voted
in the aggregate together with such other affected shares
and not by class or series except where otherwise required
by law or permitted by the Board of Trustees of Galaxy; and

(ii) if said matter does not affect the Special Series 2
shares of Class D and Series 3 shares of Class G, Class I
and Class X, such shares shall not be entitled to vote
(except where required by law or permitted by the Board of
Trustees) even though the matter is submitted to a vote of
the holders of shares in Galaxy other than said Special
Series 2 shares of Class D and said Series 3 shares of Class
G, Class I and Class X.

(b) With respect to each such series of shares, the first
sentence of Section 5.1B(9) shall not apply, and the following
shall apply instead:

-4-
<PAGE>

(c) Class D-Special Series 2, Class G-Series 3, Class I-Series 3
and Class X-Series 3 shares shall be convertible into
Class D -Special Series 1, Class G-Series 2, Class I-Series 2 and
Class X-Series 2 shares, respectively, on the basis of the
relative net asset values of the shares converted and the shares
into which such shares are converted, and otherwise after such
time or times, and upon such conditions and pursuant to such
procedures, as shall be determined by the Trustees from time to
time in connection with the sale and issuance of such shares,

-5-
<PAGE>

(4) That the foregoing resolutions remain in full force and
effect on the date hereof.

/s/ W. Bruce McConnel, III
-----------------------------
W. Bruce McConnel, III
Secretary

Dated: October 6, 1998

Subscribed and sworn to before
me this 6th day of October, 1998

/s/ Dorothea A. Natale
- ----------------------------------------
Notary Public
My Commission Expires: September 4, 2000

-6-

<PAGE>

ADDENDUM NO. 3 TO ADVISORY AGREEMENT

This Addendum No. 3, dated as of the 18th day of September, 1998, is
entered into between THE GALAXY FUND, a Massachusetts business trust, located in
Westboro, Massachusetts ("Galaxy"), and FLEET INVESTMENT ADVISORS INC., a New
York corporation, located in Boston, Massachusetts (the "Adviser").

WHEREAS, Galaxy and the Adviser have entered into an Advisory
Agreement dated as of May 19, 1994, which was extended to additional investment
portfolios of Galaxy by Addendum No. 1 dated as of December 1, 1995 and Addendum
No. 2 dated as of March 3, 1998 (the "Advisory Agreement"), pursuant to which
Galaxy appointed the Adviser to act as investment adviser to Galaxy for its
Money Market Fund, Government Fund, Tax-Exempt Fund, U.S. Treasury Fund,
Institutional Government Money Market 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, Rhode Island Municipal Bond Fund, Equity
Value Fund, Equity Growth Fund, Equity Income Fund, International Equity Fund,
Small Company Equity Fund, Asset Allocation Fund, Growth and Income Fund,
Connecticut Municipal Money Market Fund, Massachusetts Municipal Money Market
Fund, Small Cap Value Fund, New Jersey Municipal Bond Fund, MidCap Equity Fund
and Strategic Equity Fund (each a "Fund");

WHEREAS, Galaxy has notified the Adviser that it has established three
new portfolios, namely the Prime Reserves, Government Reserves and Tax-Exempt
Reserves and that it desires to retain the Adviser to act as the investment
adviser therefor, and the Adviser has notified Galaxy that it is willing to
serve as investment adviser for the Prime Reserves, Government Reserves and
Tax-Exempt Reserves;

NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. APPOINTMENT. Galaxy hereby appoints the Adviser to act as
investment adviser to Galaxy for the Prime Reserves, Government Reserves and
Tax-Exempt Reserves for the period and on the terms set forth in the Advisory
Agreement. The Adviser hereby accepts such appointment and agrees to render the
services set forth in the Advisory Agreement for the compensation herein
provided.

2. COMPENSATION. For the services provided and the expenses assumed
pursuant to the Advisory Agreement with respect to the Prime Reserves,
Government Reserves and Tax-Exempt Reserves, Galaxy will pay the Adviser and the
Adviser will accept as full compensation therefor fees, computed daily and paid
monthly, based on the net assets of the Prime Reserves, Government Reserves and
Tax-Exempt Reserves considered separately on a per-Fund basis, at the annual
rate of .40% of the first $750,000,000 of net assets of each of the Prime
Reserves, Government Reserves and Tax-Exempt Reserves plus .35% of net assets of
each such Fund in excess of $750,000,000.

<PAGE>

3. CAPITALIZED TERMS. From and after the date hereof, the term
"Fund" as used in the Advisory Agreement shall be deemed to include the Prime
Reserves, Government Reserves and Tax-Exempt Reserves. Capitalized terms used
herein and not otherwise defined shall have the meanings ascribed to them in the
Advisory Agreement.

4. MISCELLANEOUS. Except to the extent supplemented hereby, the
Advisory Agreement shall remain unchanged and in full force and effect and is
hereby ratified and confirmed in all respects as supplemented hereby.

IN WITNESS WHEREOF, the undersigned have executed this Addendum as of
the date and year first above written.

THE GALAXY FUND

By: /s/ John T. O'Neill
-------------------
Name: John T. O'Neill
Title: President

FLEET INVESTMENT ADVISORS INC.

By: /s/ Thomas M. O'Neill
---------------------
Name: Thomas M. O'Neill
Title: President

- 2 -

<PAGE>

THE GALAXY FUND

SUB-ADVISORY AGREEMENT

INTERNATIONAL EQUITY FUND

AGREEMENT made as of October 8, 1998 between FLEET INVESTMENT ADVISORS
INC., a New York corporation (the "Adviser"), and OECHSLE INTERNATIONAL
ADVISORS, LLC, a Delaware limited liability company ("Oechsle").

WHEREAS, The Galaxy Fund ("Galaxy") is registered as an open-end,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act");

WHEREAS, the Adviser has been appointed investment adviser to Galaxy's
International Equity Fund (the "Fund");

WHEREAS, the Adviser previously has retained Oechsle International
Advisors, L.P. ("Oechsle L.P.") to assist it in the provision of a continuous
investment program for the Fund and Oechsle L.P. currently is providing such
assistance pursuant to a Sub-Advisory Agreement dated as of August 12, 1996;

WHEREAS, Oechsle L.P. is this day recapitalizing and reorganizing into
Oechsle (the "Transaction"); and

WHEREAS, the Adviser desires to retain Oechsle to assist it in the
provision of a continuous investment program for the Fund following the
Transaction, and Oechsle is willing to do so;

NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:

1. APPOINTMENT. The Adviser hereby appoints Oechsle to act as
sub-adviser to the Fund as permitted by the Adviser's Advisory Agreement with
Galaxy pertaining to the Fund. Intending to be legally bound, Oechsle accepts
such appointment and agrees to render the services herein set forth for the
compensation herein provided.

2. SUB-ADVISORY SERVICES. Subject to the supervision of Galaxy's
Board of Trustees, Oechsle will assist the Adviser in providing a continuous
investment program for the Fund, including research and management with respect
to all securities and investments and cash equivalents in the Fund. Oechsle
will provide services under this Agreement in accordance with the Fund's
investment objective, policies and restrictions as stated in the Fund's
prospectuses and statement of additional information and resolutions of Galaxy's
Board of Trustees applicable to the Fund.

<PAGE>

Without limiting the generality of the foregoing, Oechsle further
agrees that it will:

(a) prepare, subject to the Adviser's approval, lists of foreign
countries for investment by the Fund and determine from time to time what
securities and other investments will be purchased, retained or sold for
the Fund, including, with the assistance of the Adviser, the Fund's
investments in futures and forward currency contracts;

(b) manage in consultation with the Adviser the Fund's temporary
investments in securities;

(d) manage the Fund's overall cash position, and determine from
time to time what portion of the Fund's assets will be held in different
currencies;

(e) provide the Adviser with foreign broker research, a
quarterly review of international economic and investment developments, and
occasional "White Papers" on international investment issues;

(f) attend regular business and investment-related meetings with
Galaxy's Board of Trustees and the Adviser if requested to do so by Galaxy
and/or the Adviser; and

(g) maintain books and records with respect to the securities
transactions for the Fund, furnish to the Adviser and Galaxy's Board of
Trustees such periodic and special reports as they may request with respect
to the Fund, and provide in advance to the Adviser all reports to the Board
of Trustees for examination and review within a reasonable time prior to
Galaxy Board meetings.

3. COVENANTS BY SUB-ADVISER. Oechsle agrees with respect to the
services provided to the Fund that it:

(a) will conform with all Rules and Regulations of the
Securities and Exchange Commission ("SEC") applicable to it;

(b) will use the same skill and care in providing such services
as it uses in providing services to other investment companies;

(c) will telecopy trade information to the Adviser on the first
business day following the day of the trade and cause broker confirmations to be
sent directly to the Adviser. In executing portfolio transactions and selecting
brokers or dealers, Oechsle will use its best efforts to seek on behalf of the
Fund the best overall terms available. In assessing the best overall terms
available for any transaction, Oechsle shall consider all factors it deems
relevant,

-2-
<PAGE>

including the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or dealer, and
the reasonableness of the commission, if any, both for the specific transaction
and on a continuing basis. In evaluating the best overall terms available, and
in selecting the broker or dealer to execute a particular transaction, Oechsle
may also consider the brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) provided to the
Fund and/or other accounts over which Oechsle or any affiliate of Oechsle
exercises investment discretion. Oechsle is authorized, subject to the prior
approval of Galaxy's Board of Trustees, to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, Oechsle determines in good faith that such
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer--viewed in terms of that particular
transaction or in terms of the overall responsibilities of Oechsle to the Fund
and to Galaxy.

Except to the extent permitted by the SEC or by applicable law,
portfolio securities will not be purchased from or sold to the Adviser, Oechsle,
the Fund's distributor (the "Distributor"), or any affiliated person of either
Galaxy, the Adviser, Oechsle, or the Distributor.

(d) will treat confidentially and as proprietary information of
Galaxy all records and other information relative to the Fund and prior, present
or potential shareholders, and will not use such records and information for any
purpose other than performance of its responsibilities and duties hereunder
(except after prior notification to and approval in writing by Galaxy, which
approval shall not be unreasonably withheld and may not be withheld and will be
deemed granted where Oechsle may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by Galaxy);

(e) will notify Galaxy of any change in its membership within a
reasonable time after such change.

4. SERVICES NOT EXCLUSIVE. (a) The services furnished by Oechsle
hereunder are deemed not to be exclusive, and nothing in this Agreement shall
(i) prevent Oechsle or any affiliated person (as defined in the 1940 Act) of
Oechsle from acting as investment adviser or manager for any other person or
persons, including other management investment companies with investment
objectives and policies the same as or similar to those of the Fund or (ii)
limit or restrict Oechsle or any such affiliated person from buying, selling or
trading any securities or other investments (including any securities or other
investments which the Fund is eligible to buy) for its or their own accounts or
for the accounts of others for whom it or they may be acting; PROVIDED, HOWEVER,
that Oechsle agrees that it will not undertake any activities which, in its
judgment, will adversely affect the performance of its obligations to the Fund
under this Agreement.

(b) Nothing contained herein, however, shall prohibit Oechsle
from advertising or soliciting the public generally with respect to other
products or services, regardless

-3-
<PAGE>

of whether such advertisement or solicitation may include prior, present or
potential shareholders of Galaxy.

5. PORTFOLIO TRANSACTIONS. Investment decisions for the Fund shall
be made by Oechsle independently from those for any other investment companies
and accounts advised or managed by Oechsle. The Fund and such investment
companies and accounts may, however, invest in the same securities. When a
purchase or sale of the same security is made at substantially the same time on
behalf of the Fund 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 Oechsle believes to be equitable to the Fund and such other
investment company or account. In some instances, this investment procedure may
adversely affect the price paid or received by the Fund or the size of the
position obtained or sold by the Fund. To the extent permitted by law, Oechsle
may aggregate the securities to be sold or purchased for the Fund with those to
be sold or purchased for other investment companies or accounts in order to
obtain best execution.

6. BOOKS AND RECORDS. In compliance with the requirements of Rule
31a-3 under the 1940 Act, Oechsle hereby agrees that all records which it
maintains for Galaxy are the property of Galaxy and further agrees to surrender
promptly to Galaxy any of such records upon Galaxy's request. Oechsle further
agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940 Act.

7. EXPENSES. During the term of this Agreement, Oechsle will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities, commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Fund.

8. COMPENSATION. For the services provided and the expenses assumed
with respect to the Fund pursuant to this Agreement, the Adviser will pay
Oechsle and Oechsle will accept as full compensation therefor fees, 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.

9. LIMITATION OF LIABILITY OF OECHSLE. Oechsle shall not be liable
for any error of judgment or mistake of law or for any loss suffered by Galaxy
or the Adviser, 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 Oechsle in the
performance of its duties or from reckless disregard of its obligations and
duties under this Agreement.

10. REFERENCE TO OECHSLE. Neither the Adviser nor any affiliate or
agent of it shall make reference to or use the name of Oechsle or any of its
affiliates, or any of their clients, except references concerning the identify
of and services provided by Oechsle to the Fund, which references shall not
differ in substance from those included in the current registration statement
pertaining to the Fund, this Agreement and the Advisory Agreement between the
Adviser and Galaxy with respect to the Fund, in any advertising or promotional
materials without the prior

-4-
<PAGE>

approval of Oechsle, which approval shall not be unreasonably withheld or
delayed. The Adviser hereby agrees to make all reasonable efforts to cause
Galaxy and any affiliate thereof to satisfy the foregoing obligation.

11. DURATION AND TERMINATION. This Agreement shall become effective
on the date of the consummation of the Transaction, provided that the
shareholders of the Fund have previously approved the Agreement in accordance
with the requirements of the 1940 Act. Unless sooner terminated as provided
herein, this Agreement shall continue in effect until August 10, 1999.
Thereafter if not terminated, this Agreement shall continue in effect for
successive twelve-month periods ending on August 10, PROVIDED such continuance
is specifically approved at least annually (a) by the vote of a majority of
those members of Galaxy's Board of Trustees who are not parties to this
Agreement, or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by Galaxy's Board of
Trustees or by the vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, this Agreement may be terminated at
any time, without the payment of any penalty, by the Adviser or by Galaxy (by
Galaxy's Board of Trustees or by vote of a majority of the outstanding voting
securities of the Fund) on 60 days' written notice to Oechsle (which notice may
be waived by the party entitled to receive the same) and will automatically
terminate upon the termination of the Advisory Agreement between the Adviser and
Galaxy with respect to the Fund. This Agreement may be terminated by Oechsle at
any time, without payment of any penalty, on 90 days' written notice to Galaxy
and the Adviser (which notice may be waived by the party entitled to receive the
same). This Agreement will immediately terminate in the event of its
assignment. (As used in this Agreement, the terms "majority of the outstanding
voting securities," "interested persons" and "assignment" shall have the same
meanings as such terms in the 1940 Act.)

12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought. No amendment of this Agreement shall be
effective with respect to the Fund until approved by the vote of a majority of
the outstanding voting securities of the Fund.

13. NOTICE. Any notice, advice or report to be given pursuant to
this Agreement shall be delivered or mailed:

To Oechsle at:

One International Place
Boston, MA 02110
Attention: Stephen J. Butters

-5-
<PAGE>

With a copy to:

Christopher P. Harvey, Esq.
Hale and Dorr
60 State Street
Boston, MA 02109

To the Adviser at:

75 State Street
Boston, MA 02109
Attention: Thomas O'Neill

To Galaxy at:

4400 Computer Drive
Westboro, MA 01581

With a copy to:

W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107

14. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.

This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and shall be governed by New
York law.

15. NAMES. The names "The Galaxy Fund" and "Trustees of The Galaxy
Fund" refer respectively to the Trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under a Declaration of
Trust dated March 31, 1986 which is hereby referred to and a copy of which is on
file at the office of the State Secretary of the Commonwealth of Massachusetts
and the principal office of the Trust. The obligations of "The Galaxy Fund"
entered into in the name or on behalf thereof by any of the Trustees,
representatives or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, shareholders, or representatives of
Galaxy personally, but bind only the property of Galaxy, and all persons dealing
with any class of shares of Galaxy must look solely to the property of Galaxy
belonging to such class for the enforcement of any claims against Galaxy.

-6-
<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.

FLEET INVESTMENT ADVISORS INC.

By: /s/ Thomas M. O'Neill
-------------------------
Name: Thomas M. O'Neill
Title: President

OECHSLE INTERNATIONAL
ADVISORS, LLC

By: Oechsle Group, LLC,
Member Manager

By: /s/ Andrew S. Paul
-------------------------
Name: Andrew S. Paul
Title: Managing Principal

-7-

<PAGE>

THE GALAXY FUND

DISTRIBUTION AGREEMENT
Amendment No. 2

September 18, 1998

First Data Distributors, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581

Dear Sirs:

This letter is to confirm that the undersigned, The Galaxy Fund (the
"Trust"), a Massachusetts business trust, has agreed that the Distribution
Agreement between the Trust and First Data Distributors, Inc. ("FD
Distributors") dated as of June 1, 1997 (the "Agreement") is herewith amended to
provide that FD Distributors shall be the distributor for the Trust's Prime
Reserves, Government Reserves and Tax-Exempt Reserves on the terms and
conditions contained in the Agreement.

If the foregoing is in accordance with your understanding, will you so
indicate by signing and returning to us the enclosed copy hereof.

Very truly yours,

THE GALAXY FUND

By: /s/ John T. O'Neill
-----------------------
Name: John T. O'Neill
Title: President

Accepted:

FIRST DATA DISTRIBUTORS, INC.

By: /s/ Scott M. Hacker
----------------------
Name: Scott M. Hacker
Title: Vice President and Treasurer

<PAGE>

AMENDMENT NO. 3 TO
DISTRIBUTION AGREEMENT

This Amendment No. 3, dated as of December 3, 1998, is entered into between
THE GALAXY FUND (the "Company"), a Massachusetts business trust, and FIRST DATA
DISTRIBUTORS, INC. (the "Distributor"), a Massachusetts corporation.

WHEREAS, the Company and the Distributor have entered into a Distribution
Agreement, dated as of June 1, 1997, as amended on March 3, 1998 and September
18, 1998 (the "Distribution Agreement"), pursuant to which the Company appointed
the Distributor to act as distributor of the Company's shares; and

WHEREAS, the Company and the Distributor wish to further amend the
Distribution Agreement to clarify certain provisions with respect to the
distribution of the Company's CDSC Shares (as defined in the Distribution
Agreement);

NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:

1. Section 1.10 of the Distribution Agreement is hereby deleted in its
entirety and the following substituted in its place:

1.10 (a) With respect to CDSC Shares, the Distributor shall impose
a CDSC in connection with the redemption of such CDSC Shares,
not to exceed a specified percentage of the original purchase
price of the Shares, as from time to time set forth in the then
current Prospectuses. The Distributor may retain (or receive
from the Company, as the case may be) all or any CDSC. The
Distributor may, but shall not be required to, pay to
broker-dealers or other persons through whom such CDSC Shares
are sold a commission or other payment to the extent consistent
with the then current Prospectuses and applicable rules and
regulations.

(b) The Distributor may assign or sell to a third party (a "CDSC
Financing Entity") all or part of the CDSC on any CDSC Shares
that the Distributor is entitled to receive under this Agreement.
The Distributor's right to a CDSC on such CDSC Shares, if
assigned or sold to a CDSC Financing Entity, shall continue after
termination of this Agreement.

(c)(i) The Distributor shall be entitled to receive all
distribution and service fees at the rate and under the terms and
conditions set forth in the Distribution and Services Plan
adopted with respect to a particular class of CDSC Shares (the
"Plan") on the CDSC Shares of that class which were sold during
the period of this

<PAGE>

Agreement, so long as the Plan is in effect. The Distributor may
assign or sell to a CDSC Financing Entity all or part of the
distribution and service fees the Distributor is entitled to
receive from the Company under the particular Plan. The
Distributor's right to payment on such CDSC Shares, if assigned
or sold to CDSC Financing Entity, shall continue after
termination of this Agreement.

(c)(ii) The Distributor shall not be required to offer or sell a
particular class of CDSC Shares unless and until it has received
a binding commitment from a CDSC Financing Entity (a
"Commitment") satisfactory to the Distributor which Commitment
shall cover all expenses and fees related to the offer and sale
of such CDSC Shares including but not limited to dealer
reallowances, financing commitment fees, and legal fees. If at
any time during the term of this Agreement the then current CDSC
financing is terminated, the Distributor has the right to
immediately suspend the sale of such CDSC Shares until substitute
financing becomes effective.

(c)(iii) If the Distributor determines, in its sole discretion,
to pay to broker-dealers or other persons through whom a
particular class of CDSC Shares are sold a commission or other
payment, such commission or payment shall not be due and payable
by, and the payment shall not become an obligation of, the
Distributor until the Distributor receives financing relating to
the sale of such CDSC Shares from the CDSC Financing Entity. If
the Distributor does not receive such financing, the Distributor
shall not be liable for the payment of any such commission or
other payment to any party.

(d) The Distributor and the Company hereby agree that the terms
and conditions set forth herein regarding the offer and sale of
CDSC Shares may be amended upon approval of both parties in order
to comply with the terms and conditions of any agreement with the
CDSC Financing Entity to finance the costs for the offer and sale
of CDSC Shares so long as such terms and conditions are in
compliance with the particular Plan.

2. The changes to the Distribution Agreement effected by this Amendment
No. 3 shall be effective as of the date first written above. Except
to the extent amended hereby, the Distribution Agreement shall remain
unchanged and in full force and effect and is hereby ratified and
confirmed in all respects as amended hereby.

-2-

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 3 as
of the day and year first above written.

THE GALAXY FUND

By: /s/ John T. O'Neill
-----------------------------------
Name: John T. O'Neill
Title: President

FIRST DATA DISTRIBUTORS, INC.

By: /s/ Scott M. Hacker
-----------------------------------
Name: Scott M. Hacker
---------------------------------
Title: VP & Treasurer
--------------------------------

-3-

<PAGE>

THE GALAXY FUND

ADMINISTRATION AGREEMENT
Amendment No. 3

September 18, 1998

First Data Investor Services
Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581

Dear Sirs:

This letter is to confirm that the undersigned, The Galaxy Fund (the
"Trust"), a Massachusetts business trust, has agreed that the Administration
Agreement between the Trust and First Data Investor Services Group, Inc.
("FDISG") dated as of June 1, 1997 (the "Agreement") is herewith amended to
provide that FDISG shall be the administrator for the Trust's Prime Reserves,
Government Reserves and Tax-Exempt Reserves on the terms and conditions
contained in the Agreement.

If the foregoing is in accordance with your understanding, will you so
indicate by signing and returning to us the enclosed copy hereof.

Very truly yours,

THE GALAXY FUND

By: /s/ John T. O'Neill
-------------------
Name: John T. O'Neill
Title: President

Accepted:

FIRST DATA INVESTOR SERVICES
GROUP, INC.

By: /s/ Barbara L. Worthen
----------------------
Name: Barbara L. Worthen
Title: EVP and General Counsel

<PAGE>

THE GALAXY FUND

TRANSFER AGENCY AND SERVICES AGREEMENT
Amendment No. 3

September 18, 1998

First Data Investor Services
Group, Inc.
4400 Computer Drive
Westboro, Massachusetts 01581

Dear Sirs:

This letter is to confirm that the undersigned, The Galaxy Fund (the
"Trust"), a Massachusetts business trust, has agreed that the Transfer Agency
and Services Agreement ("Agreement") between the Trust and First Data Investor
Services Group, Inc. ("FDISG") dated as of June 1, 1997 is herewith amended to
provide that FDISG shall be the transfer agent and dividend disbursing agent for
the Trust's Prime Reserves, Government Reserves and Tax-Exempt Reserves on the
terms and conditions contained in the Agreement.

If the foregoing is in accordance with your understanding, will you so
indicate by signing and returning to us the enclosed copy thereof.

Very truly yours,

THE GALAXY FUND

By: /s/ John T. O'Neill
-------------------
Name: John T. O'Neill
Title: President

Accepted:

FIRST DATA INVESTOR SERVICES
GROUP, INC.

By: /s/ Barbara L. Worthen
----------------------
Name: Barbara L. Worthen
Title: EVP and General Counsel

<PAGE>

CONSENT OF COUNSEL

We hereby consent to the use of our name and to the references to our
Firm under the caption "Counsel" in the Statements of Additional Information
that are included in Post-Effective Amendment No. 36 to the Registration
Statement (No. 33-4806) on Form N-1A under the Securities Act of 1933, as
amended, of The Galaxy Fund. This consent does not constitute a consent under
Section 7 of the Securities Act of 1933, and in consenting to the use of our
name and the references to our Firm under such caption we have not certified any
part of the Registration Statement and do not otherwise come within the
categories of persons whose consent is required under Section 7 or the rules and
regulations of the Securities and Exchange Commission thereunder.

/s/Drinker Biddle & Reath LLP
-----------------------------
Philadelphia, Pennsylvania Drinker Biddle & Reath LLP
December 30, 1998