GALAXY FUND /DE/, 485APOS, 1998-09-11

GALAXY FUND /DE/
485APOS, 1998-09-11

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<PAGE>

As filed with the Securities and Exchange Commission on September 11, 1998
Securities Act File No. 33-4806
Investment Company Act File No. 811-4636

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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. 34 /X/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/

Amendment No. 35 /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>

THE GALAXY FUND
(A Prime Shares and B Prime Shares of the
Short-Term Bond Fund, Intermediate Government Income
Fund, High Quality Bond Fund and Tax-Exempt Bond Fund)

FORM N-1A

CROSS REFERENCE SHEET

PURSUANT TO RULE 495(a)

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

Part A
Item No.. . . . . . . . . . . . . . Prospectus Heading
- -------- ------------------

1. Cover Page . . . . . . . . . . Cover Page

2. Synopsis . . . . . . . . . . . Expense Summary

3. Condensed Financial
Information. . . . . . . . . . Not Applicable

4. General Description of
Registrant . . . . . . . . . . Investment Objectives and Policies;
Investments, Strategies and Risks;
Investment Limitations; Description of
Galaxy and its Shares

5. Management of the Fund . . . . Management of the Funds; Investment
Objectives and Policies; Investment
Adviser; Authority to Act as Investment
Adviser; Administrator; Custodian and
Transfer Agent; Expenses; Performance
Reporting; Miscellaneous

5A. Management's Discussion of
Fund Performance . . . . . . . Not Applicable

6. Capital Stock and Other
Securities . . . . . . . . . . Dividends and Distributions; Taxes;
Description of Galaxy and Its Shares;
Miscellaneous

<PAGE>

7. Purchase of Securities
Being Offered. . . . . . . . . How to Purchase and Redeem Shares;
Distributor; Purchase of Shares; Other
Purchase and Redemption Information

8. Redemption or
Repurchase . . . . . . . . . . How to Purchase and Redeem Shares;
Distributor; Redemption of Shares; Other
Purchase and Redemption Information

9. Pending Legal
Proceedings. . . . . . . . . . Not Applicable

<PAGE>
PRIME SHARES

THE GALAXY FUND

SHORT-TERM BOND FUND

INTERMEDIATE GOVERNMENT INCOME FUND

HIGH QUALITY BOND FUND

TAX-EXEMPT BOND FUND

PROSPECTUS

, 1998
<PAGE>
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- --------------------------------------------------------------------------------

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

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE GALAXY FUND....................................................... 1
HIGHLIGHTS............................................................ 3
EXPENSE SUMMARY....................................................... 5
INVESTMENT OBJECTIVES AND POLICIES.................................... 8
Short-Term Bond Fund................................................ 8
Intermediate Government Income Fund................................. 9
High Quality Bond Fund.............................................. 10
Tax-Exempt Bond Fund................................................ 11
Risk Considerations................................................. 12
Other Investment Policies and Risk Considerations................... 13
INVESTMENT LIMITATIONS................................................ 22
PRICING OF SHARES..................................................... 23
HOW TO PURCHASE SHARES................................................ 24
Distributor......................................................... 24
General............................................................. 24
Purchase Procedures................................................. 24
Other Purchase Information.......................................... 25
Applicable Sales Charges--A Prime Shares............................ 25
Quantity Discounts.................................................. 26
Applicable Sales Charges--B Prime Shares............................ 28
Characteristics of A Prime Shares and B Prime Shares................ 29

<CAPTION>
PAGE
----
<S> <C>
Factors to Consider When Selecting A Prime Shares or B Prime
Shares............................................................. 30
HOW TO REDEEM SHARES.................................................. 31
General............................................................. 31
Redemption Procedures............................................... 31
Other Redemption Information........................................ 31
INVESTOR PROGRAMS..................................................... 32
Exchange Privilege.................................................. 32
DIVIDENDS AND DISTRIBUTIONS........................................... 33
TAXES................................................................. 33
Federal............................................................. 33
State and Local..................................................... 34
MANAGEMENT OF THE FUNDS............................................... 35
Investment Adviser.................................................. 35
Authority to Act as Investment Adviser.............................. 36
Administrator....................................................... 36
DESCRIPTION OF GALAXY AND ITS SHARES.................................. 37
A Prime Shares Distribution Plan.................................... 38
B Prime Shares Distribution and Services Plan....................... 38
CUSTODIAN AND TRANSFER AGENT.......................................... 39
EXPENSES.............................................................. 39
PERFORMANCE REPORTING................................................. 39
MISCELLANEOUS......................................................... 41
Year 2000 Risks..................................................... 41
</TABLE>

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- --------------------------------------------------------------------------------
<PAGE>
THE GALAXY FUND

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

The Galaxy Fund ("Galaxy") is an open-end management investment company.
This Prospectus describes four separate investment portfolios (individually, a
"Fund," collectively, the "Funds") offered to investors by Galaxy. Each Fund has
its own investment objective and policies:

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

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

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

The TAX-EXEMPT BOND FUND'S investment objective is to provide shareholders
with as high a level of current interest income free of federal income tax as is
consistent with preservation of capital. Under normal market and economic
conditions, the Fund will invest substantially all of its assets in bonds and
notes issued by or on behalf of states, territories and possessions of the
United States, the District of Columbia and their respective authorities,
agencies, instrumentalities and political subdivisions the interest on which, in
the opinion of bond counsel to the issuer, is exempt from regular federal income
tax ("Municipal Securities").

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
This Prospectus describes the A Prime Shares and B Prime Shares (together,
"Shares") representing interests in each Fund. A Prime Shares are sold with a
front-end sales charge. B Prime Shares are sold with a contingent deferred sales
charge. A Prime Shares and B Prime Shares are offered through selected
broker/dealers to individual or institutional customers. Galaxy is also
authorized to issue three additional series of shares in each Fund ("Trust
Shares," "Retail A Shares" and "Retail B Shares"). Trust Shares are offered
under a separate prospectus primarily to investors maintaining qualified
accounts at bank and trust institutions, including institutions affiliated with
Fleet Financial Group, Inc., and to participants in employer-sponsored defined
contribution plans. Retail A Shares and Retail B Shares are offered under a
separate prospectus primarily to customers of 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. Retail A Shares and Retail B Shares may
also be purchased directly by individuals, corporations or other entities who
submit a purchase application to Galaxy, purchasing either for their own
accounts or for the accounts of others. A Prime Shares, B Prime Shares, Trust
Shares, Retail A Shares and Retail B Shares in a Fund represent equal pro rata
interests in the Fund, except they bear different expenses which reflect the
difference in the range of services provided to them. See "Management of the
Funds" and "Description of Galaxy and Its Shares" herein.

Each of the Funds is advised by Fleet Investment Advisors Inc. and sponsored
and distributed by First Data Distributors, Inc., which is not affiliated with
Fleet Investment Advisors Inc. or its parent, Fleet Financial Group, Inc., and
affiliates.

This Prospectus sets forth concisely the information that prospective
investors should consider before investing. Investors should read this
Prospectus and retain it for future reference. Additional information about the
Funds, contained in the Statement of Additional Information relating to the A
Prime Shares and B Prime Shares of the Funds and bearing the same date, has been
filed with the Securities and Exchange Commission. The current Statement of
Additional Information is available upon request without charge by contacting
Galaxy at its telephone number or address shown above. The Statement of
Additional Information, as it may be amended from time to time, is incorporated
by reference in its entirety into this Prospectus.

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

, 1998

2
<PAGE>
HIGHLIGHTS

Q: WHAT IS THE GALAXY FUND?

A: Galaxy is an open-end management investment company (commonly known as a
mutual fund) that offers investors the opportunity to invest in different
investment portfolios, each having separate investment objectives and policies.
This Prospectus describes Galaxy's SHORT-TERM BOND, INTERMEDIATE GOVERNMENT
INCOME, HIGH QUALITY BOND and TAX-EXEMPT BOND FUNDS. Prospectuses for Galaxy's
MONEY MARKET, GOVERNMENT, U.S. TREASURY, TAX-EXEMPT, CONNECTICUT MUNICIPAL MONEY
MARKET, MASSACHUSETTS MUNICIPAL MONEY MARKET, INSTITUTIONAL GOVERNMENT MONEY
MARKET, PRIME RESERVES, GOVERNMENT RESERVES, TAX-EXEMPT RESERVES, PRIME
RESERVES, GOVERNMENT RESERVES, TAX-EXEMPT RESERVES, EQUITY VALUE, EQUITY GROWTH,
EQUITY INCOME, INTERNATIONAL EQUITY, SMALL COMPANY EQUITY, MIDCAP EQUITY, ASSET
ALLOCATION, SMALL CAP VALUE, GROWTH AND INCOME, STRATEGIC EQUITY, CORPORATE
BOND, NEW JERSEY MUNICIPAL BOND, NEW YORK MUNICIPAL BOND, CONNECTICUT MUNICIPAL
BOND, MASSACHUSETTS MUNICIPAL BOND and RHODE ISLAND MUNICIPAL BOND FUNDS may be
obtained by calling 1-800-628-0414.

Q: WHO ADVISES THE FUNDS?

Q: WHAT ADVANTAGES DO THE FUNDS OFFER?

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

Q: HOW CAN I BUY AND REDEEM SHARES?

A: The Funds are distributed by First Data Distributors, Inc. ("FD
Distributors"). A Prime Shares and B Prime Shares of the Funds are sold through
selected broker/dealers to individual or institutional customers. A Prime Shares
of the Funds may be purchased at their net asset value plus a maximum initial
sales charge of 4.75%. A Prime Shares are subject to distribution fees of .25%
of the average daily net asset value of such Shares. B Prime Shares of the Funds
may be purchased at their net asset value subject to a contingent deferred sales
charge. The contingent deferred sales charge is paid on certain share
redemptions made within six years of the purchase date at the maximum rate of
5.00% of the lower of (i) the net asset value of the redeemed shares or (ii) the
original purchase price of the redeemed shares. B Prime Shares are subject to
shareholder servicing and distribution fees of 1.00% of the average daily net
asset value of such Shares. Share purchase and redemption information is
provided below under "How to Purchase Shares" and "How to Redeem Shares." Except
as provided below under "Investor Programs," the minimum initial investment is
$2,500. The minimum investment for subsequent purchases is $100. See "How to
Purchase Shares" below.

3
<PAGE>
Q: WHEN ARE DIVIDENDS PAID?

A: Dividends from net investment income of the Funds are declared daily and
paid monthly. Net realized capital gains of the Funds are distributed at least
annually. Dividends and distributions are paid in cash, although shareholders
may choose to have dividends and distributions automatically reinvested in
additional shares of the same series of shares with respect to which the
dividend or distribution was declared without sales charges. See "Dividends and
Distributions."

Q: WHAT POTENTIAL RISKS ARE PRESENTED BY THE FUNDS' INVESTMENT PRACTICES?

A: The Short-Term Bond Fund invests primarily in corporate debt obligations
rated within the four highest rating categories assigned by S&P or Moody's. The
Tax-Exempt Bond Fund invests primarily in Municipal Securities (as defined
below) rated within the four highest rating categories assigned by S&P or
Moody's. Debt obligations (including corporate debt obligations and Municipal
Securities) rated in the lowest of the four highest rating categories assigned
by Moody's or S&P are considered to have speculative characteristics, even
though they are of investment grade quality. The Intermediate Government Income
and High Quality Bond Funds invest in such obligations rated within the three
highest rating categories assigned by S&P or Moody's. The Short-Term Bond Fund
may invest in the debt obligations of foreign corporations and banks and in
obligations issued or guaranteed by foreign governments or any of their
political subdivisions or instrumentalities. The Short-Term Bond, Intermediate
Government Income and High Quality Bond Funds (the "Taxable Bond Funds") may
invest in dollar-denominated debt obligations of U.S. corporations issued
outside the United States. The Funds may lend their securities and enter into
repurchase agreements and reverse repurchase agreements with qualifying banks
and broker/dealers. In addition, each Fund may enter into interest rate futures
contracts and the Tax-Exempt Bond Fund may enter into municipal bond index
futures contracts. The Funds may purchase eligible securities on a when-issued
basis and may purchase or sell securities on a "forward commitment" or "delayed
settlement" basis. In addition, the Funds may acquire "stand-by commitments"
with respect to Municipal Securities held in their respective portfolios. The
value of the Funds' portfolio securities will generally vary inversely with
changes in prevailing interest rates. See "Investment Objectives and Policies."

Q: WHAT SHAREHOLDER PRIVILEGES ARE OFFERED BY THE FUNDS?

A: A Prime Shares of a Fund may be exchanged for A Prime Shares of any other
Galaxy portfolio which offers A Prime Shares. B Prime Shares of a Fund may be
exchanged for B Prime Shares of any other Galaxy portfolio which offers B Prime
Shares. In either case, exchanges are not subject to additional sales charges or
contingent deferred sales charges. See "Investor Programs."

4
<PAGE>
EXPENSE SUMMARY

<TABLE>
<CAPTION>
INTERMEDIATE
SHORT-TERM GOVERNMENT HIGH QUALITY TAX-EXEMPT
BOND FUND INCOME FUND BOND FUND BOND FUND
--------------------- --------------------- --------------------- ---------------------
(A PRIME (B PRIME (A PRIME (B PRIME (A PRIME (B PRIME (A PRIME (PRIME B
SHAREHOLDER TRANSACTION EXPENSES SHARES) SHARES) SHARES) SHARES) SHARES) SHARES) SHARES) SHARES)
- ---------------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Maximum Front End Sales Charge
Imposed on Purchases (as a
percentage of offering price).... 4.75%(1) None 4.75%(1) None 4.75%(1) None 4.75%(1) None
Maximum Deferred Sales Charge (as
a percentage of offering
price)........................... None 5.00%(2) None 5.00%(2) None 5.00%(2) None 5.00%(2)
Sales Charge Imposed on Reinvested
Dividends........................ None None None None None None None None
Redemption Fees................... None None None None None None None None
Exchange Fees..................... None None None None None None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ---------------------------------------------
Advisory Fees
(After Fee Waivers).............. .55% .55% .55%. .55% .55% .55% .55% .55%
12b-1 Fees(3,4)................... .25% 1.00% .25% 1.00% .25% 1.00% .25% 1.00%
Other Expenses.................... .43% .40% .31% .28% .31% .28% .34% .29%
Total Fund Operating Expenses
(After Fee Waivers).............. 1.23% 1.95% 1.11% 1.83% 1.11% 1.83% 1.14% 1.84%
</TABLE>

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

(1) Reduced front-end sales charges may be available. A deferred sales charge of
up to 1.00% is assessed on certain redemptions of A Prime Shares that are
purchased with no sales charge as part of an investment of $1,000,000 or more.
See "How to Purchase Shares--Applicable Sales Charges.--A Prime Shares."

(2) This amount applies to redemptions during the first year. The charge
decreases to 4.00%, 3.00%, 3.00%, 2.00% and 1.00% for redemptions made during
the second through sixth years, respectively. B Prime Shares automatically
convert to A Prime Shares after eight years. See "How to Purchase and Redeem
Shares--Applicable Sales Charge--B Prime Shares."

(3) 12b-1 fees with respect to A Prime Shares are payable at the maximum annual
rate of .30% and 12b-1 fees (including shareholder servicing fees) with
respect to B Prime Shares are payable at the maximum annual rate of 1.25%.

(4) Long-term investors may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the rules of the National Association of
Securities Dealers, Inc.

5
<PAGE>
Example: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return, and (2) redemption of your investment at the end of the
following periods:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Short-Term Bond Fund (A Prime Shares)(1)..................................... $ 60 $ 85 $ 111 $ 187
--- --- ----- -----

Short-Term Bond Fund (B Prime Shares)
Assuming complete redemption at end of period(2)........................... $ 70 $ 90 $ 124 $ 206(3)
--- --- ----- -----
Assuming no redemption..................................................... $ 20 $ 60 $ 104 $ 206(3)
--- --- ----- -----
Intermediate Government Income Fund (A Prime Shares)(1)...................... $ 59 $ 81 $ 105 $ 175
--- --- ----- -----

Intermediate Government Income Fund (B Prime Shares)
Assuming complete redemption at end of period(2)........................... $ 68 $ 87 $ 117 $ 193(3)
--- --- ----- -----
Assuming no redemption..................................................... $ 18 $ 57 $ 97 $ 193(3)
--- --- ----- -----
High Quality Bond Fund (A Prime Shares)(1)................................... $ 59 $ 81 $ 105 $ 175
--- --- ----- -----

High Quality Bond Fund (B Prime Shares)
Assuming complete redemption at end of period(2)........................... $ 68 $ 87 $ 117 $ 193(3)
--- --- ----- -----
Assuming no redemption..................................................... $ 18 $ 57 $ 97 $ 193(3)
--- --- ----- -----
Tax-Exempt Bond Fund (A Prime Shares)(1)..................................... $ 59 $ 82 $ 107 $ 178
--- --- ----- -----

Tax-Exempt Bond Fund (B Prime Shares)
Assuming complete redemption at end of period(2)........................... $ 68 $ 87 $ 118 $ 194(3)
--- --- ----- -----
Assuming no redemption..................................................... $ 18 $ 57 $ 98 $ 194(3)
--- --- ----- -----
</TABLE>

- ---------

(1) Assumes deduction at time of purchase of maximum applicable front-end sales
charge.

(2) Assumes deduction of maximum applicable contingent deferred sales charge.

(3) Based on conversion of B Prime Shares to A Prime Shares after eight years.

The Expense Summary and Example are intended to assist investors in
understanding the costs and expenses that an investor in A Prime Shares and B
Prime Shares of the Funds will bear directly or indirectly. The information in
the Expense Summary and Example is based on expenses which each Fund expects to
incur during the current fiscal year on its A Prime Shares and B Prime Shares.
Without voluntary fee waivers by Fleet, (i) "Advisory Fees" would be .75% and
.75% for A Prime Shares and B Prime Shares, respectively, of the Short-Term Bond
Fund, .75% and .75% for A Prime Shares and B Prime Shares, respectively, of the
Intermediate Government Income Fund, .75% and .75% for A Prime Shares and B
Prime Shares, respectively, of the High Quality Bond Fund, and .75% and .75% for
A Prime Shares and B Prime Shares, respectively, of the Tax-Exempt Bond Fund;
and (ii) "Total Operating Expenses" would be 1.43% and 2.15% for A Prime Shares
and B Prime Shares, respectively, of the Short-Term Bond Fund, 1.31% and 2.03%
for A Prime Shares and B Prime Shares, respectively, of the Intermediate
Government Bond Fund, 1.31% and 2.03% for A Prime Shares and B Prime Shares,
respectively, of the High Quality Bond Fund, and 1.34% and 2.04% for A Prime
Shares and B Prime Shares, respectively, of the Tax-Exempt Bond Fund. Fleet is
under no obligation to waive fees and/or reimburse expenses but has

6
<PAGE>
advised Galaxy that it intends to waive fees and/or reimburse expenses during
the current year to the extent necessary to maintain the Funds' operating
expenses at the levels set forth in the above table. For more complete
descriptions of these costs and expenses, see "How to Purchase Shares," "How to
Redeem Shares," "Management of the Funds" and "Description of Galaxy and Its
Shares" in this Prospectus. Any fees charged by broker/dealers directly to their
customer accounts for services related to an investment in A Prime Shares or B
Prime Shares of the Funds are in addition to and not reflected in the fees and
expenses described above.

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

7
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES

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

SHORT-TERM BOND FUND

The Short-Term Bond Fund's investment objective is to seek a high level of
current income consistent with preservation of capital. The Fund will invest
substantially all of its assets in debt obligations of domestic and foreign
corporations such as bonds and debentures, obligations convertible into common
stock, "money market" instruments such as bank obligations and commercial paper,
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and asset-backed and mortgage-backed securities. The Fund may
also invest, from time to time, in obligations issued by or on behalf of states,
territories and possessions of the United States, the District of Columbia and
their respective authorities, agencies, instrumentalities and political
sub-divisions, the interest on which, in the opinion of bond counsel to the
issuer, is exempt from regular federal income tax ("Municipal Securities"). The
purchase of Municipal Securities may be advantageous when, as a result of
prevailing economic, regulatory or other circumstances, the performance of such
securities, on a pre-tax basis, is comparable to that of corporate or U.S.
Government debt obligations. The Fund may also enter into interest rate futures
contracts to hedge against changes in market values. See "Other Investment
Policies and Risk Considerations". Under normal market and economic conditions,
at least 65% of the Fund's total assets will be invested in bonds and
debentures, subject to the quality standards described below. The Fund will not
invest in common stock, and any common stock received through the conversion of
convertible debt obligations will be sold in an orderly manner as soon as
possible.

Under normal market and economic conditions, the Fund will invest
substantially all of its assets in debt obligations rated at the time of
purchase within the four highest rating categories assigned by S&P ("AAA", "AA",
"A" and "BBB") or Moody's ("Aaa", "Aa", "A" and "Baa") (or which, if unrated,
are determined by Fleet to be of comparable quality) and in obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities and
"money market" instruments such as those listed below under "Other Investment
Policies". Debt obligations rated within the four highest rating categories
assigned by S&P or Moody's are considered to be investment grade. Debt
obligations rated in the lowest of the four highest rating categories assigned
by S&P or Moody's are considered to have speculative characteristics, even
though they are of investment grade quality, and changes in economic conditions
or other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case with higher grade debt
obligations. Under normal market and economic conditions, at least 65% of the
Fund's total assets will be invested in debt obligations rated in the three
highest rating categories assigned by S&P or Moody's. Unrated securities will be
determined to be of comparable quality to rated debt obligations if, among other
things, other outstanding obligations of the issuers of such securities are
rated BBB/Baa or better. When, in the opinion of Fleet, a defensive investment
posture is warranted, the Fund may invest temporarily and without limitation in
high quality, short-term money market instruments. See Appendix A to the
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

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

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

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

INTERMEDIATE GOVERNMENT INCOME FUND

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

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

9
<PAGE>
posture is warranted, the Fund may invest temporarily and without limitation in
high quality, short-term "money market" instruments. See Appendix A to the
Statement of Additional Information for a description of S&P's and Moody's
rating categories.

In addition, the Fund may invest in obligations issued by Canadian
Provincial Governments and in debt obligations of supranational entities. See
"Investment Objectives and Policies--Short-Term Bond Fund." The Fund may also
invest in dollar-denominated high quality debt obligations of U.S. corporations
issued outside the United States.

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

HIGH QUALITY BOND FUND

The High Quality Bond Fund's investment objective is to seek a high level of
current income consistent with prudent risk of capital. The Fund will invest
substantially all of its assets in debt obligations such as bonds and
debentures, obligations convertible into common stock, "money market"
instruments such as bank obligations and commercial paper, obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities, and
asset-backed and mortgage-backed securities. The Fund may also invest, from time
to time, in Municipal Securities See "Investment Objectives and
Policies--Short-Term Bond Fund." The Fund may also enter into interest rate
futures contracts to hedge against changes in the market values of fixed income
instruments that the Fund holds or intends to purchase. See "Other Investment
Policies and Risk Considerations." At least 65% of the Fund's total assets will
be invested in non-convertible bonds. Any common stock received through the
conversion of convertible debt obligations will be sold in an orderly manner as
soon as possible.

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

The Fund seeks to provide a current yield greater than that generally
available from a portfolio of high quality short-term obligations. The Fund's
average weighted maturity will vary from time to time

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<PAGE>
depending on, among other things, current market and economic conditions and the
comparative yields on instruments with different maturities. The Fund adjusts
its average weighted maturity and its holdings of corporate and U.S. Government
debt securities in a manner consistent with Fleet's assessment of prospective
changes in interest rates. The success of this strategy depends upon Fleet's
ability to predict changes in interest rates.

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

TAX-EXEMPT BOND FUND

The Tax-Exempt Bond Fund's investment objective is to provide shareholders
with as high a level of current interest income free of federal income tax as is
consistent with preservation of capital. To achieve this objective, the Fund
will invest substantially all of its assets in Municipal Securities. The Fund's
average weighted maturity will vary in response to variations in comparative
yields of differing maturities of instruments.

As a matter of fundamental policy that cannot be changed without the
requisite consent of the Fund's shareholders, the Fund will invest, except
during temporary defensive periods, at least 80% of its total assets in
Municipal Securities, primarily bonds (at least 65% under normal market
conditions).

From time to time, during temporary defensive periods, the Fund may, without
limit, hold uninvested cash reserves or invest in taxable obligations in such
proportions as, in Fleet's opinion, prevailing market or economic conditions
warrant. Uninvested cash reserves will not earn income. Such taxable instruments
may include (i) obligations of the U.S. Treasury; (ii) obligations of agencies
or instrumentalities of the U.S. Government; (iii) "money market" instruments
such as certificates of deposit and bankers' acceptances of selected banks and
commercial paper rated within the two highest rating categories assigned by any
major rating service; (iv) repurchase agreements collateralized by U.S.
Government obligations or other "money market" instruments; (v) futures
contracts; or (vi) securities issued by other investment companies that invest
in high quality short-term Municipal Securities. Under normal market conditions,
the Fund anticipates that not more than 5% of its net assets will be invested in
any one category of taxable securities and that not more than 20% of its total
assets will be invested in taxable securities in the aggregate. For more
information, see "Other Investment Policies and Risk Considerations" below.

Municipal Securities purchased by the Fund will consist primarily of issues
which are rated at the time of purchase within the four highest rating
categories assigned by S&P ("AAA," "AA," "A" and "BBB") or Moody's ("Aaa," "Aa,"
"A" and "Baa") or unrated instruments determined by Fleet to be of comparable
quality. See "Short-Term Bond Fund" above for a description of the risks of
investing in debt obligations, including Municipal Securities, rated in the
lowest of the four highest rating categories. Such Municipal Securities will be
purchased (and retained) only when Fleet believes the issuers have an adequate
capacity to pay interest and repay principal. If the ratings of a particular
Municipal Security purchased by the Fund are subsequently downgraded below the
four highest ratings 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 automatic sale of
the Municipal Security. Under normal market and economic conditions, at least
65% of the Tax-Exempt Bond Fund's total assets will be invested in

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<PAGE>
Municipal Securities rated in the three highest rating categories assigned by
S&P or Moody's. See "Appendix A to the Statement of Additional Information for a
description of S&P's and Moody's rating categories.

See "Risk Considerations" and "Other Investment Policies and Risk
Considerations" below for information regarding additional investment policies
of the Tax-Exempt Bond Fund.

RISK CONSIDERATIONS

INTEREST RATE RISK

Generally, the market value of fixed income 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.

FOREIGN SECURITIES

Investments by the Short-Term Bond Fund in foreign securities may involve
higher costs than investments in U.S. securities, including higher transaction
costs, as well as the imposition of additional taxes by foreign governments. In
addition, foreign investments may include additional risks associated with
currency exchange rates, less complete financial information about the issuers,
less market liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions, might adversely affect the payment of principal and interest on
foreign obligations.

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

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<PAGE>
MUNICIPAL SECURITIES

Although there is no present intention to do so on a regular basis, the
Tax-Exempt Bond Fund may invest more than 25% of its assets in Municipal
Securities the interest on which is paid solely from revenues on similar
projects if such investment is deemed necessary or appropriate by Fleet. To the
extent that the Tax-Exempt Bond 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.

OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS

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

U.S. GOVERNMENT OBLIGATIONS AND MONEY MARKET INSTRUMENTS

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

Obligations issued or guaranteed by the U.S. Government, its agencies and
instrumentalities include U.S. Treasury securities which differ only in their
interest rates, maturities and time of issuance: Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial maturities of one to
ten years; and Treasury Bonds generally have initial maturities of more than ten
years. Obligations of certain agencies and instrumentalities of the U.S.
Government, such as those of the Government National Mortgage Association, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the Treasury; others, such as those of the Federal National
Mortgage Association, are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others, such as those of
the 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.

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

13
<PAGE>
profitability of the banking industry is largely dependent upon the availability
and cost of funds to finance lending operations and the quality of underlying
bank assets.

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

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

TYPES OF MUNICIPAL SECURITIES

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

Each Fund's portfolio may also include "moral obligation" securities, which
are normally issued by special purpose public authorities. If the issuer of
moral obligation securities is unable to meet its debt service obligations from
current revenues, it may draw on a reserve fund, the restoration of which is a
moral commitment but not a legal obligation of the state or municipality which
created the issuer.

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

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<PAGE>
VARIABLE AND FLOATING RATE MUNICIPAL SECURITIES

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

PRIVATE ACTIVITY BONDS

Each Fund may invest in "private activity bonds," the interest on which,
although exempt from regular federal income tax, may constitute an item of tax
preference for purposes of the federal alternative minimum tax. Investments in
such securities by the Tax-Exempt Bond Fund, 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 that Fund's
total assets when added together with any taxable investments held by the Fund.

Private activity bonds held by a Fund are in most cases revenue securities
and are not payable from the unrestricted revenues of the issuer. Consequently,
the credit quality of such private activity bonds is usually directly related to
the credit standing of the corporate user of the facility involved.

REPURCHASE AND REVERSE REPURCHASE AGREEMENTS

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

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

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SECURITIES LENDING

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

INVESTMENT COMPANY SECURITIES

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

CUSTODIAL RECEIPTS AND CERTIFICATES OF PARTICIPATION

Securities acquired by the Tax-Exempt Bond Fund may be in the form of
custodial receipts evidencing rights to receive a specific future interest
payment, principal payment or both on certain Municipal Securities. Such
obligations are held in custody by a bank on behalf of holders of the receipts.
These custodial receipts are known by various names, including "Municipal
Receipts," "Municipal Certificates of Accrual on Tax-Exempt Securities"
("M-CATS") and "Municipal Zero-Coupon Receipts." The Tax-Exempt Bond Fund may
also purchase from time to time certificates of participation that, in the
opinion of counsel to the issuer, are exempt from federal income tax. A
certificate of participation gives the Tax-Exempt Bond 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 Tax-Exempt
Bond Fund may invest pursuant to guidelines approved by Galaxy's Board of
Trustees. For certain certificates of participation, the Tax-Exempt Bond Fund
will have the right to demand payment, on not more than 30 days' notice, for all
or any part of the Fund's participation interest, plus accrued interest. As to
these instruments, the Tax-Exempt Bond Fund intends to exercise its right to

16
<PAGE>
demand payment as needed to provide liquidity, to maintain or improve the
quality of its investment portfolio or upon a default (if permitted under the
terms of the instrument).

FUTURES CONTRACTS

The Tax-Exempt Bond Fund may purchase and sell municipal bond index futures
contracts as a hedge against changes in market conditions. A municipal bond
index assigns values daily to the municipal bonds included in the index based on
the independent assessment of dealer-to-dealer municipal bond brokers. A
municipal bond index futures contract represents a firm commitment by which two
parties agree to take or make delivery of an amount equal to a specified dollar
amount multiplied by the difference between the municipal bond index value on
the last trading date of the contract and the price at which the futures
contract is originally struck. No physical delivery of the underlying securities
in the index is made.

Each Fund may enter into contracts for the future delivery of fixed income
securities commonly known as interest rate futures contracts. Interest rate
futures contracts are similar to municipal bond index futures contracts except
that, instead of a municipal bond index, the "underlying commodity" is
represented by various types of fixed-income securities.

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

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

WHEN-ISSUED, FORWARD COMMITMENT AND DELAYED SETTLEMENT TRANSACTIONS

Each 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

17
<PAGE>
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 respective investment objectives.

STAND-BY COMMITMENTS

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

ASSET-BACKED SECURITIES

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. The Tax-Exempt Bond Fund will not invest more than 10% of its total
assets in asset-backed securities. See "Asset-Backed Securities" in the
Statement of Additional Information.

MORTGAGE-BACKED SECURITIES

Each Fund may invest in mortgage-backed securities (including collateralized
mortgage obligations) that represent pools of mortgage loans assembled for sale
to investors by various governmental agencies and government-related
organizations, such as the Government National Mortgage Association, the Federal
National Mortgage Association, and the Federal Home Loan Mortgage Corporation.
Mortgage-backed securities provide a monthly payment consisting of interest and
principal payments. Additional

18
<PAGE>
payment may be made out of unscheduled repayments of principal resulting from
the sale of the underlying residential property, refinancing or foreclosure, net
of fees or costs that may be incurred. Prepayments of principal on
mortgage-backed securities may tend to increase due to refinancing of mortgages
as interest rates decline. To the extent that the Fund purchases mortgage-backed
securities at a premium, mortgage foreclosures and prepayments of principal by
mortgagors (which may be made at any time without penalty) may result in some
loss of the Fund's principal investment to the extent of the premium paid. The
yield of a Fund that invests in mortgage-backed securities may be affected by
reinvestment of prepayments at higher or lower rates than the original
investment.

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

MORTGAGE DOLLAR ROLLS

Each Taxable Bond 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.

19
<PAGE>
STRIPPED OBLIGATIONS

To the extent consistent with its investment objective, each Taxable Bond
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.

GUARANTEED INVESTMENT CONTRACTS

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

BANK INVESTMENT CONTRACTS

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

20
<PAGE>
issuing bank. BICs are considered illiquid securities and will be subject to the
Funds' 10% limitation on such investments, unless there is an active and
substantial secondary market for the particular instrument and market quotations
are readily available.

DERIVATIVE SECURITIES

The Funds may from time to time, in accordance with their respective
investment policies, purchase certain "derivative" securities. Derivative
securities are instruments that derive their value from the performance of
underlying assets, interest rates or indices, and include, but are not limited
to, municipal bond index and interest rate futures and certain asset-backed and
mortgage-backed securities.

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 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 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. See "Investment
Objectives and Policies--Derivative Securities" in the Statement of Additional
Information relating to the Funds for additional information.

PORTFOLIO TURNOVER

Each Fund may sell a portfolio investment soon after its acquisition if
Fleet believes that such a disposition is consistent with the Fund's investment
objective. Portfolio investments may be sold for a variety of reasons, such as a
more favorable investment opportunity or other circumstances bearing on the
desirability of continuing to hold such investments. A portfolio turnover rate
of 100% or more is considered high, although the rate of portfolio turnover will
not be a limiting factor in making portfolio decisions. A high rate of portfolio
turnover may result in the realization of substantial capital gains and involves
correspondingly greater transaction costs. To the extent that net capital gains
are realized, distributions derived from such gains are treated as ordinary
income for federal income tax purposes. (See "Taxes--Federal.") The portfolio
turnover rate for each Fund for the fiscal years ended October 31, 1997 and
October 31, 1996 were as follows: 173% and 214%, respectively, for the
Short-Term Bond Fund; 128% and 235%, respectively, for the Intermediate
Government Income Fund; 182% and 163%, respectively, for the High Quality Bond
Fund; and 78% and 15%, respectively, for the Tax-Exempt Bond Fund.

21
<PAGE>
INVESTMENT LIMITATIONS

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

No Fund may:

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

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

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

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

5. 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) with respect to the
Tax-Exempt Bond Fund only, there is no limitation with respect to
obligations issued or guaranteed by any state, territory or possession of
the U.S. Government, the District of Columbia, or any of their authorities,
agencies, instrumentalities or political subdivisions, (c) with respect to
the Taxable Bond Funds only, 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 (d) with
respect to the Taxable Bond Funds only, utilities will be classified
according to their services. (For example, gas, gas transmission, electric
and gas, electric and telephone each will be considered a separate
industry.)

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<PAGE>
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 Taxable Bond 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 Taxable Bond 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
Taxable Bond Fund's 10% limitation on purchases of illiquid instruments
described under Investment Limitation No. 3 above, Rule 144A securities will not
be considered to be illiquid if Fleet has determined, in accordance with
guidelines established by the Board of Trustees, that an adequate trading market
exists for such securities.

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.

PRICING OF SHARES

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

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

23
<PAGE>
HOW TO PURCHASE SHARES

DISTRIBUTOR

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

GENERAL

Investments in A Prime Shares of the Funds are subject to a front-end sales
charge. Investments in B Prime 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 A Prime Shares and B Prime Shares"
and "Factors to Consider When Selecting A Prime Shares or B Prime Shares" before
deciding between the two.

The A Prime Shares and the B Prime Shares described in this Prospectus are
sold through selected broker/dealers to individual and institutional customers.
Generally, investors purchase A Prime Shares or B Prime Shares through a
broker/dealer organization which has entered into a selling agreement with FD
Distributors. Purchases may take place only on days on which FD Distributors,
Galaxy's custodian and Galaxy's transfer agent are open for business ("Business
Days"). If a broker/dealer 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. Broker/ dealers can call FD Distributors at
1-800-628-0414 for information on purchasing shares on behalf of their
customers.

PURCHASE PROCEDURES

Purchase orders for A Prime Shares and B Prime Shares are placed by
investors through selected broker/dealers. The broker/dealer is responsible for
transmitting its customers' purchase orders to FD Distributors and for wiring
required funds in payment to Galaxy's custodian on a timely basis. FD
Distributors is responsible for transmitting such orders to Galaxy's transfer
agent for execution. Shares purchased by a broker/dealer on behalf of its
customers will normally be held of record by the broker/ dealer and beneficial
ownership of the shares will be recorded by the broker/dealer and reflected in
the account statements provided to its customers. Depending on the terms of the
arrangement between a particular broker/dealer and Galaxy's transfer agent,
confirmations of Share purchases and redemptions and pertinent account
statements will either be sent by Galaxy's transfer agent directly to a
shareholder with a copy to the broker/dealer, or will be furnished directly to
the shareholder by the broker/dealer. Other procedures for the purchase of A
Prime Shares and B Prime Shares established by broker/dealers may apply.
Customers wishing to purchase A Prime Shares and B Prime Shares through their
broker/ dealer should contact the broker/dealer directly for appropriate
purchase instructions.

EFFECTIVE TIME OF PURCHASE. A purchase order for Shares received and
accepted by FD Distributors from a broker/dealer on a Business Day prior to the
close of regular trading hours on the Exchange (currently 4:00 p.m. Eastern
Time) will be executed at the net asset value per share determined on that date,
provided that Galaxy's custodian receives the purchase price in federal funds or
other immediately available funds prior to 4:00 p.m. on the third Business Day
following the receipt of such order. Such order

24
<PAGE>
will be executed on the day on which the purchase price is received in proper
form. If funds are not received by such date and time, the order will not be
accepted and notice thereof will be given promptly to the broker/dealer
submitting the order. Payment for orders which are not received or accepted will
be returned. If a broker/dealer accepts a purchase order from a customer on a
non-Business Day, the order will not be executed until it is received and
accepted by FD Distributors on a Business Day in accordance with the above
procedures. On a 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 Business Day.

OTHER PURCHASE INFORMATION

INVESTMENT MINIMUMS. The minimum initial investment is $2,500. The minimum
investment for subsequent purchases is $100.

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

APPLICABLE SALES CHARGES--A PRIME SHARES

The public offering price for A Prime Shares of the Funds is the sum of the
net asset value of the A Prime Shares purchased plus any applicable front-end
sales charge. The sales charge is assessed as follows:

<TABLE>
<CAPTION>
REALLOWANCE TO
TOTAL SALES CHARGE DEALERS
------------------------------------ -----------------
AS A % OF AS A % OF AS A % OF
OFFERING PRICE NET ASSET OFFERING PRICE
AMOUNT OF TRANSACTION PER SHARE VALUE PER SHARE PER SHARE
- ---------------------------------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Less than $50,000............................. 4.75 4.99 4.25
$50,000 but less than $100,000................ 4.50 4.71 4.00
$100,000 but less than $250,000............... 3.50 3.63 3.00
$250,000 but less than $500,000............... 2.50 2.56 2.00
$500,000 but less than $1,000,0000............ 2.00 2.04 1.75
$1,000,000 and over........................... 0.00* 0.00* 0.00*
</TABLE>

- ---------

* There is no initial sales charge on purchases of $1,000,000 or more of A Prime
Shares; however, a contingent deferred sales charge of 1.00% will be imposed
on the lesser of the offering price or the net asset value of such A Prime
Shares on the redemption date for Shares redeemed within one year after
purchase. The contingent deferred sales charge will not be assessed on
redemptions within one year after purchase in connection with the death or
disability of a shareholder. To receive this exemption, a shareholder must
explain the status of his or her redemption at the time the A Prime Shares are
redeemed.

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

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.

25
<PAGE>
At various times FD Distributors may implement programs under which a
broker/dealer's sales force may be eligible to win nominal awards for certain
sales efforts. Also, FD Distributors in its discretion may from time to time,
pursuant to objective criteria established by FD Distributors, pay fees to
qualifying broker/dealers for certain services or activities which are primarily
intended to result in sales of A Prime Shares of a Fund. If any such program is
made available to any broker/dealer, it will be made available to all
broker/dealers on the same terms and conditions. Payments made under such
programs will be made by FD Distributors out of its own assets and not out of
the assets of the Funds. These programs will not change the price of A Prime
Shares or the amount that the Funds will receive from such sales.

In certain situations or for certain individuals, the front-end sales charge
for A Prime Shares of the Funds may be waived either because of the nature of
the investor or the reduced sales effort required to attract such investments.
In order to receive the sales charge waiver, an investor must explain the status
of his or her investment at the time of purchase. No sales charge is assessed on
purchases of A Prime Shares of the Funds by the following categories of
investors or in the following types of transactions:

- reinvestment of dividends and distributions;

- purchases by persons who were beneficial owners of shares of the Funds or
any of the other portfolios offered by Galaxy or any other funds advised
by Fleet or its affiliates before December 1, 1995;

- purchases by directors, officers and employees of broker/dealers having
agreements with FD Distributors pertaining to the sale of A Prime Shares
to the extent permitted by such organizations;

- purchases made with redemption proceeds from another mutual fund complex
on which a front-end or back-end sales charge has been paid, provided the
purchase is made within 60 days after the redemption;

- 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 investment advisers, consultants or financial planners who
place trades for their own accounts or the accounts of their clients and
who charge such clients a management, consulting, advisory or other fee;

- any purchase pursuant to the Reinstatement Privilege described below.

QUANTITY DISCOUNTS

An investor 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.

In order to obtain quantity discount benefits, an investor's broker/dealer
must notify Galaxy's administrator, First Data Investor Services Group, Inc.
("Investor Services Group"), at the time of

26
<PAGE>
purchase that his or her client 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 your broker/ dealer.

RIGHTS OF ACCUMULATION. A reduced sales charge applies to any purchase of A
Prime Shares of any portfolio of Galaxy that is sold with a sales charge
("Eligible Fund") where an investor's then current aggregate investment in A
Prime 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 4.50% 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 A Prime 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 A Prime 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.

A Prime Shares equal to 5% of the amount indicated in the Letter of Intent
will be held in escrow 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, an appropriate number of A Prime
Shares held in escrow will be redeemed to realize the difference, pursuant to
the terms of the Letter of Intent and at FD Distributors' direction. 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 the 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 through his or her broker/dealer 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.

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<PAGE>
REINSTATEMENT PRIVILEGE. Investors may reinvest all or any portion of their
redemption proceeds in A Prime Shares of the Funds or in A Prime Shares of
another portfolio of Galaxy that offers A Prime Shares within 90 days of the
redemption trade date without paying a sales load. A Prime Shares so reinvested
will be purchased at a price equal to the net asset value next determined after
First Data Investor Services Group, Inc. ("Investor Services Group"), Galaxy's
transfer agent, receives a reinstatement request and payment in proper form from
the investor's broker/dealer on behalf of its client.

Broker/dealers 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 Internal Revenue Code's "wash
sale" rules.

APPLICABLE SALES CHARGES--B PRIME SHARES

The public offering price for B Prime Shares of each Fund is the net asset
value of the B Prime Shares purchased. Although investors pay no front-end sales
charge on purchases of B Prime 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. Broker/dealers who have entered into agreements with FD
Distributors will receive commissions from FD Distributors in connection with
sales of B Prime Shares. These commissions may be different than the
reallowances or placement fees paid to broker/dealers in connection with sales
of A Prime Shares. See "Applicable Sales Charges--A Prime Shares". The
contingent deferred sales charge on B Prime 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 B Prime Shares. In addition, a
contingent deferred sales charge will not be assessed on B Prime Shares
purchased through reinvestment of dividends or capital gains distributions.

The amount of any contingent deferred sales charge investors must pay
depends on the number of years that elapse between the purchase date and the
date such B Prime Shares are redeemed. Solely for purposes of this
determination, all payments during a month will be aggregated and deemed to have
been made on the first day of the month.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
NUMBER OF YEARS DOLLAR AMOUNT SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
- ------------------------------------------------------------------------ ---------------------
<S> <C>
Less than one........................................................... 5.00%
More than one but less than two......................................... 4.00%
More than two but less than three....................................... 3.00%
More than three but less than four...................................... 3.00%
More than four but less than five....................................... 2.00%
More than five but less than six........................................ 1.00%
More than six but less than seven....................................... None
More than seven but less than eight..................................... None
After eight............................................................. None
</TABLE>

28
<PAGE>
When an investor redeems his or her B Prime Shares, the redemption request
is processed to minimize the amount of the contingent deferred sales charge that
will be charged. B Prime Shares are redeemed first from those shares that are
not subject to a contingent deferred sales charge (I.E., B Prime Shares that
were acquired through reinvestment of dividends or distributions or that qualify
for other deferred sales charge exemptions) and after that from the B Prime
Shares that have been held the longest.

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 B Prime Shares.

EXEMPTIONS FROM THE CONTINGENT DEFERRED SALES CHARGE. Certain types of
redemptions may qualify for an exemption from the contingent deferred sales
charge. To receive exemptions (i), (iv) or (viii) listed below, an investor's
broker/dealer must explain the status of his or her redemption at the time B
Prime Shares are redeemed. The contingent deferred sales charge with respect to
B Prime Shares is not assessed on: (i) exchanges described under "Investor
Programs--Exchange Privilege" below; (ii) redemptions in connection with
required (or, in some cases, discretionary) distributions to participants or
beneficiaries of an employee pension, profit-sharing or other trust or qualified
retirement or Keogh plan, individual retirement account or custodial account
maintained pursuant to Section 403(b)(7) of the Internal Revenue Code of 1986,
as amended, (the "Code"); (iii) redemptions in connection with required (or, in
some cases, discretionary) distributions to participants in qualified retirement
or Keogh plans, individual retirement accounts or custodial accounts maintained
pursuant to Section 403(b)(7) of the Code due to death, disability or the
attainment of a specified age; (iv) redemptions effected pursuant to a Fund's
right to liquidate a shareholder's account if the aggregate net asset value of B
Prime Shares held in the account is less than the minimum account size; (v)
redemptions in connection with the combination of the Funds with any other
investment company registered under the 1940 Act by merger, acquisition of
assets, or by any other transaction; (vi) redemptions in connection with the
death or disability of a shareholder; (vii) redemptions resulting from a
tax-free return of an excess contribution pursuant to Section 408(d)(4) or (5)
of the Code; or (viii) any redemption of B Prime Shares held by an investor who
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.

CHARACTERISTICS OF A PRIME SHARES AND B PRIME SHARES

The primary difference between A Prime Shares and B Prime 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 A Prime
Shares and B Prime Shares are the same.

A Prime Shares of the Funds are sold at their net asset value plus a
front-end sales charge of up to 4.75%. This front-end sales charge may be
reduced or waived in some cases. (See "Applicable Sales Charges--A Prime Shares"
and "Quantity Discounts.") A Prime Shares of a Fund are currently subject to
ongoing distribution fees at an annual rate of .25% of a Fund's average daily
net assets attributable to its A Prime Shares.

B Prime Shares of each Fund are sold at net asset value without an initial
sales charge. Normally, however, a deferred sales charge is paid if the Shares
are redeemed within six years of investment. (See "Applicable Sales Charges--B
Prime Shares.") B Prime Shares of a Fund are currently subject to ongoing
shareholder servicing and distribution fees at an annual rate of up to 1.00% of
the Fund's average daily net

29
<PAGE>
assets attributable to its B Prime Shares. These ongoing fees, which are higher
than those charged on A Prime Shares, will cause B Prime Shares to have a higher
expense ratio and pay lower dividends than A Prime Shares.

Eight years after purchase, B Prime Shares of each Fund will convert
automatically to A Prime Shares of the same Fund. The purpose of the conversion
is to relieve a holder of B Prime 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 B Prime Shares to A Prime Shares
takes place at net asset value, as a result of which an investor receives
dollar-for-dollar the same value of A Prime Shares as he or she had of B Prime
Shares. The conversion occurs eight years after the beginning of the calendar
month in which the B Prime Shares are purchased. Upon conversion, the converted
Shares will be relieved of the distribution and shareholder servicing fees borne
by B Prime Shares, although they will be subject to the distribution and
shareholder servicing fees borne by A Prime Shares.

B Prime Shares acquired through a reinvestment of dividends or distributions
(as discussed under "Applicable Sales Charges--B Prime Shares") are also
converted at the earlier of two dates--eight years after the beginning of the
calendar month in which the reinvestment occurred or the date of conversion of
the most recently purchased B Prime Shares that were not acquired through
reinvestment of dividends or distributions. For example, if an investor makes a
one-time purchase of B Prime Shares of a Fund, and subsequently acquires
additional B Prime Shares of such Fund only through reinvestment of dividends
and/ or distributions, all of such investor's B Prime Shares in the Fund,
including those acquired through reinvestment, will convert to A Prime Shares of
such Fund on the same date.

FACTORS TO CONSIDER WHEN SELECTING A PRIME SHARES OR B PRIME SHARES

Before purchasing A Prime Shares or B Prime Shares of any Fund, investors
should consider whether, during the anticipated periods of their investments in
the particular Fund, the accumulated distribution and shareholder servicing fees
and potential contingent deferred sales charge on B Prime Shares prior to
conversion would be less than the initial sales charge and accumulated
shareholder servicing fees on A Prime Shares purchased at the same time, and to
what extent such differential would be offset by the higher yield of A Prime
Shares. In this regard, to the extent that the sales charge for A Prime Shares
is waived or reduced by one of the methods described above, investments in A
Prime Shares become more desirable. An investment of $250,000 or more in B Prime
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 B Prime Shares in amounts exceeding $250,000.

Although A Prime Shares are subject to distribution fees, they are not
subject to the higher distribution and shareholder servicing fee applicable to B
Prime Shares. For this reason, A Prime 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 A Prime 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 B Prime Shares in the Funds.

30
<PAGE>
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 eight-year period should compare the cost of the
contingent deferred sales charge plus the aggregate annual distribution and
shareholder servicing fees on B Prime Shares to the cost of the initial sales
charge and distribution fees on the A Prime Shares. Over time, the expense of
the annual distribution and shareholder servicing fees on the B Prime Shares may
equal or exceed the initial sales charge and annual distribution fee applicable
to A Prime Shares. For example, if net asset value remains constant, the
aggregate distribution and shareholder servicing fees with respect to B Prime
Shares of a Fund would equal or exceed the initial sales charge and aggregate
distribution fees of A Prime Shares approximately eight years after the
purchase. In order to reduce such fees for investors that hold B Prime Shares
for more than eight years, B Prime Shares will be automatically converted to A
Prime Shares as described above at the end of such eight-year period.

HOW TO REDEEM SHARES

GENERAL

Redemption orders are effected at the net asset value per share next
determined after receipt of the order by FD Distributors. On a 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. Galaxy reserves the right to transmit redemption
proceeds within seven days after receiving the redemption order if, in its
judgment, an earlier payment could adversely affect a Fund.

REDEMPTION PROCEDURES

Investors may redeem all or part of their A Prime Shares or B Prime Shares
in accordance with procedures governing their accounts at their broker/dealers.
It is the responsibility of the broker/dealer to transmit redemption orders to
FD Distributors and credit their customers' accounts with redemption proceeds on
a timely basis. No charge for wiring redemption payments to broker/dealers is
imposed by Galaxy, although broker/dealers may charge a customer's account for
redemption services. Information relating to such redemption services and
charges, if any, is available from the broker/dealers.

Payments for redemption orders received by FD Distribution on a Business Day
will normally be wired on the third Business Day to the broker/dealers.

IF ANY PORTION OF THE SHARES TO BE REDEEMED REPRESENTS AN INVESTMENT MADE BY
PERSONAL CHECK, GALAXY RESERVES THE RIGHT TO DELAY PAYMENT OF PROCEEDS UNTIL FD
DISTRIBUTORS IS REASONABLY SATISFIED THAT THE CHECK HAS BEEN COLLECTED, WHICH
COULD TAKE UP TO 15 DAYS FROM THE PURCHASE DATE. A SHAREHOLDER WHO ANTICIPATES
THE NEED FOR MORE IMMEDIATE ACCESS TO HIS OR HER INVESTMENT SHOULD PURCHASE
SHARES BY FEDERAL FUNDS OR BANK WIRE OR BY CERTIFIED OR CASHIER'S CHECK. BANKS
NORMALLY IMPOSE A CHARGE IN CONNECTION WITH THE USE OF BANK WIRES, AS WELL AS
CERTIFIED CHECKS, CASHIER'S CHECKS AND FEDERAL FUNDS.

OTHER REDEMPTION INFORMATION

31
<PAGE>
redemptions. In addition, if an investor has agreed with a particular
broker/dealer to maintain a minimum balance in his or her account at the
broker/dealer with respect to A Prime Shares or B Prime Shares of a Fund, and
the balance in such account falls below that minimum, the investor may be
obliged by the broker/dealer to redeem all of his or her shares.

INVESTOR PROGRAMS

EXCHANGE PRIVILEGE

A shareholder may, after appropriate prior authorization, exchange through
his or her broker/dealer A Prime Shares of a Fund having a value of at least
$100 for A Prime Shares of any of the other Funds or portfolios of Galaxy that
offer A Prime Shares, provided that such other A Prime Shares may be sold
legally in the state of the shareholder's residence. A shareholder may exchange
through his or her broker/ dealer B Prime Shares of any Fund for B Prime Shares
of any of the other Funds or portfolios of Galaxy that offer B Prime Shares,
provided that such other B Prime Shares may be sold legally in the state of the
shareholder's residence.

No additional sales charge will be incurred when exchanging A Prime Shares
of a Fund for A Prime Shares of another Galaxy portfolio that imposes a sales
charge. B Prime Shares may be exchanged without the payment of any contingent
deferred sales charge at the time the exchange is made. In determining the
holding period for calculating the contingent deferred sales charge payable on
redemptions of B Prime Shares, the holding period of the B Prime Shares
originally held will be added to the holding period of the B Prime Shares
acquired through exchange. Galaxy does not charge an exchange fee. The minimum
initial investment to establish an account in another Fund or portfolio by
exchange is $2,500.

An exchange involves a redemption of all or a portion of the Shares of a
Fund and the investment of the redemption proceeds in Shares of another Fund or
portfolio offered by Galaxy. 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 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,
shareholders should contact their broker/dealers.

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, a shareholder should consult a tax or other
financial adviser to determine the tax consequences.

32
<PAGE>
OTHER SHAREHOLDER SERVICES

Your broker/dealer may offer other services to its customers. For example,
your broker/dealer may offer participation in an automatic investment program
that allows you to systematically purchase shares of a particular Fund on a
periodic basis from a designated account. Your broker/dealer may also offer a
systematic withdrawal plan which permits you automatically to redeem shares on a
regular basis. Please contact your broker/dealer for details on these and any
other shareholder services that may be available.

DIVIDENDS AND DISTRIBUTIONS

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

Dividends and distributions will be paid in cash. Shareholders may elect to
have their dividends reinvested in additional Shares of the same series of a
Fund at the net asset value of such shares on the ex-dividend date. Such
election, or any revocation thereof, must be communicated in writing through
your broker/dealer to Galaxy's transfer agent (see "Custodian and Transfer
Agent" below) and will become effective with respect to dividends paid after its
receipt.

TAXES

FEDERAL

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

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

It is the policy of the Tax-Exempt Bond 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 (known as exempt-interest dividends) may be
treated by the Fund's shareholders as items of interest excludable from their
gross income under

33
<PAGE>
Section 103(a) of the Code, unless under the circumstances applicable to a
particular shareholder, exclusion would be disallowed. (See the Statement of
Additional Information under "Additional Information Concerning Taxes".)

If the Tax-Exempt Bond Fund should hold certain "private activity bonds"
issued after August 7, 1986, shareholders must include, as an item of tax
preference, the portion of dividends paid by the Fund that is attributable to
interest on such bonds in their federal alternative minimum taxable income for
purposes of determining liability, if any, for the 26% to 28% alternative
minimum tax for individuals and the 20% alternative minimum tax applicable to
corporations. Corporate shareholders must also take all exempt-adjustments for
federal alternative minimum tax purposes. Shareholders receiving Social Security
benefits should note that all exempt-interest dividends will be taken into
account in determining the taxability of such benefits. Interest on indebtedness
incurred by a shareholder to purchase or carry Fund shares generally is not
deductible for federal income tax purposes.

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

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

Prior to any purchase of Shares of a Fund, the impact of capital gain
distributions (and, with respect to the Taxable Bond Funds, any other
distributions) which are expected to be declared or have been declared, but not
paid, should be carefully considered. Any capital gain (or other distribution)
paid shortly after the purchase of shares of a Fund will have the effect of
reducing the per share net asset value by the per share amount of the
distribution. Furthermore, all or a portion of such distributions, although in
effect a return of capital to the shareholder, are subject to tax.

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

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

STATE AND LOCAL

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

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

34
<PAGE>
MANAGEMENT OF THE FUNDS

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

INVESTMENT ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts,
02109, serves as the investment adviser to the Funds. Fleet is an indirect
wholly-owned subsidiary of Fleet Financial Group, Inc., a registered bank
holding company with total assets of approximately $100.7 billion at June 30,
1998. Fleet, which commenced operations in 1984, also provides investment
management and advisory services to individual and institutional clients and
manages the other investment portfolios of Galaxy.

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 may from time to time, in its discretion, waive advisory fees payable
by the Funds in order to help maintain a competitive expense ratio and may from
time to time allocate a portion of its advisory fees to Fleet Bank or other
subsidiaries of Fleet Financial Group, Inc. in consideration for administrative
and/ or shareholder support services which they provide to beneficial
shareholders. Fleet is currently waiving a portion of the advisory fees payable
to it by the Funds so that it is entitled to receive advisory fees at the annual
rate of .55% of each Fund's average daily net assets, but Fleet may in its
discretion revise or discontinue this waiver at any time. For the fiscal year
ended October 31, 1997, Fleet received advisory fees (after fee waivers) at the
effective annual rate of .55% of each Fund's average daily net assets. In
addition to fee waivers, during the fiscal year ended October 31, 1997, Fleet
also reimbursed the Short-Term Bond, High Quality Bond and Tax-Exempt Bond Funds
for certain operating expenses, which reimbursement may be revised or
discontinued at any time.

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

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

Ms. Schofield also serves as portfolio manager of the High Quality Bond Fund
and is primarily responsible for the day-to-day management of the Fund's
investment portfolio. Ms. Schofield began

35
<PAGE>
serving as co-portfolio manager of the Fund on March 1, 1996 and has been sole
portfolio manager of the Fund since April 1, 1996.

The organizational arrangements of Fleet require that all investment
decisions with respect to the Tax-Exempt Bond Fund be made by Fleet's Tax-Exempt
Investment Policy Committee and no one person is responsible for making
recommendations to that Committee.

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

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
other entities 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 losses to any
shareholder.

ADMINISTRATOR

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

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, computed daily and paid
monthly, at the annual rate of .09% of the first $2.5 billion of combined
average daily net assets of the Funds and the other portfolios offered by Galaxy
(collectively, the "Portfolios"), .085% of the next $2.5 billion of combined
average daily net assets, .075% of the next $7 billion of combined average daily
net assets, .065% of the next $3 billion of combined average daily net assets,
.06% of the next $3 billion of combined average daily net assets and .0575% of
combined average daily net assets in excess of $18 billion. In addition,
Investor Services Group also receives a separate annual fee from each 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, 1997, Investor

36
<PAGE>
Services Group received administration fees at the effective annual rate of
.082% of each Fund's average daily net assets.

DESCRIPTION OF GALAXY AND ITS SHARES

Galaxy was organized as a Massachusetts business trust on March 31, 1986.
Galaxy's Declaration of Trust authorizes the Board of Trustees to classify or
reclassify any unissued shares into one or more classes or series of shares.
Pursuant to such authority, the Board of Trustees has authorized the issuance of
an unlimited number of shares in each series of the Funds as follows: Class D
shares ("Trust Shares"), Class D--Special Series 1 shares (Retail A Shares),
Class D--Special Series 2 shares (Retail B Shares), Class D--Special Series 3
shares (A Prime Shares) and Class D--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 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, each of which is a diversified company under the 1940 Act.

The Board of Trustees has also authorized the issuance of additional classes
and series of shares representing interests in other investment portfolios of
Galaxy. For information concerning the Funds' Trust Shares, Retail A Shares and
Retail B Shares and these other portfolios, which are offered through separate
prospectuses, contact FD Distributors at 1-800-628-0414.

Shares of each series in a Fund bear their pro rata portion of all operating
expenses paid by that Fund except as follows. Holders of a series of a Fund bear
fees that are paid under any distribution and/or shareholder servicing plans
applicable to such series. For example, holders of a Fund's A Prime Shares bear
the fees paid under Galaxy's Distribution Plan for A Prime Shares (described
below) and holders of a Fund's B Prime Shares bear the fees paid under Galaxy's
Distribution and Services Plan for B Prime Shares (described below). In
addition, each series of Shares of a Fund may bear differing transfer agency
expenses. Each series of Shares of the Funds may also have different sales
charges. The differences in expenses and sales charges of each series of Shares
will affect their performance. Standardized yield and total return quotations
are computed separately for each series of Shares.

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

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.

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<PAGE>
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.

A PRIME SHARES DISTRIBUTION PLAN

Galaxy has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act with respect to A Prime Shares of the Funds (the "A Prime Shares Plan").
Under the A Prime Shares Plan, Galaxy may pay FD Distributors or another person
for expenses and activities intended to result in the sale of A Prime Shares,
including: (i) direct out-of-pocket promotional expenses incurred in advertising
and marketing A Prime Shares; (ii) expenses incurred in connection with
preparing, printing, mailing, and distributing or publishing advertisements and
sales literature; (iii) expenses incurred in connection with printing and
mailing Prospectuses and Statements of Additional Information to other than
current shareholders; (iv) periodic payments or commissions to one or more
securities dealers, brokers, financial institutions or other industry
professionals, such as investment advisors, accountants, and estate planning
firms (each a "Distribution Organization") with respect to a Fund's A Prime
Shares beneficially owned by customers for whom the Distribution Organization is
the Distribution Organization of record or shareholder of record; (v) the direct
or indirect cost of financing the payments or expenses included in (i) and (iv)
above; or (vi) such other services as may be construed by any court or
governmental agency or commission, including the SEC, to constitute distribution
services under the 1940 Act or rules and regulations thereunder.

Under the A Prime Shares Distribution Plan, payments by Galaxy for
distribution expenses may not exceed the annualized rate of .30% of the average
daily net assets attributable to each such Fund's outstanding A Prime Shares. As
of the date of this Prospectus, Galaxy intends to limit the Funds' payments for
distribution expenses to not more than .25% (on an annualized basis) of the
average daily net asset value of A Prime Shares owned of record or beneficially
by customers of broker/dealers.

B PRIME SHARES DISTRIBUTION AND SERVICES PLAN

Galaxy has adopted a Distribution and Services Plan pursuant to Rule 12b-1
under the 1940 Act with respect to B Prime Shares of the Funds (the "B Prime
Shares Plan"). Under the B Prime Shares Plan, Galaxy may pay (a) FD Distributors
or another person for expenses and activities intended to result in the sale of
B Prime Shares, including: (i) direct out-of-pocket promotional expenses
incurred in advertising and marketing B Prime Shares; (ii) expenses incurred in
connection with preparing, printing, mailing, and distributing or publishing
advertisements and sales literature; (iii) expenses incurred in connection with
printing and mailing Prospectuses and Statements of Additional Information to
other than current shareholders; (iv) periodic payments or commissions to one or
more securities dealers, brokers, financial institutions or other industry
professionals, such as investment advisors, accountants, and estate planning
firms (each a "Distribution Organization") with respect to a Fund's B Prime
Shares beneficially owned by customers for whom the Distribution Organization is
the Distribution Organization of record or shareholder of record; (v) the direct
or indirect cost of financing the payments or expenses included in (i) and (iv)
above; or (vi) such other services as may be construed by any court or
governmental agency or commission, including the SEC, to constitute distribution
services under the 1940 Act or rules and regulations thereunder, (b)
broker/dealers for shareholder liaison services, which means personal services
for holders of B Prime Shares and/or the maintenance of shareholder accounts,
such as responding to customer inquiries and providing information on accounts,
and (c) broker/dealers for administrative support services, which include but
are not limited to: (i) transfer agent and subtransfer agent services for
beneficial owners of B Prime Shares; (ii) aggregating and processing purchase
and redemption orders;

38
<PAGE>
(iii) providing beneficial owners with statements showing their positions in B
Prime Shares; (iv) processing dividend payments; (v) providing sub-accounting
services for B Prime 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 B Prime Shares Plan, payments by Galaxy (i) for distribution
expenses may not exceed the annual rate of .75% of the average daily net assets
attributable to each Fund's outstanding B Prime Shares, and (ii) to a
broker/dealer 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 B Prime
Shares which are owned of record or beneficially by that broker/dealer's
customers for whom the broker/dealer is the dealer of record or shareholder of
record or with whom it has a servicing relationship. As of the date of this
Prospectus, Galaxy intends to limit the Funds' payments for shareholder liaison
and administrative support services under the Plan to an aggregate fee of not
more than .25% (on an annualized basis) of the average daily net asset value of
B Prime Shares owned of record or beneficially by customers of broker/dealers.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank, 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. Chase Manhattan may employ
sub-custodians for the Short-Term Bond Fund for the purpose of providing
custodial services for the Fund's foreign assets held outside the United States.
First Data Investor Services Group, Inc. ("Investor Services Group"), a
wholly-owned subsidiary of First Data Corporation, serves as the Funds' transfer
and dividend disbursing agent. Services performed by these entities for the
Funds are described in the Statement of Additional Information. Communications
to Investor Services Group should be directed to Investor Services Group at P.O.
Box 5108, 4400 Computer Drive, Westboro, Massachusetts 01581-5108.

EXPENSES

Except as noted below, Fleet and Investor Services Group bear all expenses
in connection with the performance of their services for the Funds. Galaxy bears
the expenses incurred in the Funds' operations including taxes; interest; fees
(including fees paid to its trustees and officers who are not affiliated with
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, fund accounting and custody fees; charges of the transfer
agent and dividend disbursing agent; certain insurance premiums; outside
auditing and legal expenses; costs of independent pricing services; costs of
shareholder reports and meetings; and any extraordinary expenses. The Funds also
pay for brokerage fees and commissions in connection with the purchase of
portfolio securities.

PERFORMANCE REPORTING

39
<PAGE>
other relevant bond indices or to rankings prepared by independent services or
other financial or industry publications that monitor the performance of mutual
funds. For example, the performance of the Funds may be compared to data
prepared by LIPPER ANALYTICAL SERVICES, INC., a widely recognized independent
service which monitors the performance of mutual funds.

Performance 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 each series of Shares of the Funds.

The standard yield is computed by dividing a Fund's average daily net
investment income per share during a 30-day (or one month) base period
identified in the advertisement by the maximum public offering price per share
on the last day of the period, and annualizing the result on a semi-annual
basis. A Fund may also advertise its "effective yield," which is calculated
similarly but, when annualized, the income earned by an investment in a Fund is
assumed to be reinvested. The Tax-Exempt Bond Fund may also quote its "tax
equivalent yield" which demonstrates the level of taxable yield necessary to
produce an after-tax equivalent yield to the Fund's tax-free yield. It is
calculated by increasing the Fund's yield (calculated as above) by the amount
necessary to reflect the payment of income taxes at stated tax rates. The Fund's
tax-equivalent yield will be higher than its yield.

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.
Average total return figures will be given for the most recent one-, five- and
ten-year periods (if applicable), and may be given for other periods as well,
such as from the commencement of a Fund's operations, or on a year-by-year
basis. Each Fund may also use "aggregate total return" figures for various
periods, representing the cumulative change in the value of an investment in a
Fund for the specified period. Both methods of calculating total return reflect
the maximum front-end sales load charged by the Funds for A Prime Shares and the
applicable contingent deferred sales charge for B Prime Shares and assume that
dividends and capital gain distributions made by a Fund during the period are
reinvested in Fund shares.

The Funds may also advertise total return data without reflecting the sales
charge imposed on the purchase of A Prime Shares or the redemption of B Prime
Shares in accordance with the rules of the SEC. Quotations that do not reflect
the sales charge will be higher than quotations that do reflect the sales
charge.

The performance of the Funds will fluctuate and any quotation of performance
should not be considered as representative of future performance. Since yields
fluctuate, yield data cannot necessarily be used to compare an investment in a
Fund's shares with bank deposits, savings accounts and similar investment
alternatives which often provide an agreed or guaranteed fixed yield for a
stated period of time. Shareholders should remember that performance 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 broker/dealers to accounts of their customers that
have invested in Shares of a Fund will not be included in performance
calculations.

40
<PAGE>
interest to shareholders and prospective investors. The topics may include but
are not limited to the advantages and disadvantages of investing in tax-deferred
and taxable investments; Fund performance and how such performance may compare
to various market indices; shareholder profiles and hypothetical investor
scenarios; the economy; the financial and capital markets; investment strategies
and techniques; investment products; and tax, retirement and investment
planning.

MISCELLANEOUS

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

As used in this Prospectus, a "vote of the holders of a majority of the
outstanding shares" of 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.

YEAR 2000 RISKS

Like other investment companies, financial and business organizations and
individuals around the world, Galaxy could be adversely affected if the computer
systems used by Fleet and Galaxy's other service providers do not properly
process and calculate date-related information and data from and after January
1, 2000. This is commonly known as the "Year 2000 Problem." Fleet is taking
steps to address the Year 2000 Problem with respect to the computer systems that
it uses and to obtain assurance that comparable steps are being taken by
Galaxy's 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
Galaxy as a result of the Year 2000 Problem.

41
<PAGE>

Galaxy
------
Funds
------

Short-Term Bond Fund

Intermediate Government
Income Fund

High Quality Bond Fund

Tax-Exempt Bond Fund

[GRAPHIC]

pkg 50 ----------, 1998

<PAGE>

THE GALAXY FUND
(A Prime Shares and B Prime Shares of the 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 and Strategic Equity Fund)

FORM N-1A

CROSS REFERENCE SHEET

PURSUANT TO RULE 495(a)

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

Part A
Item No.. . . . . . . . . . . . . . Prospectus Heading
- -------- ------------------

1. Cover Page . . . . . . . . . . Cover Page

2. Synopsis . . . . . . . . . . . Expense Summary

3. Condensed Financial
Information. . . . . . . . . . Not Applicable

4. General Description of
Registrant . . . . . . . . . . Investment Objectives and Policies;
Investments, Strategies and Risks;
Investment Limitations; Description of
Galaxy and its Shares

5A. Management's Discussion of
Fund Performance . . . . . . . Not Applicable

<PAGE>

6. Capital Stock and Other
Securities . . . . . . . . . . Dividends and Distributions; Taxes;
Description of Galaxy and Its Shares;
Miscellaneous

7. Purchase of Securities
Being Offered. . . . . . . . . How to Purchase and Redeem Shares;
Distributor; Purchase of Shares; Other
Purchase and Redemption Information

8. Redemption or
Repurchase . . . . . . . . . . How to Purchase and Redeem Shares;
Distributor; Redemption of Shares; Other
Purchase and Redemption Information

9. Pending Legal
Proceedings. . . . . . . . . . Not Applicable

<PAGE>
PRIME SHARES

THE GALAXY FUND

EQUITY VALUE FUND

EQUITY GROWTH FUND

EQUITY INCOME FUND

INTERNATIONAL EQUITY FUND

SMALL COMPANY EQUITY FUND

ASSET ALLOCATION FUND

SMALL CAP VALUE FUND

GROWTH AND INCOME FUND

STRATEGIC EQUITY FUND

PROSPECTUS

, 1998
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

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

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE GALAXY FUND........................................................... 1
HIGHLIGHTS................................................................ 3
EXPENSE SUMMARY........................................................... 5
INVESTMENT OBJECTIVES AND POLICIES........................................ 9
Equity Value Fund....................................................... 9
Equity Growth Fund...................................................... 10
Equity Income Fund...................................................... 10
International Equity Fund............................................... 11
Small Company Equity Fund............................................... 12
Asset Allocation Fund................................................... 13
Small Cap Value Fund.................................................... 14
Growth and Income Fund.................................................. 14
Strategic Equity Fund................................................... 15
Special Risk Considerations............................................. 16
European Currency Unification........................................... 17
Other Investment Policies and Risk Considerations....................... 17
INVESTMENT LIMITATIONS.................................................... 28
PRICING OF SHARES......................................................... 30
Valuation of the Equity Value, Equity Growth, Equity Income, Small
Company Equity, Asset Allocation, Small Cap Value, Growth and Income
and Strategic Equity Funds............................................. 31
Valuation of the International Equity Fund.............................. 31
HOW TO PURCHASE SHARES.................................................... 32
Distributor............................................................. 32
General................................................................. 32
Purchase Procedures..................................................... 32
Other Purchase Information.............................................. 33
Applicable Sales Charges--A Prime Shares................................ 33

Quantity Discounts...................................................... 35
Applicable Sales Charges--B Prime Shares................................ 36
Characteristics of A Prime Shares and B Prime Shares.................... 38
Factors to Consider When Selecting A Prime Shares or B Prime Shares..... 38
HOW TO REDEEM SHARES...................................................... 39
General................................................................. 39
Redemption Procedures................................................... 39
Other Redemption Information............................................ 40
INVESTOR PROGRAMS......................................................... 40
Exchange Privilege...................................................... 40
DIVIDENDS AND DISTRIBUTIONS............................................... 41
TAXES..................................................................... 42
Federal................................................................. 42
State and Local......................................................... 43
MANAGEMENT OF THE FUNDS................................................... 43
Investment Adviser and Sub-Adviser...................................... 43
Authority to Act as Investment Adviser.................................. 46
Administrator........................................................... 46
DESCRIPTION OF GALAXY AND ITS
SHARES.................................................................. 46
A Prime Shares Distribution Plan........................................ 48
B Prime Shares Distribution and Services Plan........................... 48
CUSTODIAN AND TRANSFER AGENT.............................................. 49
EXPENSES.................................................................. 49
PERFORMANCE REPORTING..................................................... 50
MISCELLANEOUS............................................................. 51
Year 2000 Risks......................................................... 51
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
THE GALAXY FUND

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

The Galaxy Fund ("Galaxy") is an open-end management investment company.
This Prospectus describes nine separate diversified investment portfolios
(individually, a "Fund," collectively, the "Funds") offered to investors by
Galaxy. Each Fund has its own investment objective and policies:

The EQUITY VALUE FUND'S investment objective is to seek long-term capital
appreciation. Income is secondary to the objective of capital appreciation. The
Fund attempts to achieve this objective by investing, under normal market and
economic conditions, at least 75% of its total assets in common stock, preferred
stock and debt securities convertible into common stock that the Fund's
investment adviser believes are undervalued and exhibit acceptable levels of
risk.

The EQUITY GROWTH FUND'S investment objective is to seek long-term capital
appreciation. The Fund attempts to achieve this objective by investing, under
normal market and economic conditions, at least 75% of its total assets in
common stock, preferred stock, common stock warrants and securities convertible
into common stock of companies that the Fund's investment adviser believes have
above-average earnings potential.

The EQUITY INCOME FUND'S investment objective is to seek current income and
capital appreciation. The Fund attempts to achieve this objective by investing,
under normal market and economic conditions, at least 75% of its total assets in
common stock and securities convertible into common stock that offer income
potential.

The INTERNATIONAL EQUITY FUND'S investment objective is to seek long-term
capital appreciation. The Fund attempts to achieve this objective by investing,
under normal market and economic conditions, at least 75% of its total assets in
the equity securities of foreign issuers.

The SMALL COMPANY EQUITY FUND'S investment objective is to seek capital
appreciation. The Fund attempts to achieve this objective by investing primarily
in the securities of companies with market value capitalizations of $1.5 billion
or less that the Fund's investment adviser believes represent the potential for
significant capital appreciation. Under normal market and economic conditions,
the Fund will invest at least 65% of its assets in the equity securities of
companies with market value capitalizations of $750 million or less.

The ASSET ALLOCATION FUND'S investment objective is to seek a high total
return by providing both a current level of income that is greater than that
produced by the popular stock market averages as well as long-term growth in the
value of the Fund's assets. Due to the Fund's expenses, however, net income
distributed to shareholders may be less than that of the averages. The Fund
attempts to achieve this objective and at the same time reduce volatility by
allocating its assets in varying amounts among short-term obligations, common
stocks, preferred stocks and bonds.

The SMALL CAP VALUE FUND'S investment objective is to provide long-term
capital appreciation. The Fund attempts to achieve this objective by investing,
under normal market and economic conditions, at least 65% of its total assets in
equity securities of companies that have a market value capitalization of up to
$1.5 billion.

The GROWTH AND INCOME FUND'S investment objective is to provide a relatively
high total return through long-term capital appreciation and current income. The
Fund attempts to achieve this objective by investing primarily in common stocks
of companies believed to have prospects for above-average growth and dividends
or of companies where significant fundamental changes are taking place. Under
normal market and economic conditions, the Fund will invest at least 65% of its
total assets in common stocks, preferred stocks, common stock warrants and
securities convertible into common stock.

The STRATEGIC EQUITY FUND'S investment objective is to seek long-term
capital appreciation. The Fund attempts to achieve this objective by investing
primarily in the securities of companies that the Fund's investment adviser
believes are reasonably priced and offer favorable return potential relative to
other securities. Under normal market and economic conditions, the 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.

This Prospectus describes the A Prime Shares and B Prime Shares (together,
"Shares") representing interests in each Fund. A Prime Shares are sold with a
front-end sales charge. B Prime Shares are sold with a contingent deferred sales
charge. A Prime Shares and B Prime Shares are offered through selected
broker/dealers to individual or institutional customers. Galaxy is also
authorized to issue three additional series of shares in each Fund ("Trust
Shares," "Retail A Shares" and "Retail B Shares"). Trust Shares are offered
under a separate prospectus primarily to investors maintaining qualified
accounts at bank and trust institutions, including institutions affiliated with
Fleet Financial Group, Inc., and to participants in employer-sponsored defined
contribution plans. Retail A Shares and Retail B Shares are offered under a
separate prospectus primarily to individuals, corporations or other entities,
purchasing either for their own accounts or for the accounts of others, and to
FIS Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, Inc., Fleet
Financial Group, Inc., its affiliates, their correspondent banks and other
qualified banks, savings and loan associations and broker/dealers on behalf of
their customers. Retail A Shares and Retail B Shares may also be purchased
directly by individuals, corporations or other entities who submit a purchase
application to Galaxy, purchasing either for their own accounts or the accounts
of others. A Prime Shares, B Prime Shares, Trust Shares, Retail A Shares and
Retail B Shares in a Fund represent equal pro rata interests in the Fund, except
they bear different expenses that reflect the difference in the range of
services provided to them. See "Management of the Funds" and "Description of
Galaxy and Its Shares" herein.

Each of the Funds is advised by Fleet Investment Advisors Inc. and sponsored
and distributed by First Data Distributors, Inc., which is not affiliated with
Fleet or its parent, Fleet Financial Group, Inc., and affiliates. Oechsle
International Advisors, LLC serves as the sub-adviser to the International
Equity Fund.

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

, 1998

2
<PAGE>
HIGHLIGHTS

Q: WHAT IS THE GALAXY FUND?

A: Galaxy is an open-end management investment company (commonly known as a
mutual fund) that offers investors the opportunity to invest in different
investment portfolios, each having separate investment objectives and policies.
This Prospectus describes Galaxy's EQUITY VALUE, EQUITY GROWTH, EQUITY INCOME,
INTERNATIONAL EQUITY, SMALL COMPANY EQUITY, ASSET ALLOCATION, SMALL CAP VALUE,
GROWTH AND INCOME and STRATEGIC EQUITY FUNDS. Prospectuses for Galaxy's MIDCAP
EQUITY, MONEY MARKET, GOVERNMENT, U.S. TREASURY, TAX-EXEMPT, CONNECTICUT
MUNICIPAL MONEY MARKET, MASSACHUSETTS MUNICIPAL MONEY MARKET, INSTITUTIONAL
GOVERNMENT MONEY MARKET, PRIME RESERVES, GOVERNMENT RESERVES, TAX-EXEMPT
RESERVES, 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 and RHODE ISLAND
MUNICIPAL BOND FUNDS may be obtained by calling 1-800-628-0414.

Q: WHO ADVISES THE FUNDS?

A: The Funds are managed by Fleet Investment Advisors Inc. ("Fleet"), an
indirect wholly-owned subsidiary of Fleet Financial Group, Inc. Fleet Financial
Group, Inc. is a financial services company with total assets as of June 30,
1998 of approximately $100.7 billion. Oechsle International Advisors, LLC
("Oechsle") serves as the sub-adviser to the International Equity Fund. As of
June 30, 1998, Oechsle had discretionary management authority over approximately
$12.6 billion of assets. See "Management of the Funds--Investment Adviser and
Sub-Adviser."

Q: WHAT ADVANTAGES DO THE FUNDS OFFER?

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

Q: HOW CAN I BUY AND REDEEM SHARES?

A: The Funds are distributed by First Data Distributors, Inc. ("FD
Distributors"). A Prime Shares and B Prime Shares of the Funds are sold through
selected broker/dealers to individual or institutional customers. A Prime Shares
of the Funds may be purchased at their net asset value plus a maximum initial
sales charge of 5.50%. A Prime Shares are subject to distribution fees of .25%
of the average daily net asset value of such Shares. B Prime Shares of the Funds
may be purchased at their net asset value subject to a contingent deferred sales
charge. The contingent deferred sales charge is paid on certain share
redemptions made within eight years of the purchase date at the maximum rate of
5.00% of the lower of (i) the net asset value of the redeemed shares or (ii) the
original purchase price of the redeemed shares. B Prime Shares are subject to
shareholder servicing and distribution fees of 1.00% of the average daily net
asset value of such Shares. Share purchase and redemption information is
provided below under "How to Purchase Shares" and "How to Redeem Shares." Except
as provided below under "Investor Programs," the minimum initial investment is
$2,500. The minimum investment for subsequent purchases is $100. See "How to
Purchase Shares" below.

3
<PAGE>
Q: WHEN ARE DIVIDENDS PAID?

A: Dividends from net investment income of the Equity Value, Equity Growth,
Equity Income, Small Company Equity, Asset Allocation, Small Cap Value, Growth
and Income and Strategic Equity Funds are declared and paid quarterly. Dividends
from net investment income of the International Equity Fund are declared and
paid annually. Net realized capital gains of each Fund are distributed at least
annually. Dividends and distributions are paid in cash, although shareholders
may choose to have dividends and distributions automatically reinvested in
additional Shares of the same series with respect to which the dividend or
distribution was declared without sales charges. See "Dividends and
Distributions."

Q: WHAT POTENTIAL RISKS ARE PRESENTED BY THE FUNDS' INVESTMENT PRACTICES?

A: One or more of the Funds may invest in foreign securities either directly
or indirectly through American Depository Receipts ("ADRs"), European Depository
Receipts ("EDRs") and, in the case of certain of the Funds, Global Depository
Receipts ("GDRs"). Investments in foreign securities incur higher costs than
investments in U.S. securities, including higher transaction costs as well as
the imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with currency exchange
rates, less complete financial information about individual companies, less
market liquidity, and political instability. See "Investment Objectives and
Policies--Special Risk Considerations--Foreign Securities." The Small Company
Equity and Small Cap Value Funds invest primarily in small capitalization
stocks. The Growth and Income Fund invests primarily in growth-oriented equity
securities, which may include securities of issuers with small capitalizations.
As a result, these Funds may be more volatile than, and may fluctuate
independently of, broad stock market indices. See "Investment Objectives and
Policies." The Small Cap Value and Growth and Income Funds may invest in lower-
rated convertible securities, which are high-yield, high-risk bonds that are
typically subject to greater market fluctuations and may be more difficult to
value or dispose of than higher-rated, lower-yielding bonds. See "Investment
Objectives and Policies--Other Investment Policies and Risk Considerations--
Convertible Securities." One or more of the Funds may also invest in certain
derivative securities, such as put and call options, stock index futures and
options, indexed securities and swap agreements, foreign currency exchange
transactions and certain asset-backed and mortgage-backed securities. Derivative
securities derive their value from the performance of underlying assets,
interest or currency exchange rates and indices and as a result entail
additional market and credit risks. See "Investment Objectives and
Policies--Other Investment Policies and Risk Considerations--Derivative
Securities."

Q: WHAT SHAREHOLDER PRIVILEGES ARE OFFERED BY THE FUNDS?

4
<PAGE>
EXPENSE SUMMARY

Set forth below is a summary of (i) the shareholder transaction expenses
imposed by each Fund with respect to its A Prime Shares and B Prime Shares, and
(ii) the operating expenses for A Prime Shares and B Prime Shares of each Fund.
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when buying or selling
shares of a Fund. ANNUAL FUND OPERATING EXPENSES are paid out of each Fund's
assets and include fees for portfolio management, maintenance of shareholder
accounts, general Fund administration, accounting and other services. Examples
based on the summary are also shown.
<TABLE>
<CAPTION>
EQUITY EQUITY EQUITY
VALUE GROWTH INCOME
FUND FUND FUND
------------------------- ------------------------- -------------------------
A PRIME B PRIME A PRIME B PRIME A PRIME B PRIME
SHARES SHARES SHARES SHARES SHARES SHARES
------------------------- -------------------------
-------------------------

<S> <C> <C> <C> <C> <C> <C>
Shareholder Transaction Expenses
- ----------------------------------------
Maximum Front-End Sales Charge Imposed
on Purchases (as a percentage of
offering price)....................... 5.50%(1) None 5.50%(1) None 5.50%(1) None
Maximum Deferred Sales Charge (as a
percentage of offering price)......... None 5.00%(2) None 5.00%(2) None 5.00%(2)
Sales Charge Imposed on Reinvested
Dividends............................. None None None None None None
Redemption Fees......................... None None None None None None
Exchange Fees........................... None None None None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ----------------------------------------
Advisory Fees (After Fee Waivers)....... .75% .75% .75% .75% .75% .75%
12b-1 Fees(3,4)......................... .25% 1.00% .25% 1.00% .25% 1.00%
Other Expenses (After Fee Waivers)...... .40% .42% .38% .39% .43% .38%
Total Fund Operating Expenses (After Fee
Waivers).............................. 1.40% 2.17% 1.38% 2.14% 1.43% 2.13%

<CAPTION>
INTERNATIONAL SMALL COMPANY
EQUITY EQUITY
FUND FUND
------------------------- -------------------------
A PRIME B PRIME A PRIME B PRIME
SHARES SHARES SHARES SHARES
------------------------- -------------------------

<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
- ----------------------------------------
Maximum Front-End Sales Charge Imposed
on Purchases (as a percentage of
offering price)....................... 5.50%(1) None 5.50%(1) None
Maximum Deferred Sales Charge (as a
percentage of offering price)......... None 5.00%(2) None 5.00%(2)
Sales Charge Imposed on Reinvested
Dividends............................. None None None None
Redemption Fees......................... None None None None
Exchange Fees........................... None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ----------------------------------------
Advisory Fees (After Fee Waivers)....... .65% .65% .75% .75%
12b-1 Fees(3,4)......................... .25% 1.00% .25% 1.00%
Other Expenses (After Fee Waivers)...... .50% .57% .44% .47%
Total Fund Operating Expenses (After Fee
Waivers).............................. 1.40% 2.22% 1.44% 2.22%
</TABLE>

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

(2) This amount applies to redemptions made during the first year. The charge
decreases to 4.00%, 3.00%, 3.00%, 2.00% and 1.00% for redemptions made during
the second through sixth years, respectively. B Prime Shares automatically
convert to A Prime Shares after eight years. See "How to Purchase
Shares--Applicable Sales Charges--B Prime Shares.

(4) Long-term investors may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the rules of the National Association of
Securities Dealers, Inc.

5
<PAGE>
<TABLE>
<CAPTION>
ASSET SMALL CAP
ALLOCATION VALUE
FUND FUND
------------------------- -------------------------
A PRIME B PRIME A PRIME B PRIME
SHARES SHARES SHARES SHARES
-------------------------
-------------------------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
- ----------------------------------------
Maximum Front-End Sales Charge Imposed
on Purchases (as a percentage of
offering price)....................... 5.50%(1) None 5.50%(1) None
Maximum Deferred Sales Charge (as a
percentage of offering price)......... None 5.00%(2) None 5.00%(2)
Sales Charge Imposed on Reinvested
Dividends............................. None None None None
Redemption Fees......................... None None None None
Exchange Fees........................... None None None None

ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ----------------------------------------
Advisory Fees (After Fee Waivers)....... .75% .75% .75% .75%
12b-1 Fees(3,4)......................... .25% 1.00% .25% 1.00%
Other Expenses.......................... .42% .45% .31% .26%
Total Fund Operating Expenses (After Fee
Waivers).............................. 1.42% 2.20% 1.31% 2.01%

<CAPTION>
GROWTH AND STRATEGIC
INCOME EQUITY
FUND FUND
------------------------- -------------------------
A PRIME B PRIME A PRIME B PRIME
SHARES SHARES SHARES SHARES
------------------------- -------------------------

<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
- ----------------------------------------
Maximum Front-End Sales Charge Imposed
on Purchases (as a percentage of
offering price)....................... 5.50%(1) None 5.50%(1) None
Maximum Deferred Sales Charge (as a
percentage of offering price)......... None 5.00%(2) None 5.00%(2)
Sales Charge Imposed on Reinvested
Dividends............................. None None None None
Redemption Fees......................... None None None None
Exchange Fees........................... None None None None
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
- ----------------------------------------
Advisory Fees (After Fee Waivers)....... .75% .75% .55% .55%
12b-1 Fees(3,4)......................... .25% 1.00% .25% 1.00%
Other Expenses.......................... .28% .36% .70% .60%
Total Fund Operating Expenses (After Fee
Waivers).............................. 1.28% 2.11% 1.50% 2.15%
</TABLE>

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

(4) Long-term investors may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the rules of the National Association of
Securities Dealers, Inc.

6
<PAGE>
Example: You would pay the following expenses on a $1,000 investment, assuming
(1) a 5% annual return, and (2) redemption of your investment at the end of the
following periods:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Equity Value Fund (A Prime Shares)(1)....................... $ 69 $ 97 $ 127 $ 212
Equity Value Fund (B Prime Shares)
Assuming complete redemption at end of period(2).......... $ 72 $ 97 $ 135 $ 227(3)
Assuming no redemption.................................... $ 22 $ 67 $ 115 $ 227(3)
Equity Growth Fund (A Prime Shares)(1)...................... $ 69 $ 96 $ 126 $ 210
Equity Growth Fund (B Prime Shares)
Assuming complete redemption at end of period(2).......... $ 71 $ 96 $ 133 $ 225(3)
Assuming no redemption.................................... $ 21 $ 66 $ 113 $ 225(3)
Equity Income Fund (A Prime Shares)(1)...................... $ 69 $ 98 $ 128 $ 215
Equity Income Fund (B Prime Shares)
Assuming complete redemption at end of period(2).......... $ 71 $ 96 $ 133 $ 225(3)
Assuming no redemption.................................... $ 21 $ 66 $ 113 $ 225(3)
International Equity Fund (A Prime Shares)(1)............... $ 69 $ 97 $ 127 $ 212
International Equity Fund (B Prime Shares)
Assuming complete redemption at end of period(2).......... $ 72 $ 98 $ 137 $ 231(3)
Assuming no redemption.................................... $ 22 $ 68 $ 117 $ 231(3)
Small Company Equity Fund (A Prime Shares)(1)............... $ 69 $ 98 $ 129 $ 216
Small Company Equity Fund (B Prime Shares)
Assuming complete redemption at end of period(2).......... $ 72 $ 98 $ 137 $ 232(3)
Assuming no redemption.................................... $ 22 $ 68 $ 117 $ 232(3)
Asset Allocation Fund (A Prime Shares)(1)................... $ 69 $ 98 $ 128 $ 214
Asset Allocation Fund (B Prime Shares)
Assuming complete redemption at end of period(2).......... $ 72 $ 98 $ 136 $ 230(3)
Assuming no redemption.................................... $ 22 $ 68 $ 116 $ 230(3)
Small Cap Value Fund (A Prime Shares)(1).................... $ 68 $ 94 $ 122 $ 212
Small Cap Value Fund (B Prime Shares)
Assuming complete redemption at end of period(2).......... $ 70 $ 92 $ 127 $ 212(3)
Assuming no redemption.................................... $ 20 $ 62 $ 107 $ 212(3)
Growth and Income Fund (A Prime Shares)(1).................. $ 68 $ 93 $ 121 $ 199
Growth and Income Fund (B Prime Shares)
Assuming complete redemption at end of period(2).......... $ 71 $ 95 $ 132 $ 220(3)
Assuming no redemption.................................... $ 21 $ 65 $ 112 $ 220(3)
Strategic Equity Fund (A Prime Shares)(1)................... $ 70 $ 100 $ 132 $ 222
Strategic Equity Fund (B Prime Shares)
Assuming complete redemption at end of period(2).......... $ 72 $ 96 $ 134 $ 228(3)
Assuming no redemption.................................... $ 22 $ 66 $ 114 $ 228(3)
</TABLE>

- ---------

(1) Assumes deduction at time of purchase of maximum applicable front-end sales
charge.

(2) Assumes deduction of maximum applicable contingent deferred sales charge.

(3) Based on conversion of B Prime Shares to A Prime Shares after eight years.

7
<PAGE>
The Expense Summary and Example are intended to assist investors in
understanding the costs and expenses that an investor in A Prime Shares and B
Prime Shares of the Funds will bear directly or indirectly. The information in
the Expense Summary and Example is based on expenses which each Fund expects to
incur during the current fiscal year on its A Prime Shares and B Prime Shares.
Without voluntary fee waivers by Fleet, (i) Advisory Fees would be .90% and .90%
for A Prime Shares and B Prime Shares, respectively, of the International Equity
Fund and .75% and .75% for A Prime Shares and B Prime Shares, respectively, of
the Strategic Equity Fund, and (ii) Total Fund Operating Expenses would be would
be 1.65% and 2.47% for A Prime Shares and B Prime Shares, respectively, of the
International Equity Fund and 1.70% and 2.35% for A Prime Shares and B Prime
Shares, respectively, of the Strategic Equity Fund. Fleet is under no obligation
to waive fees and/or reimburse expenses but has advised Galaxy that it intends
to waive fees and/or reimburse expenses during the current year to the extent
necessary to maintain the Funds' operating expenses at the levels set forth in
the above table. For more complete descriptions of these costs and expenses, see
"How to Purchase Shares," "How to Redeem Shares," "Management of the Funds" and
"Description of Galaxy and Its Shares" in this Prospectus. Any fees charged by
broker/dealers directly to their customer accounts for services related to an
investment in A Prime Shares or B Prime Shares of the Funds are in addition to
and not reflected in the fees and expenses described above.

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

8
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES

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

EQUITY VALUE FUND

The investment objective of the Equity Value Fund is to seek long-term
capital appreciation. Income is secondary to the objective of capital
appreciation. The Fund attempts to achieve its investment objective by investing
primarily in common stock, preferred stock (including convertible preferred
stock) and debt obligations convertible into common stock that Fleet believes to
be undervalued, as measured by various financial tests, including one or more of
the following: cash flow, return on equity, return on assets, fixed charge
coverage and ratios of market capitalization to revenues. In addition, Fleet
considers the current value of an issuer's fixed assets (including real estate),
cash items, net working capital, indebtedness and historical book value. Stocks
which appear to be undervalued are also reviewed to determine whether
unacceptable risks account for their valuation. The Fund also seeks to purchase
stock with a projected price-earnings ratio below that of the Standard & Poor's
500 Composite Stock Price Index (the "S&P 500").

Under normal market and economic conditions, the Fund invests at least 75%
of its total assets in common stock, preferred stock and debt securities
convertible into common stock that Fleet believes to be undervalued. Debt
securities convertible into common stock are purchased primarily during periods
of relative market instability and are acquired principally for income with the
potential for appreciation being a secondary consideration. Equity investments
consist primarily of common stock of companies having capitalizations that
exceed $100 million. Stocks of such companies generally are listed on a national
exchange or are unlisted securities with an established over-the-counter market.

The Fund may hold other types of securities in such proportions as, in the
opinion of Fleet, existing market and economic conditions may warrant, including
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, and other high quality "money market" instruments. The Fund
may also hold cash pending investment, during temporary defensive periods or if,
in the opinion of Fleet, suitable stock or convertible debt securities are
unavailable.

The Fund may also invest up to 20% of its total assets in foreign
securities, either directly or indirectly through 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-- Options and Futures
Contracts" and "Other Investment Policies and Risk Considerations--Derivative
Securities" below. See "Other Investment Policies and Risk Considerations" below
for information regarding additional investment policies of the Equity Value
Fund.

9
<PAGE>
EQUITY GROWTH FUND

The Equity Growth Fund's investment objective is to seek long-term capital
appreciation. The Fund attempts to achieve its investment objective by
investing, under normal market and economic conditions, at least 75% of its
total assets in a broadly diversified portfolio off equity securities such as
common stock, preferred stock, common stock warrants and securities convertible
into common stock of companies that Fleet believes will increase future earnings
to a level above the average earnings of similar issuers. Such companies often
retain their earnings to finance current and future growth and, for this reason,
generally pay little or no dividends. Equity securities in which the Fund
invests are selected based on analysis of trends in industries and companies,
earning power, growth features, quality and depth of management, marketing and
manufacturing skills, financial conditions and other investment criteria. By
investing in convertible securities, the Fund will seek the opportunity, through
the conversion feature, to participate in the capital appreciation of the common
stock into which the securities are convertible. 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--Options and Futures Contracts" and "Other Investment
Policies and Risk Considerations--Derivative Securities" below.

As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Other Investment
Policies and Risk Considerations" below) and U.S. Government obligations at such
times and in such proportions as, in the opinion of Fleet, prevailing market or
economic conditions warrant. See "Other Investment Policies and Risk
Considerations" below for information regarding additional investment policies
of the Equity Growth Fund.

EQUITY INCOME FUND

The Equity Income Fund's investment objective is to seek current income and
capital appreciation. The Fund attempts to achieve its investment objective by
investing, under normal market and economic conditions, at least 75% of its
total assets in common stock and securities convertible into common stock that
offer income potential. Factors generally considered in selecting portfolio
securities include current income and prospects for dividend growth and capital
appreciation. However, the Fund's portfolio can be expected to include
securities that offer only growth potential or only income potential, as well as
securities that combine both these elements.

The Equity Income Fund may invest up to 20% of its total assets in foreign
securities, either directly or indirectly through the purchase of ADRs and EDRs.
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 Depositary Receipts" below. The Fund may also purchase put
options and call options and write covered call options. See "Other Investment
Policies and Risk Considerations--Options and Futures Contracts" and "Other
Investment Policies and Risk Considerations--Derivative Securities" below.

10
<PAGE>
As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Other Investment
Policies and Risk Considerations" below) and U.S. Government obligations at such
times and in such proportions as, in the opinion of Fleet, prevailing market or
economic conditions warrant. See "Other Investment Policies and Risk
Considerations" below for information regarding additional investment policies
of the Equity Income Fund.

INTERNATIONAL EQUITY FUND

The International Equity Fund's investment objective is to seek long-term
capital appreciation. The Fund attempts to achieve its investment objective by
investing at least 75% of its total assets in equity securities of foreign
issuers. The Fund's assets will be invested at all times in the securities of
issuers located in at least three different foreign countries. Although the Fund
may earn income from dividends, interest and other sources, current income will
not be its primary consideration. The Fund emphasizes established companies,
although it may invest in companies of varying sizes as measured by assets,
sales and capitalization.

The Fund may invest in securities of issuers located in a variety of
different foreign regions and countries, including, but not limited to,
Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany,
Greece, Hong Kong, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, the
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, Thailand and the United Kingdom. More than 25% of the Fund's total
assets may be invested in the securities of issuers located in the same country.
Investment in a particular country of 25% or more of the Fund's total assets
will make the Fund's performance more dependent upon the political and economic
circumstances of a particular country than a mutual fund that is more widely
diversified among issuers in different countries. Criteria for determining the
appropriate distribution of investments among various countries and regions
include prospects for relative economic growth, expected levels of inflation,
government policies influencing business conditions, the outlook for currency
relationships, and the range of investment opportunities available to
international investors. Under normal market and economic conditions, no more
than 20% of the Fund's net assets will be invested in the aggregate in the
securities of issuers located in countries with emerging economies or emerging
securities markets.

The Fund invests in common stock and may invest in other securities with
equity characteristics, consisting of trust or limited partnership interests,
preferred stock, rights and warrants. The Fund may also invest in convertible
securities, consisting of debt securities or preferred stock that may be
converted into common stock or that carry the right to purchase common stock.
See "Other Investment Policies 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".

During temporary defensive periods in response to unusual and adverse
conditions affecting the equity markets, or to meet anticipated day-to-day
operating expenses, the Fund's assets may be invested in short-term debt
instruments. In addition, when the Fund experiences large cash inflows from the
issuance of new shares or the sale of portfolio securities, and desirable equity
securities that are consistent with the

11
<PAGE>
Fund's investment objective are unavailable in sufficient quantities, the Fund
may hold short-term investments for a limited time pending availability of
suitable equity securities. The short-term debt instruments in which the Fund
may invest may be denominated in foreign currencies or U.S. dollars, and include
foreign and domestic: (i) short-term debt securities, including short-term
obligations of national governments, their agencies, instrumentalities,
authorities or political subdivisions; (ii) commercial paper, including master
notes; (iii) bank obligations, including negotiable certificates of deposit,
time deposits, bankers' acceptances, and Euro-currency instruments and
securities; and (iv) repurchase agreements.

Subject to applicable securities regulations, the Fund may, for the purpose
of hedging its portfolio, purchase and write covered call options on specific
portfolio securities and may purchase and write put and call options on foreign
stock 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.
For temporary defensive purposes, the Fund may also invest a major portion of
its assets in securities of U.S. issuers. See "Other Investment Policies and
Risk Considerations" below regarding additional investment policies of the
International Equity Fund.

SMALL COMPANY EQUITY FUND

The Small Company Equity Fund's investment objective is to seek capital
appreciation. The Fund attempts to achieve its investment objective by investing
primarily in the securities of companies with market value capitalizations of
$1.5 billion or less ("Small Capitalization Securities") which Fleet believes
represent the potential for significant capital appreciation.

Small Capitalization Securities in which the Fund may invest include common
stock, preferred stock, securities convertible into common stock, rights and
warrants. Under normal market and economic conditions, at least 65% of the
Fund's total assets will be invested in the equity securities of companies with
market value capitalizations of $1.5 billion or less. For temporary defensive
purposes, the Fund may also invest in corporate debt obligations.

The issuers of Small Capitalization Securities tend to be companies which
are smaller or newer than those listed on the New York or American Stock
Exchanges. As a result, Small Capitalization Securities are primarily traded on
the over-the-counter market, although they may also be listed for trading on the
New York or American Stock Exchanges. Because the issuers of Small
Capitalization Securities tend to be smaller or less well-established companies,
they may have limited product lines, markets or financial resources. As a
result, Small Capitalization Securities are often less marketable and may
experience a higher level of price volatility than the securities of larger or
more well-established companies.

The Fund may invest up to 20% of its total assets in foreign securities,
either directly or indirectly through ADRs and EDRs. See "Special Risk
Considerations--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

12
<PAGE>
inherent in the ongoing management of the Fund. See "Other Investment Policies
and Risk Considerations--Options and Futures Contracts" and "Other Investment
Policies and Risk Considerations-- Derivative Securities" below.

ASSET ALLOCATION FUND

The investment objective of the Asset Allocation Fund is to seek a high
total return by providing both a current level of income that is greater than
that provided by the popular stock market averages as well as long-term growth
in the value of the Fund's assets. Fleet interprets the objective to refer to
the Dow Jones Industrial Average (of 30 companies listed on the New York Stock
Exchange) and the S&P 500. Due to the Fund's expenses, net income distributed to
shareholders may be less than that of these averages.

The Fund attempts to achieve its investment objective and at the same time
reduce volatility by allocating its assets among short-term obligations, common
stock, preferred stock and bonds. The proportion of the Fund's assets invested
in each type of security will vary from time to time as a result of Fleet's
interpretation of economic and market conditions. However, at least 25% of the
Fund's total assets will at all times be invested in fixed-income senior
securities, including debt securities and preferred stocks. In selecting common
stock for purchase by the Fund, Fleet will analyze the potential for changes in
earnings and dividends for a foreseeable period.

The Fund may also invest up to 20% of its total assets in foreign
securities. Such foreign investments may be made directly, by purchasing
securities issued or guaranteed by foreign corporations, banks or governments
(or their political subdivisions or instrumentalities) or by supranational banks
or other organizations, or indirectly, by purchasing ADRs and EDRs. Examples of
supranational banks include the International Bank for Reconstruction and
Development ("World Bank"), the Asian Development Bank and the InterAmerican
Development Bank. Obligations of supranational banks may be supported by
appropriated but unpaid commitments of their member countries and there is no
assurance that those commitments will be undertaken or met in the future. See
"Special Risk Considerations--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.

As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Other Investment
Policies and Risk Considerations" below) and U.S. Government obligations at such
times and in such proportions as, in the opinion of Fleet, prevailing market and
economic conditions warrant. See "Other Investment Policies and Risk
Considerations" below for information regarding additional investment policies
of the Asset Allocation Fund.

13
<PAGE>
SMALL CAP VALUE FUND

The Small Cap Value Fund's investment objective is to provide long-term
capital appreciation. The Fund attempts to achieve its investment objective by
investing, under normal market and economic conditions, at least 65% of its
assets in equity securities of companies that have a market value capitalization
of up to $1.5 billion.

Small capitalization stocks have historically been more volatile in price
than larger capitalization stocks, such as those included in the S&P 500. This
is because, among other things, smaller companies have a lower degree of
liquidity in the equity market and tend to have a greater sensitivity to
changing economic conditions. Further, in addition to exhibiting greater
volatility, these stocks may, to some degree, fluctuate independently of the
stocks of large companies. That is, the stock of small capitalization companies
may decline in price as the prices of large company stocks rise or vice versa.
Therefore, investors should expect that the Fund will be more volatile than, and
may fluctuate independently of, broad stock market indices such as the S&P 500.

The Fund may purchase convertible securities, including convertible
preferred stock, convertible bonds or debentures, units consisting of "usable"
bonds and warrants or a combination of the features of several of these
securities. See "Other Investment Policies and Risk Considerations--Convertible
Securities" below. The Fund may also buy and sell options and futures contracts
and utilize stock index futures contracts, options, swap agreements, indexed
securities, and options on futures contracts. See "Other Investment Policies and
Risk Considerations--Options and Futures Contracts," "Other Investment Policies
and Risk Considerations--Stock Index Futures, Swap Agreements, Indexed
Securities and Options" and "Other Investment Policies and Risk
Considerations--Derivative Securities" below.

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.

As a temporary defensive measure, in such proportions as, in the judgment of
Fleet, prevailing market conditions warrant, the Fund may invest in: (i)
short-term money market instruments (such as those listed below under "Other
Investment Policies and Risk Considerations"); (ii) securities issued and/or
guaranteed as to payment of principal and interest by the U.S. Government, its
agencies, or instrumentalities; and (iii) repurchase agreements. Additional
information about the types of money market instruments and U.S. Government
obligations in which the Small Cap Value Fund is permitted to invest is
contained in the Statement of Additional Information relating to the Fund. See
"Other Investment Policies and Risk Considerations" below for information
regarding additional investment policies of the Small Cap Value Fund.

GROWTH AND INCOME FUND

The Growth and Income Fund's investment objective is to provide a relatively
high total return through long-term capital appreciation and current income. The
Fund attempts to achieve this objective by investing primarily in common stocks
of companies with prospects for above-average growth and dividends

14
<PAGE>
or of companies where significant fundamental changes are taking place. Under
normal market conditions, the Fund will invest at least 65% of its assets in
common stocks, preferred stocks, common stock warrants and securities
convertible into common stock.

The Fund invests primarily in growth-oriented equity securities.
Growth-oriented stocks may include issuers with smaller capitalizations. See
"Small Company Equity Fund" and "Small Cap Value Fund" above for a description
of the risks associated with investments in small capitalization stocks.
Investors should expect that the Fund will be more volatile than, and may
fluctuate independently of, broad stock indices such as the S&P 500.

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 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.

As a temporary defensive measure, in such proportions as, in the judgment of
Fleet, prevailing market conditions warrant, the Fund may invest in: (i)
short-term money market instruments (such as those listed below under "Other
Investment Policies and Risk Considerations"); (ii) securities issued and/or
guaranteed as to payment of principal and interest by the U.S. Government, its
agencies, or instrumentalities; and (iii) repurchase agreements. Additional
information about the types of money market instruments and U.S. Government
obligations in which the Fund is permitted to invest is contained in the
Statement of Additional Information relating to the Fund. See "Other Investment
Policies and Risk Considerations" below for information regarding additional
investment policies of the Growth and Income Fund.

STRATEGIC EQUITY FUND

The investment objective of the Strategic Equity Fund is to seek long-term
capital appreciation. The Fund attempts to achieve its investment objective by
investing primarily in the securities of growth companies that Fleet believes
are reasonably priced and relative to other industries, competitors and
historical price/earnings multiples. In selecting investments for the Fund,
Fleet uses a fundamental analysis which focuses on intermediate and long-term
return forecasts for a broad universe of between 300 and 400 large and
mid-capitalization stocks. Under normal market and economic conditions, the 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.

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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--Options and Futures Contracts", "Other Investment Policies and
Risk Considerations--Stock Index Futures, Swap Agreements, Indexed Securities
and Options" and "Other Investment Policies and Risk Considerations--Derivative
Securities" below.

As a temporary defensive measure, the Fund may invest without limitation in
cash, "money market" instruments (such as those listed under "Other Investment
Policies and Risk Considerations" below) and in U.S. Government obligations at
such times and in such proportions as, in the opinion of Fleet, prevailing
market and economic conditions warrant. See "Other Investment Policies and Risk
Considerations" below for information regarding additional investment policies
of the Strategic Equity Fund.

SPECIAL RISK CONSIDERATIONS

MARKET RISK

Each Fund invests primarily (or with respect to the Asset Allocation Fund,
to a significant degree) in equity securities. As with other mutual funds that
invest primarily or to a significant degree in equity securities, the Funds are
subject to market risks. That is, the possibility exists that common stocks will
decline over short or even extended periods of time and both the U.S. and
certain foreign equity markets tend to be cyclical, experiencing both periods
when stock prices generally increase and periods when stock prices generally
decrease.

INTEREST RATE RISK

To the extent that the Funds invest in fixed income securities, their
holdings of such securities are sensitive to changes in interest rates and the
interest rate environment. Generally, the prices of bonds and other debt
securities fluctuate inversely with interest rate changes.

FOREIGN SECURITIES

Investments in foreign securities may involve higher costs than investments
in U.S. securities, including higher transaction costs, as well as the
imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with currency exchange
rates, less complete financial information about the issuers, less market
liquidity, and political instability. Future political and economic
developments, the possible imposition of withholding taxes on interest income,
the possible seizure or nationalization of foreign holdings, the possible
establishment of exchange controls, or the adoption of other governmental
restrictions, might adversely affect the payment of dividends or principal and
interest on foreign obligations.

Although each of the Funds may invest in securities denominated in foreign
currencies, each Fund values its securities and other assets in U.S. dollars. As
a result, the net asset value of a Fund's shares may fluctuate with U.S. dollar
exchange rates as well as with price changes of the Fund's foreign securities in
the various local markets and currencies. Thus, an increase in the value of the
U.S. dollar compared to the

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currencies in which a Fund makes its foreign investments could reduce the effect
of increases and magnify the effect of decreases in the price of a Fund's
foreign securities in their local markets. Conversely, a decrease in the value
of the U.S. dollar will have the opposite effect of magnifying the effect of
increases and reducing the effect of decreases in the prices of a Fund's 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.

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 are about to adopt a single European currency, the
euro. On January 1, 1999, the euro will become legal tender for all countries
participating in the Economic and Monetary Union ("EMU"). A new European Central
Bank will be created to manage the monetary policy of the new unified region. On
the same date, the exchange rates will be 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

RATINGS

All debt obligations, including convertible bonds, purchased by the Equity
Value, Equity Growth, Equity Income, Small Company Equity, Asset Allocation and
Strategic 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 may
have speculative characteristics and changes in economic conditions or
circumstances are more likely to lead to a weakened capacity to make principal
and interest payments than is the case for higher rated debt obligations.

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The International Equity Fund may only purchase debt securities rated "A" or
higher by Moody's or S&P, or if unrated, determined by Fleet or Oechsle to be of
comparable quality. Issuers of commercial paper, bank obligations or repurchase
agreements in which the International Equity Fund invests must have, at the time
of investment, outstanding debt rated A or higher by Moody's or S&P, or, if they
are not rated, the instrument purchased must be determined to be of comparable
quality.

The Small Cap Value and Growth and Income Funds may purchase convertible
bonds rated Ba or higher by Moody's or "BB" or higher by S&P or Fitch 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 Small Cap Value and Growth and Income Funds must be
rated in one of the top two rating categories by a nationally recognized
statistical rating agency, such as Moody's, S&P or Fitch IBCA.

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.

Obligations issued or guaranteed by the U.S. Government, its agencies and
instrumentalities include U.S. Treasury securities, which differ only in their
interest rates, maturities and time of issuance: Treasury Bills have initial
maturities of one year or less; Treasury Notes have initial maturities of one to
ten years; and Treasury Bonds generally have initial maturities of more than ten
years. Obligations of certain agencies and instrumentalities of the U.S.
Government, such as those of the Government National Mortgage Association, are
supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Federal Home Loan Banks, are supported by the right of the issuer
to borrow from the Treasury; others, such as those of the Federal National
Mortgage Association, are supported by the discretionary authority of the U.S.
Government to purchase the agency's obligations; still others, such as those of
the 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 Small Cap Value and Growth
and Income Funds, bank obligations also include U.S. dollar-denominated
obligations of foreign branches of U.S. banks or of U.S. branches of foreign
banks, all of the same type as domestic bank obligations. Investments in bank
obligations are limited 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 Small Cap
Value Fund, Growth and Income Fund and Strategic Equity Fund) of a Fund's net
assets.

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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 risk because such
banks may be subject to less stringent reserve requirements and to different
accounting, auditing, reporting and recordkeeping standards than those
applicable to domestic branches of U.S. banks. Such investments may also subject
a Fund to investment risks similar to those accompanying direct investments in
foreign securities. See Special Risk Considerations--Foreign Securities. The
Funds will invest in the obligations of U.S. branches of foreign banks or
foreign branches of U.S. banks only when Fleet and/or Oechsle believe that the
credit risk with respect to the instrument is minimal.

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.

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 Equity Value, Equity Growth, Equity Income,
International Equity, Small Company Equity, Asset Allocation and Strategic
Equity Funds, and to the 15% limit described below in Investment Limitation No.
7 under "Investment Limitations" with respect to the Small Cap Value and Growth
and Income Funds.

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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. Additional information regarding the Small Cap Value and
Growth and Income Funds' policies with respect to reverse repurchase agreements
is contained in the applicable Statement of Additional Information.

SECURITIES LENDING

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

INVESTMENT COMPANY SECURITIES

The Equity Value, Equity Growth, Equity Income, International Equity, Small
Company Equity and Asset Allocation Funds may invest in securities issued by
other investment companies which invest in high quality, short-term debt
securities and which determine their net asset value per share based on the
amortized cost or penny-rounding method. The International Equity Fund may also
purchase shares of investment companies investing primarily in foreign
securities, including so-called "country funds". Country funds have portfolios
consisting exclusively of securities of issuers located in one foreign country.
The Small Cap Value, Growth and Income and Strategic Equity Funds may invest in
other investment companies primarily for the purpose of investing their
short-term cash which has not yet been invested in other portfolio instruments.
However, from time to time, on a temporary basis, the Small Cap Value, Growth
and Income and Strategic Equity Funds may invest exclusively in one other
investment company similar to the respective Funds. Investments in other
investment companies will cause a Fund (and, indirectly, the Fund's
shareholders) to bear proportionately the costs incurred in connection with the
investment companies' operations. Except as provided above with respect to the
Small Cap Value, Growth and Income and Strategic Equity Funds, securities of
other investment companies will be acquired by the Funds within the limits
prescribed by the Investment Company Act of 1940, as amended, (the "1940 Act").
Each Fund currently intends to limit its investments so that, as determined
immediately after a securities purchase is made: (a) not more than 5% of the
value of its total assets will be invested in the securities of any one
investment company; (b) not more than 10% of the value of its total assets will
be invested in the aggregate in securities of other investment companies as a
group; (c) not more than 3% of the outstanding voting stock of any one
investment company will be owned by the Fund; and (d) not more than 10% of the
outstanding voting stock of any one closed-end investment company will be owned
in the aggregate by the Fund, other investment portfolios of Galaxy, or any
other investment companies advised by Fleet or Oechsle.

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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 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. See "Taxes".

OPTIONS AND FUTURES CONTRACTS

PUT AND CALL OPTIONS--EQUITY GROWTH, EQUITY INCOME, SMALL COMPANY EQUITY AND
ASSET ALLOCATION FUNDS. The Equity Growth, Equity Income, Small Company Equity
and Asset Allocation 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. The aggregate value of options
purchased by the Equity Growth, Equity Income, Small Company Equity and Asset
Allocation Funds may not exceed 5% of the value of their respective net assets.

COVERED CALL OPTIONS--EQUITY VALUE, EQUITY GROWTH, EQUITY INCOME,
INTERNATIONAL EQUITY, SMALL COMPANY EQUITY AND ASSET ALLOCATION FUNDS. To
further increase return on their portfolio securities, in accordance with their
respective investment objectives and policies, the Equity Value, Equity Growth,
Equity Income, International Equity, Small Company Equity and Asset Allocation
Funds may engage in writing covered call options (options on securities owned by
a Fund) and may enter into closing purchase transactions with respect to such
options. Such options must be listed on a national securities exchange and
issued by the Options Clearing Corporation. The aggregate value of the
securities subject to options written by the Equity Value, Equity Growth, Equity
Income, International Equity, Small Company Equity and Asset Allocation Funds
may not exceed 25% of the value of their respective net assets. By writing a
covered call option, a Fund forgoes the opportunity to profit from an increase
in the market price of the underlying security above the exercise price, except
insofar as the premium represents such a profit. The Fund will not be able to
sell the underlying security until the option expires or is exercised or the
Fund

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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.

OPTIONS ON FOREIGN STOCK INDEXES--INTERNATIONAL EQUITY FUND. The
International Equity Fund may, for the purpose of hedging its portfolio, subject
to applicable securities regulations purchase and write put and call options on
foreign stock indexes listed on foreign and domestic stock exchanges. A stock
index fluctuates with changes in the market values of the stocks included in the
index. Examples of foreign stock indexes are the Canadian Market Portfolio Index
(Montreal Stock Exchange), The Financial Times--Stock Exchange 100 (London Stock
Exchange) and the Toronto Stock Exchange Composite 300 (Toronto Stock Exchange).

Options on stock indexes are generally similar to options on stock except
that the delivery requirements are different. Instead of giving the right to
take or make delivery of stock at a specified price, an option on a stock index
gives the holder the right to receive a cash "exercise settlement amount" equal
to (a) the amount, if any, by which the fixed exercise price of the option
exceeds (in the case of a put) or is less than (in the case of a call) the
closing value of the underlying index on the date of exercise, multiplied by (b)
a fixed "index multiplier." Receipt of this cash amount will depend upon the
closing level of the stock index upon which the option is based being greater
than, in the case of a call, or less than, in the case of a put, the exercise
price of the option. The writer of the option is obligated, in return for the
premium received, to make delivery of this amount. The writer may offset its
position in stock index options prior to expiration by entering into a closing
transaction on an exchange or the option may expire unexercised. For additional
information relating to option trading practices and related risks, see
"Derivative Securities" below and the Statement of Additional Information
relating to the Fund.

OPTIONS AND FUTURES CONTRACTS--SMALL CAP VALUE, GROWTH AND INCOME AND
STRATEGIC EQUITY FUNDS. The Small Cap Value, Growth and Income and Strategic
Equity Funds may buy and sell options and futures contracts to manage their
exposure to changing interest rates, security prices and currency exchange
rates. The Funds may invest in options and futures based on any type of
security, index, or currency, including options and futures based on foreign
exchanges (see "Options on Foreign Stock Indexes--International Equity Fund"
above) and options not traded on exchanges. Some options and futures strategies,
including selling futures, buying puts, and writing calls, tend to hedge a
Fund's investments against price fluctuations. Other strategies, including
buying futures, writing puts, and buying calls, tend to increase market
exposure. Options and futures may be combined with each other or with forward
contracts in order to adjust the risk and return characteristics of the overall
strategy.

Options and futures can be volatile investments, and involve certain risks.
If Fleet applies a hedge at an inappropriate time or judges market conditions
incorrectly, options and futures may lower a Fund's individual return. A Fund
could also experience losses if the prices of its options and futures positions
were poorly correlated with its other investments, or if it could not close out
its positions because of an illiquid secondary market. See the applicable
Statement of Additional Information for additional information as to the Funds'
policies on options and futures trading.

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.

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STOCK INDEX FUTURES, SWAP AGREEMENTS, INDEXED SECURITIES AND OPTIONS--SMALL
CAP VALUE, GROWTH AND INCOME AND STRATEGIC EQUITY FUNDS. The Small Cap Value,
Growth and Income and Strategic Equity Funds may utilize stock index futures
contracts, options, swap agreements, indexed securities, and options on futures
contracts, subject to the limitation that the value of these futures contracts,
swap agreements, indexed securities, and options will not exceed 20% of the
Funds' respective total assets. The Funds will not purchase options to the
extent that more than 5% of the value of their respective total assets would be
invested in premiums on open put option positions. In addition, the Funds do not
intend to invest more than 5% of the market value of their respective total
assets in each of the following: futures contracts, swap agreements, and indexed
securities. When a Fund enters into a swap agreement, liquid assets of the Fund
equal to the value of the swap agreement will be segregated by that Fund.

There are several risks accompanying the utilization of futures contracts.
Positions in futures contracts may be closed only on an exchange or board of
trade that furnishes a secondary market for such contracts. While the Funds plan
to utilize futures contracts only if there exists an active market for such
contracts, there is no guarantee that a liquid market will exist for the
contracts at a specified time. Furthermore, because by definition, futures
contracts look to projected price levels in the future and not to current levels
of valuation, market circumstances may result in there being a discrepancy
between the price of the stock index future and the movement in the
corresponding stock index. The absence of a perfect price correlation between
the futures contract and its underlying stock index could stem from investors
choosing to close futures contracts by offsetting transactions, rather than
satisfying additional margin requirements. This could result in a distortion of
the relationship between the index and the futures market. In addition, because
the futures market imposes less burdensome margin requirements than the
securities market, an increased amount of participation by speculators in the
futures market could result in price fluctuations.

AMERICAN, EUROPEAN AND GLOBAL DEPOSITORY RECEIPTS

Each Fund may invest in ADRs and EDRs. The International Equity, Small Cap
Value, Growth and Income and Strategic Equity 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."

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

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other foreign currencies. A Fund either enters into these transactions on a spot
(I.E., cash) basis at the spot rate prevailing in the foreign currency exchange
market, or uses forward contracts to purchase or sell foreign currencies.
Forward foreign currency exchange contracts are agreements to exchange one
currency for another--for example, to exchange a certain amount of U.S. dollars
for a certain amount of Japanese yen--at a future date and at a specified price.
Typically, the other party to a currency exchange contract will be a commercial
bank or other financial institution.

Forward foreign currency exchange contracts also allow a Fund to hedge the
currency risk of portfolio securities denominated in a foreign currency. This
technique permits the assessment of the merits of a security to be considered
separately from the currency risk. By separating the asset and the currency
decision, it is possible to focus on the opportunities presented by the security
apart from the currency risk. Although forward foreign currency exchange
contracts are of short duration, generally between one and twelve months, 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 order to ensure that the short
position is not used to achieve leverage with respect to the Fund's investments,
the Fund will establish with its custodian a segregated account consisting of
cash or other liquid assets equal in value to the fluctuating market value of
the currency as to which the short position is being maintained. The value of
the securities in the segregated account will be adjusted at least daily to
reflect changes in the market value of the short position. See the applicable
Statement of Additional Information for additional information regarding foreign
currency exchange transactions.

ASSET-BACKED SECURITIES--ASSET ALLOCATION FUND

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

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

24
<PAGE>
Association, the Federal National Mortgage Association, and the Federal Home
Loan Mortgage Corporation. Mortgage-backed securities provide a monthly payment
consisting of interest and principal payments. Additional payment may be made
out of unscheduled repayments of principal resulting from the sale of the
underlying residential property, refinancing or foreclosure, net of fees or
costs that may be incurred. Prepayments of principal on mortgage-backed
securities may tend to increase due to refinancing of mortgages as interest
rates decline. To the extent that the Fund purchases mortgage-backed securities
at a premium, mortgage foreclosures and prepayments of principal by mortgagors
(which may be made at any time without penalty) may result in some loss of the
Fund's principal investment to the extent of the premium paid. The yield of the
Fund, should it invest in mortgage-backed securities, may be affected by
reinvestment of prepayments at higher or lower rates than the original
investment.

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

25
<PAGE>
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 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 Small Cap Value and Growth and Income 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

26
<PAGE>
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 the Appendix to the Statement of
Additional Information relating to the Small Cap Value and Growth and Income
Funds.

DERIVATIVE SECURITIES

The Funds may from time to time, in accordance with their respective
investment policies, purchase certain "derivative" securities. Derivative
securities are instruments that derive their value from the performance of
underlying assets, interest or currency exchange rates, or indices, and include,
but are not limited to, put and call options, stock index futures and options,
indexed securities and swap agreements, 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 their
investments in derivative securities. See "Investment Objectives and
Policies--Derivative Securities" in the Statement of Additional Information for
additional information.

WHEN-ISSUED AND DELAYED SETTLEMENT TRANSACTIONS--INTERNATIONAL EQUITY, SMALL CAP
VALUE,
GROWTH AND INCOME AND STRATEGIC EQUITY FUNDS

The International Equity, Small Cap Value, Growth and Income and Strategic
Equity Funds may purchase eligible securities on a "when-issued" basis. The
Small Cap Value, Growth and Income and Strategic Equity 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

27
<PAGE>
occur sometime in the future. When-issued and delayed settlement transactions
involve the risk, however, that the yield or price obtained in a transaction may
be less favorable than the yield or price available in the market when the
securities delivery takes place.

A Fund may dispose of a commitment prior to settlement if Fleet or Oechsle,
as the case may be, deems it appropriate to do so. In addition, a Fund may enter
into transactions to sell its purchase commitments to third parties at current
market values and simultaneously acquire other commitments to purchase similar
securities at later dates. The Funds may realize short-term profits or losses
upon the sale of such commitments.

PORTFOLIO TURNOVER

Each Fund may sell a portfolio investment soon after its acquisition if
Fleet and/or Oechsle believes that such a disposition is consistent with the
Fund's investment objective. Portfolio investments may be sold for a variety of
reasons, such as a more favorable investment opportunity or other circumstances
bearing on the desirability of continuing to hold such investments. A portfolio
turnover rate of 100% or more is considered high, although the rate of portfolio
turnover will not be a limiting factor in making portfolio decisions. A high
rate of portfolio turnover involves correspondingly greater brokerage commission
expenses and other transaction costs, which must be ultimately borne by a Fund's
shareholders. High portfolio turnover may result in the realization of
substantial net capital gains; distributions derived from such gains will be
treated as ordinary income for federal income tax purposes. See
"Taxes--Federal." The portfolio turnover rate for each Fund (other than the
Strategic Equity Fund) for the fiscal years ended October 31, 1997 and October
31, 1996 were as follows: 111% and 116%, respectively, for the Equity Value
Fund; 66% and 36%, respectively, for the Equity Growth Fund; 37% and 45%,
respectively, for the Equity Income Fund; 45% and 146%, respectively, for the
International Equity Fund; 69% and 82%, respectively, for the Small Company
Equity Fund; 58% and 48%, respectively, for the Asset Allocation Fund; 52% and
39%, respectively, for the Small Cap Value Fund; and 93% and 59%, respectively,
for the Growth and Income Fund. The Strategic Equity Fund, which did not conduct
investment operations during the periods indicated above, cannot accurately
predict its annual portfolio turnover rate, although it is not expected to
exceed 100%.

INVESTMENT LIMITATIONS

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

The Equity Value, Equity Growth, Equity Income, International Equity, Small
Company Equity, Asset Allocation and Strategic Equity Funds may not:

28
<PAGE>
2. Borrow money or issue senior securities, except that each Fund may
borrow from domestic banks for temporary purposes and then in amounts not in
excess of 10%, with respect to the Equity Value Fund, or 33%, with respect
to the Equity Growth, Equity Income, International Equity, Small Company
Equity, Asset Allocation and Strategic 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 Equity Growth, Equity Income,
International Equity, Small Company Equity, Asset Allocation and Strategic
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.

The Small Cap Value and Growth and Income Funds may not:

5. Borrow money directly or through reverse repurchase agreements
(arrangements in which the Fund sells a portfolio instrument for a
percentage of its cash value with an arrangement to buy it back on a set
date) or pledge securities except, under certain circumstances, such Funds
may borrow up to one-third of the value of their respective total assets and
pledge up to 10% of the value of their respective total assets to secure
such borrowings.

6. With respect to 75% of the value of their respective total assets,
invest more than 5% in securities of any one issuer, other than cash, cash
items, or securities issued or guaranteed by the government of the United
States or its agencies or instrumentalities and repurchase agreements
collateralized by such securities, or acquire more than 10% of the
outstanding voting securities of any one issuer.

The following investment policy may be changed by Galaxy's Board of Trustees
without shareholder approval. Shareholders will be notified before any material
change in this limitation becomes effective:

7. The Small Cap Value and Growth and Income Funds may not invest more
than 15% of their respective net assets in securities subject to
restrictions on resale under the Securities Act of 1933 (except for
commercial paper issued under Section 4(2) of the Securities Act of 1933 and
certain securities which meet the criteria for liquidity as established by
the Board of Trustees).

29
<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 Equity Growth, Equity Income, International Equity, Small Company
Equity, Asset Allocation and Strategic 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 Small Cap Value and Growth and Income Funds intend to invest in
restricted securities. Restricted securities are any securities in which a Fund
may otherwise invest pursuant to its investment objective and policies, but
which are subject to restriction on resale under federal securities law. Each
such Fund will limit its investments in illiquid securities, including certain
restricted securities not determined by the Board of Trustees to be liquid,
non-negotiable fixed time deposits with maturities over seven days,
over-the-counter options, and repurchase agreements providing for settlement in
more than seven days after notice, to 15% of its net assets.

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 each
Fund's 10% limitation (15% with respect to the Small Cap Value, Growth and
Income and Strategic Equity Funds) on purchases of illiquid instruments
described above, Rule 144A securities will not be considered to be illiquid if
Fleet and/or Oechsle has determined, in accordance with guidelines established
by the Board of Trustees, that an adequate trading market exists for such
securities.

PRICING OF SHARES

30
<PAGE>
sales and redemptions is calculated separately for each series of shares by
dividing the value of all securities and other assets attributable to a
particular series of shares of the Fund, less the liabilities attributable to
the shares of that series of the Fund, by the number of outstanding shares of
that series of the Fund.

VALUATION OF THE EQUITY VALUE, EQUITY GROWTH, EQUITY INCOME, SMALL COMPANY
EQUITY, ASSET ALLOCATION, SMALL CAP VALUE, GROWTH AND INCOME AND STRATEGIC
EQUITY FUNDS

The assets in the Equity Value, Equity Growth, Equity Income, Small Company
Equity, Asset Allocation, Small Cap Value, Growth and Income and Strategic
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

The International Equity Fund's portfolio securities which are primarily
traded on a domestic exchange are valued at the last sale price on that exchange
or, if there is no recent sale, at the last current bid quotation. Portfolio
securities which are primarily traded on foreign securities exchanges are
generally valued at the preceding closing values of such securities on their
respective exchanges, except when an occurrence subsequent to the time a value
was so established is likely to have changed such value, then the fair value of
those securities 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.

31
<PAGE>
HOW TO PURCHASE SHARES

DISTRIBUTOR

GENERAL

Investors should read "Characteristics of A Prime Shares and B Prime Shares"
and "Factors to Consider When Selecting A Prime Shares or B Prime Shares" before
deciding between the two.

The A Prime Shares and B Prime Shares described in this Prospectus are sold
through selected broker/dealers to individual and institutional customers.
Generally, investors purchase A Prime Shares or B Prime Shares through a
broker/dealer organization which has entered into a selling agreement with FD
Distributors. Purchases may take place only on days on which FD Distributors,
Galaxy's custodian, and Galaxy's transfer agent are open for business ("Business
Days"). If a broker/dealer 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. Broker/ dealers can call FD Distributors at
1-800-628-0414 for information on purchasing shares on behalf of their
customers.

PURCHASE PROCEDURES

Purchase orders for A Prime Shares and B Prime Shares are placed by
investors through selected broker/dealers. The broker/dealer is responsible for
transmitting its customers' purchase orders to FD Distributors and for wiring
required funds in payment to Galaxy's custodian on a timely basis. FD
Distributors is responsible for transmitting such orders to Galaxy's transfer
agent for execution. Shares purchased by a broker/dealer on behalf of its
customers will normally be held of record by the broker/ dealer and reflected in
the account statements provided to its customers. Depending on the terms of the
arrangement between a particular broker/dealer and Galaxy's transfer agent,
confirmations of Share purchases and redemptions and pertinent account
statements will either be sent by Galaxy's transfer agent directly to a
shareholder with a copy to the broker/dealer, or will be furnished directly to
the shareholder by the broker/dealer. Other procedures for the purchase of A
Prime Shares and B Prime Shares established by broker/dealers may apply.
Customers wishing to purchase A Prime Shares and B Prime Shares through their
broker/dealer should contact the broker/dealer directly for appropriate purchase
instructions.

EFFECTIVE TIME OF PURCHASES. A purchase order for Shares received and
accepted by FD Distributors from a broker/dealer on a Business Day prior to the
close of regular trading hours on the Exchange (currently, 4:00 p.m. Eastern
Time) will be executed at the net asset value per share determined on that date,
provided that Galaxy's custodian receives the purchase price in federal funds or
other immediately available funds prior to 4:00 p.m. on the third Business Day
following the receipt of such order. Such order

32
<PAGE>
will be executed on the day on which the purchase price is received in proper
form. If funds are not received by such date and time, the order will not be
accepted and notice thereof will be given promptly to the broker/dealer
submitting the order. Payment for orders which are not received or accepted will
be returned. If a broker/dealer accepts a purchase order from a customer on a
non-Business Day, the order will not be executed until it is received and
accepted by FD Distributors on a Business Day in accordance with the above
procedures. On a 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 Business Day.

OTHER PURCHASE INFORMATION

INVESTMENT MINIMUMS. The minimum initial investment is $2,500. The minimum
investment for subsequent purchases is $100.

APPLICABLE SALES CHARGES--A PRIME SHARES

<TABLE>
<CAPTION>
REALLOWANCE TO
TOTAL SALES CHARGE DEALERS
------------------------------------ -----------------
AS A % OF AS A % OF AS A % OF
OFFERING PRICE NET ASSET OFFERING PRICE
AMOUNT OF TRANSACTION PER SHARE VALUE PER SHARE PER SHARE
- ---------------------------------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Less than $50,000............................. 5.50 5.82 5.00
$50,000 but less than $100,000................ 4.50 4.71 4.00
$100,000 but less than $250,000............... 3.50 3.63 3.00
$250,000 but less than $500,000............... 2.50 2.56 2.00
$500,000 but less than $1,000,000............. 2.00 2.04 1.75
$1,000,000 and over........................... 0.00* 0.00* 0.00*
</TABLE>

- ---------

* There is no initial sales charge on purchases of $1,000,000 or more of A Prime
Shares; however, a contingent deferred sales charge of 1.00% will be imposed
on the lesser of the offering price or the net asset value of such A Prime
Shares on the redemption date for A Prime Shares redeemed within one year
after purchase. The contingent deferred sales charge will not be assessed on
redemptions within one year after purchase in connection with the death or
disability of a shareholder. To receive this exemption, a shareholder must
explain the status of his or her redemption at the time the A Prime Shares are
redeemed.

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

33
<PAGE>
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.

At various times FD Distributors may implement programs under which a
broker/dealer's sales force may be eligible to win nominal awards for certain
sales efforts. Also, FD Distributors in its discretion may from time to time,
pursuant to objective criteria established by FD Distributors, pay fees to
qualifying broker/dealers for certain services or activities which are primarily
intended to result in sales of A Prime Shares of a Fund. If any such program is
made available to any broker/dealer, it will be made available to all
broker/dealers on the same terms and conditions. Payments made under such
programs will be made by FD Distributors out of its own assets and not out of
the assets of the Funds. These programs will not change the price of A Prime
Shares or the amount that the Funds will receive from such sales.

- reinvestment of dividends and distributions;

- purchases by directors, officers and employees of broker/dealers having
agreements with FD Distributors pertaining to the sale of A Prime 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;

- any purchase pursuant to the Reinstatement Privilege described below.

34
<PAGE>
QUANTITY DISCOUNTS

In order to obtain quantity discount benefits, an investor's broker/dealer
must notify FD Distributors at the time of purchase that his or her client 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 your
broker/dealer.

35
<PAGE>
QUALIFICATION FOR DISCOUNTS. For purposes of applying the Rights of
Accumulation and Letter of Intent privileges described above, the scale of sales
charges applies to the combined purchases made by any individual and/or spouse
purchasing securities for his, her or their own account or for the account of
any minor children, or the aggregate investments of a trustee or custodian of
any qualified pension or profit-sharing plan established (or the aggregate
investment of a trustee or other fiduciary) for the benefit of the persons
listed above.

REINSTATEMENT PRIVILEGE. Investors may reinvest all or any portion of their
redemption proceeds in A Prime Shares of the Funds or in A Prime Shares of
another portfolio of Galaxy that offers A Prime Shares within 90 days of the
redemption trade date without paying a sales load. A Prime Shares so reinvested
will be purchased at a price equal to the net asset value next determined after
First Data Investor Services Group, Inc. ("Investor Services Group"), Galaxy's
transfer agent, receives a reinstatement request and payment in proper form from
the investor's broker/dealer on behalf of its client.

APPLICABLE SALES CHARGES--B PRIME SHARES

The amount of any contingent deferred sales charge investors must pay
depends on the number of years that elapse between the purchase date and the
date such B Prime Shares are redeemed. Solely for

36
<PAGE>
purposes of this determination, all payments during a month will be aggregated
and deemed to have been made on the first day of the month.

<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE
(AS A PERCENTAGE OF
DOLLAR AMOUNT
NUMBER OF YEARS SUBJECT
ELAPSED SINCE PURCHASE TO THE CHARGE)
- ------------------------------------------------------------------------ --------------------
<S> <C>
Less than one........................................................... 5.00%
More than one but less than two......................................... 4.00%
More than two but less than three....................................... 3.00%
More than three but less than four...................................... 3.00%
More than four but less than five....................................... 2.00%
More than five but less than six........................................ 1.00%
More than six but less than seven....................................... None
More than seven but less than eight..................................... None
After eight............................................................. None
</TABLE>

When an investor redeems his or her B Prime Shares, the redemption request
is processed to minimize the amount of the contingent deferred sales charge that
will be charged. B Prime Shares are redeemed first from those shares that are
not subject to a contingent deferred sales charge (I.E., B Prime Shares that
were acquired through reinvestment of dividends or distributions or that qualify
for other deferred sales charge exemptions) and after that from the B Prime
Shares that have been held the longest.

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<PAGE>
CHARACTERISTICS OF A PRIME SHARES AND B PRIME SHARES

A Prime Shares of the Funds are sold at their net asset value plus a
front-end sales charge of up to 5.50%. This front-end sales charge may be
reduced or waived in some cases. (See "Applicable Sales Charges--A Prime Shares"
and "Quantity Discounts.") A Prime Shares of a Fund are currently subject to
ongoing distribution fees at an annual rate of up to .25% of a Fund's average
daily net assets attributable to its A Prime Shares.

B Prime Shares of each Fund are sold at net asset value without an initial
sales charge. Normally, however, a deferred sales charge is paid if the B Prime
Shares are redeemed within six years of investment. (See "Applicable Sales
Charges--B Prime Shares.") B Prime Shares of a Fund are currently subject to
ongoing shareholder servicing and distribution fees at an annual rate of up to
1.00% of the Fund's average daily net assets attributable to its B Prime Shares.
These ongoing fees, which are higher than those charged on A Prime Shares, will
cause B Prime Shares to have a higher expense ratio and pay lower dividends than
A Prime Shares.

FACTORS TO CONSIDER WHEN SELECTING A PRIME SHARES OR B PRIME SHARES

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<PAGE>
A Prime Shares. In this regard, to the extent that the sales charge for A Prime
Shares is waived or reduced by one of the methods described above, investments
in A Prime Shares become more desirable. An investment of $250,000 or more in B
Prime 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 B Prime Shares in amounts exceeding $250,000.

Although A Prime Shares are subject to distribution fees, they are not
subject to the higher distribution and shareholder servicing fees applicable to
B Prime Shares. For this reason, A Prime 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 A Prime 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 B Prime Shares in the Funds.

As described above, purchasers of B Prime 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 B Prime Shares. Because a Fund's future returns cannot
be predicted, there can be no assurance that this will be the case. Holders of B
Prime 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 eight-year period should
compare the cost of the contingent deferred sales charge plus the aggregate
annual distribution and shareholder servicing fees on B Prime Shares to the cost
of the initial sales charge and distribution fees on the A Prime Shares. Over
time, the expense of the annual distribution fees on the B Prime Shares may
equal or exceed the initial sales charge and annual distribution fees applicable
to A Prime Shares. For example, if net asset value remains constant, the
aggregate distribution and shareholder servicing fees with respect to B Prime
Shares of a Fund would equal or exceed the initial sales charge and aggregate
distribution fees of A Prime Shares approximately eight years after the
purchase. In order to reduce such fees for investors that hold B Prime Shares
for more than eight years, B Prime Shares will be converted to A Prime Shares
automatically as described above at the end of such eight-year period.

HOW TO REDEEM SHARES

GENERAL

REDEMPTION PROCEDURES

39
<PAGE>
Galaxy, although broker/dealers may charge a customer's account for redemption
services. Information relating to such redemption services and charges, if any,
is available from the broker/dealers.

Payments for redemption orders received by FD Distributors on a Business Day
will normally be wired on the third Business Day to the broker-dealers.

OTHER REDEMPTION INFORMATION

Except as provided under "Investor Programs" below, Galaxy reserves the
right to redeem accounts involuntarily, upon 60 days' written notice, if the
account's net asset value falls below $250 as a result of redemptions. In
addition, if an investor has agreed with a particular broker/dealer to maintain
a minimum balance in his or her account at the broker/dealer with respect to A
Prime Shares or B Prime Shares of a Fund, and the balance in such account falls
below that minimum, the investor may be obliged by the broker/dealer to redeem
all of his or her shares.

INVESTOR PROGRAMS

EXCHANGE PRIVILEGE

A shareholder may, after appropriate prior authorization, exchange through
his or her broker/dealer A Prime Shares of a Fund having a value of at least
$100 for A Prime Shares of any of the other Funds or portfolios of Galaxy that
offer A Prime Shares, provided that such A Prime Shares may be sold legally in
the state of the shareholder's residence. A shareholder may exchange through his
or her broker/dealer B Prime Shares of any Fund for B Prime Shares of any of the
other Funds or portfolios of Galaxy that offer B Prime Shares, provided that
such other B Prime Shares may be sold legally in the state of the shareholder's
residence.

No additional sales charge will be incurred when exchanging A Prime Shares
of a Fund for A Prime Shares of another Galaxy portfolio that imposes a sales
charge. B Prime Shares may be exchanged without the payment of any contingent
deferred sales charge at the time the exchange is made. In determining the
holding period for calculating the contingent deferred sales charge payable on
redemption of B Prime Shares, the holding period of the B Prime Shares
originally held will be added to the holding period of the B Prime Shares
acquired through exchange. Galaxy does not charge an exchange fee. The minimum
initial investment to establish an account in another Fund or portfolio by
exchange is $2,500.

An exchange involves a redemption of all or a portion of the Shares of a
Fund and the investment of the redemption proceeds in A Prime Shares of another
Fund or portfolio offered by Galaxy. 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 per
share net asset value next determined after acceptance of the exchange request,
plus any applicable sales charge.

40
<PAGE>
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,
shareholders should contact their broker/dealers.

OTHER SHAREHOLDER SERVICES

DIVIDENDS AND DISTRIBUTIONS

Dividends from net investment income of the Equity Value, Equity Growth,
Equity Income, Small Company Equity, Asset Allocation, Small Cap Value, Growth
and Income and Strategic Equity Funds are declared and paid quarterly. Dividends
from net investment income of the International Equity Fund are declared and
paid annually. Dividends on each share of a Fund are determined in the same
manner, irrespective of series, but may differ in amount because of the
difference in the expenses paid by the respective series. Net realized capital
gains are distributed at least annually.

Dividends and distributions will be paid in cash. Customers may elect to
have their dividends reinvested in additional Shares of the same series of a
Fund at the net asset value of such Shares on the ex-dividend date. Such
election, or any revocation thereof, must be communicated in writing through
your broker/dealer to Galaxy's transfer agent (see "Custodian and Transfer
Agent" below) and will become effective with respect to dividends paid after its
receipt.

41
<PAGE>
TAXES

FEDERAL

The Equity Value Fund, Equity Growth Fund, Equity Income Fund, International
Equity Fund, Small Company Equity Fund, Asset Allocation Fund, Small Cap Value
Fund and Growth and Income Fund each qualified during its last taxable year and
intends to continue to qualify, and the Strategic Equity Fund intends to
qualify, as a "regulated investment company" under the Code. Such qualification
generally relieves a Fund of liability for federal income taxes to the extent
the Fund's earnings are distributed in accordance with the Code.

The policy of each Fund is to distribute as dividends substantially all of
its investment company taxable income and any net tax-exempt interest income
each year. Such dividends will be taxable as ordinary income to the Fund's
shareholders who are not currently exempt from federal income taxes, whether
such dividends are received in cash or reinvested in additional shares. (Federal
income taxes for distributions to an IRA or a qualified retirement plan are
deferred under the Code.) Such ordinary income distributions will qualify for
the dividends received deduction for corporations to the extent of the total
qualifying dividends received by the distributing Fund from domestic
corporations for the taxable year.

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

The dividends received deduction is not available for dividends attributable
to distributions made by a REIT to a Fund. In addition, distributions paid by
REITs often include a "return of capital." The Code requires a REIT to
distribute at least 95% of its taxable income to investors. In many cases,
however, because of "non-cash" expenses such as property depreciation, an equity
REIT's cash flow will exceed its taxable income. The REIT may distribute this
excess cash to offer a more competitive yield. This portion of the distribution
is deemed a return of capital and is generally not taxable to shareholders.

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

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

It is expected that the International Equity Fund will be subject to foreign
withholding taxes with respect to income received from sources within foreign
countries. So long as more than 50% of the value of the Fund's total assets at
the close of any taxable year consists of stock or securities of foreign
corporations, the Fund may elect, for U.S. federal income tax purposes, to treat
certain foreign taxes paid by it, including generally any withholding taxes and
other foreign income taxes, as paid by its shareholders. If the Fund

42
<PAGE>
makes this election, the amount of such foreign taxes paid by the Fund will be
included in its shareholders' income pro rata (in addition to taxable
distributions actually received by them), and shareholders would be entitled
either (a) to credit their proportionate amount of such taxes against their U.S.
federal income tax liabilities, subject to certain limitations described in the
Statement of Additional Information relating to the Fund, or (b) if they itemize
their deductions, to deduct such proportionate amount from their U.S. income,
should they so choose. Shareholders of the Equity Value, Equity Growth, Equity
Income, Small Company Equity, Asset Allocation, Small Cap Value, Growth and
Income and Strategic Equity Funds should not expect to claim a foreign tax
credit or deduction.

STATE AND LOCAL

MANAGEMENT OF THE FUNDS

INVESTMENT ADVISER AND SUB-ADVISER

Fleet, with principal offices at 75 State Street, Boston, Massachusetts
02109, serves as the investment adviser to the Funds. Fleet is an indirect
wholly-owned subsidiary of Fleet Financial Group, Inc., a registered bank
holding company with total assets of approximately $100.7 billion at June 30,
1998. Fleet, which commenced operations in 1984, also provides investment
management and advisory services to individual and institutional clients and
manages the other investment portfolios of Galaxy.

Subject to the general supervision of Galaxy's Board of Trustees and in
accordance with each Fund's investment policies, Fleet manages each Fund, makes
decisions with respect to and places orders for all purchases and sales of its
portfolio securities and maintains related records (except with respect to such
functions that have been delegated to Oechsle, the International Equity Fund's
sub-adviser, as described below).

For the services provided and expenses assumed with respect to the Equity
Value, Equity Growth, Equity Income, Small Company Equity, Asset Allocation,
Small Cap Value, Growth and Income and Strategic Equity Funds, Fleet is entitled
to receive advisory fees, computed daily and paid monthly, at the annual rate of
.75% of the average daily net assets of each Fund. For the services provided and
expenses assumed with respect to the International Equity Fund, Fleet is
entitled to receive advisory fees, computed daily and paid monthly, at the
annual rate of 1.15% of the first $50 million of the Fund's average daily net
assets, plus .95% of the next $50 million of such assets, plus .85% of net
assets in excess of $100 million.

43
<PAGE>
Fleet may from time to time, in its discretion, waive advisory fees payable
by the Funds in order to help maintain a competitive expense ratio and may from
time to time allocate a portion of its advisory fees to Fleet Bank or other
subsidiaries of Fleet Financial Group, Inc., in consideration for administrative
and/ or shareholder support services which they provide to beneficial
shareholders. For the fiscal year ended October 31, 1997, Fleet received
advisory fees (after fee waivers) at the effective annual rates of .75%, .75%,
.75%, .68%, .75%, .75%, .75% and .75% of the average daily net assets of the
Equity Value, Equity Growth, Equity Income, International Equity, Small Company
Equity, Asset Allocation, Small Cap Value and Growth and Income Funds,
respectively. In addition to fee waivers, during the fiscal year ended October
31, 1997, Fleet also reimbursed each of the Funds for certain operating
expenses, which reimbursement may be revised or discontinued at any time. The
Strategic Equity Fund did not conduct investment operations during the fiscal
year ended October 31, 1997.

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 manager member of Oechsle is Oechsle Group,
LLC. Fleet Financial Group, Inc. owns a 35% interest in Oechsle Group, LLC.

Under its sub-advisory agreement with Fleet, Oechsle determines which
securities and other investments will be purchased, retained or sold for the
Fund; places orders for the Fund; manages the Fund's overall cash position; and
provides Fleet with foreign broker research and a quarterly review of
international economic and investment developments. Fleet, among other things,
assists and consults with Oechsle in connection with the Fund's continuous
investment program; approves lists of foreign countries recommended by Oechsle
for investment; reviews the investment policies and restrictions of the Fund and
recommends appropriate changes to the Board of Trustees; and provides the Board
of Trustees and Oechsle with information concerning relevant economic and
political developments.

For the services provided and the expenses assumed pursuant to the
sub-advisory agreement, Fleet pays a fee to Oechsle, computed daily and paid
quarterly, at the annual rate of .40% of the first $50 million of the
International Equity Fund's average daily net assets, plus .35% of average daily
net assets in excess of $50 million. For the fiscal year ended October 31, 1997,
Oechsle received sub-advisory fees from Fleet at the effective annual rate of
.36% of the Fund's average daily net assets.

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

The Equity Growth Fund's portfolio manager, Robert G. Armknecht, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Armknecht, an Executive Vice President, has been with Fleet and
its predecessors since 1989 and has been the Fund's portfolio manager since its
inception.

The Equity Income Fund's portfolio manager, J. Edward Klisiewicz, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Klisiewicz, a Senior Vice President, has

44
<PAGE>
been with Fleet and its predecessors since 1970 and has been the Fund's
portfolio manager since its inception.

The International Equity Fund's portfolio managers, David von Hemert of
Fleet, and S. Dewey Keesler, Jr. and Kathleen Harris of Oechsle, are primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. von Hemert, a Senior Vice President, has been with Fleet and its
predecessors since 1980 and has been managing the Fund since August 1994. Mr.
Keesler, General Partner and Portfolio Manager, has been with Oechsle since its
founding in 1986. Ms. Harris has been a Portfolio Manager at Oechsle since
January 1995. Prior thereto, she was Portfolio Manager and Investment Director
for the State of Wisconsin Investment Board and a Fund Manager and Equity
Analyst for Northern Trust Company. Mr. Keesler and Ms. Harris have been
managing the Fund since August 1996.

The Small Company Equity Fund's portfolio manager, Stephen D. Barbaro, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Barbaro, a Vice President and Senior Portfolio Manager, has been
with Fleet and its predecessors since 1976 and has been the Fund's portfolio
manager since its inception.

The Asset Allocation Fund's co-portfolio managers, Donald Jones and David
Lindsay, are primarily responsible for the day-to-day management of the Fund's
investment portfolio. Mr. Jones determines the allocation of the Fund's assets
between equity and fixed income investments and manages the equity portion of
the Fund's investment portfolio. Mr. Lindsay manages the fixed income portion of
the Fund's investment portfolio. Mr. Jones, who currently serves as a Vice
President, has been with Fleet and its predecessors as a portfolio manager since
1988 and has been the Fund's portfolio manager since May 1, 1995. Mr. Lindsay, a
Senior Vice President, has been with Fleet and its predecessors since 1986. He
has managed the fixed income portion of the Fund's portfolio since January 1997.

The Small Cap Value Fund's portfolio manager, Peter Larson, is primarily
responsible for the day-to-day management of the Fund's investment portfolio.
Mr. Larson served as the portfolio manager of the Predecessor Small Cap Value
Fund since its inception in 1992. Prior to joining Fleet in 1995, he was
associated with Shawmut Bank since 1963 as an investment officer and was a Vice
President in charge of its Small Cap Equity Management product since 1982.

The Growth and Income Fund's portfolio manager, Gregory M. Miller, is
primarily responsible for the day-to-day management of the Fund's investment
portfolio. Mr. Miller, a Vice President, has been associated with Fleet since
1985. He has managed the Fund since July 1, 1998.

The Strategic Equity Fund's portfolio manager, Peter B. Hathaway, is
primarily responsible for the day-to-day management of the Fund's portfolio. Mr.
Hathaway, a Vice President, has been associated with Fleet since 1995. Prior to
joining Fleet, he was with Shawmut Investment Advisors and its predecessors as
an institutional fund manager. He has over 30 years of investment experience.

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.

45
<PAGE>
AUTHORITY TO ACT AS INVESTMENT ADVISER

ADMINISTRATOR

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

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, computed daily and paid
monthly, at the annual rate of .09% of the first $2.5 billion of the combined
average daily net assets of the Funds and the other portfolios offered by Galaxy
(collectively, the "Portfolios"), .085% of the next $2.5 billion of combined
average daily net assets, .075% of the next $7 billion of combined average daily
net assets, .065% of the next $3 billion of combined average daily net assets,
.06% of the next $3 billion of combined average daily net assets and .0575% of
combined average daily net assets in excess of $18 billion. In addition,
Investor Services Group also receives a separate annual fee from each 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, 1997, the Equity Value,
Equity Growth, Equity Income, International Equity, Small Company Equity, Asset
Allocation, Small Cap Value and Growth and Income Funds paid Investor Services
Group administration fees at the effective annual rate of .082% of each Fund's
average daily net assets. The Strategic Equity Fund did not conduct investment
operations during the fiscal year ended October 31, 1997.

DESCRIPTION OF GALAXY AND ITS SHARES

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<PAGE>
series representing interests in the Equity Value Fund; Class G--Series 1 shares
(Trust Shares), Class G-- Series 2 shares (Retail A Shares), Class G--Series 3
shares (Retail B Shares), Class G--Series 4 shares (A Prime Shares) and Class
G--Series 5 shares (B Prime Shares), each series representing interests in the
International Equity Fund; Class H--Series 1 shares (Trust Shares), Class
H--Series 2 shares (Retail A Shares), Class H--Series 3 shares (Retail B
Shares), 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 1940
Act. The Board of Trustees has also authorized the issuance of additional
classes and series of shares representing interests in other portfolios of
Galaxy. For information regarding the Funds' Trust Shares, Retail A Shares and
Retail B Shares and these other portfolios, which are offered through separate
prospectuses, contact FD Distributors at 1-800-628-0414.

Shares of each series in a Fund bear their pro rata portion of all operating
expenses paid by that Fund except as follows. Holders of a series of a Fund bear
fees that are paid under any distribution and/or shareholder servicing plans
applicable to such series. For example, holders of a Fund's A Prime Shares bear
the fees that are paid under Galaxy's Distribution Plan for A Prime Shares
(described below) and holders of a Fund's B Prime Shares bear the fees paid
under Galaxy's Distribution and Services Plan for B Prime Shares (described
below). In addition, each series of shares of a Fund bear differing transfer
agency expenses. Each series of Shares of the Fund may also have different sales
charges. The differences in the expenses paid by the respective series will
affect their performance. Standardized yield and total return quotations are
computed separately for each series of shares.

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

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<PAGE>
expressly required by law or when the Board of Trustees determines that the
matter to be voted on affects only the interests of shareholders of a particular
class or series.

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

A PRIME SHARES DISTRIBUTION PLAN

Galaxy has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act with respect to A Prime Shares of the Funds (the "A Prime Shares Plan").
Under the A Prime Shares Plan, Galaxy may pay FD Distributors or any other
person for expenses and activities intended to result in the sale of A Prime
Shares, including: (i) direct out-of-pocket promotional expenses incurred in
advertising and marketing A Prime Shares; (ii) expenses incurred in connection
with preparing, printing, mailing, and distributing or publishing advertisements
and sales literature; (iii) expenses incurred in connection with printing and
mailing Prospectuses and Statements of Additional Information to other than
current shareholders; (iv) periodic payments or commissions to one or more
securities dealers, brokers, financial institutions or other industry
professionals, such as investment advisors, accountants, and estate planning
firms (each a "Distribution Organization") with respect to a Fund's A Prime
Shares beneficially owned by customers for whom the Distribution Organization is
the Distribution Organization of record or shareholder of record; (v) the direct
or indirect cost of financing the payments or expenses included in (i) and (iv)
above; or (vi) such other services as may be construed by any court or
governmental agency or commission, including the SEC, to constitute distribution
services under the 1940 Act or rules and regulations thereunder.

Under the A Prime Shares Plan, payments by Galaxy for distribution expenses
may not exceed the annualized rate of .30% of the average daily net assets
attributable to each such Fund's outstanding A Prime Shares. As of the date of
this Prospectus, Galaxy intends to limit the Funds' payments for distribution
expenses to not more than .25% (on an annualized basis) of the average daily net
asset value of A Prime Shares owned of record or beneficially by customers of
broker/dealers.

B PRIME SHARES DISTRIBUTION AND SERVICES PLAN

Galaxy has adopted a Distribution and Services Plan pursuant to Rule 12b-1
under the 1940 Act with respect to B Prime Shares of the Funds (the "B Prime
Shares Plan"). Under the B Prime Shares Plan, Galaxy may pay (a) FD Distributors
or any other person for expenses and activities intended to result in the sale
of B Prime Shares, including (i) direct out-of-pocket promotional expenses
incurred in advertising and marketing B Prime Shares; (ii) expenses incurred in
connection with preparing, printing, mailing, and distributing or publishing
advertisements and sales literature; (iii) expenses incurred in connection with
printing and mailing Prospectuses and Statements of Additional Information to
other than current shareholders; (iv) periodic payments or commissions to one or
more securities dealers, brokers, financial institutions or other industry
professionals, such as investment advisors, accountants, and estate planning
firms (each a "Distribution Organization") with respect to a Fund's B Prime
Shares beneficially owned by customers for whom the Distribution Organization is
the Distribution Organization of record or shareholder of record; (v) the direct
or indirect cost of financing the payments or expenses included in (i) and (iv)
above; or (vi) such other services as may be construed by any court or
governmental agency or commission, including the SEC, to constitute distribution
services under the 1940 Act or rules and regulations thereunder, (b)
broker/dealers for shareholder liaison services, which means personal services

48
<PAGE>
for holders of B Prime Shares and/or the maintenance of shareholder accounts,
such as responding to customer inquiries and providing information on accounts,
and (c) broker/dealers for administrative support services, which include but
are not limited to: (i) transfer agent and subtransfer agent services for
beneficial owners of B Prime Shares; (ii) aggregating and processing purchase
and redemption orders; (iii) providing beneficial owners with statements showing
their positions in B Prime Shares; (iv) processing dividend payments; (v)
providing sub-accounting services for B Prime 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 B Prime Shares Plan, payments by Galaxy (i) for distribution
expenses may not exceed the annual rate of .75% of the average daily net assets
attributable to each Fund's outstanding B Prime Shares, (ii) to a broker/dealer
for shareholder liaison services may not exceed the annual rate of .25% and for
administrative support services may not exceed the annual rate of .25% of the
average daily net assets attributable to each such Fund's outstanding B Prime
Shares which are owned of record or beneficially by that broker/dealer's
customers for whom the broker/dealer is the dealer of record or shareholder of
record or with whom it has a servicing relationship. As of the date of this
Prospectus, Galaxy intends to limit the Funds' payments for shareholder liaison
and administrative support services under the Plan to an aggregate fee of not
more than .25% (on an annualized basis) of the average daily net asset value of
B Prime Shares owned of record or beneficially by customers of broker/dealers.

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

EXPENSES

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

49
<PAGE>
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, S&P 500, an unmanaged index of groups of common
stocks, the Consumer Price Index, or the Dow Jones Industrial Average, a
recognized unmanaged index of common stocks of 30 industrial companies listed on
the New York Stock Exchange. In addition, the performance of the International
Equity Fund may be compared to the Morgan Stanley Capital International Index or
the FT World Actuaries Index and the performance of the Small Company Equity
Fund and Small Cap Value Fund may be compared to the NASDAQ Composite Index, an
unmanaged index of over-the-counter stock prices.

50
<PAGE>
the instruments held in a portfolio, portfolio maturity, operating expenses, and
market conditions. Any additional fees charged by broker/dealers to accounts of
their 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

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

YEAR 2000 RISKS

<PAGE>

GALAXY
-----
FUNDS
-----

Equity Value Fund

Equity Growth Fund

Equity Income Fund

International Equity Fund

Small Company Equity Fund

Asset Allocation Fund

Small Cap Value Fund

Growth and Income Fund

Strategic Equity Fund

[GRAPHIC]

PKG 50 ________________, 1998

<PAGE>

THE GALAXY FUND
(A Prime Shares and B Prime Shares of the
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 and Tax-Exempt Bond Fund)

FORM N-1A

CROSS REFERENCE SHEET

PURSUANT TO RULE 495(a)

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

Part B Heading in Statement of
Item No. Additional Information
- -------- -----------------------

10. Cover Page . . . . . . . . . . Cover Page

11. Table of Contents. . . . . . . Table of Contents

12. General Information and
History. . . . . . . . . . . . Not Applicable

13. Investment Objectives and
Policies . . . . . . . . . . . Investment Objectives and Policies; Net
Asset Value

14. Management of the Fund . . . . Trustees and Officers; Miscellaneous

15. Control Persons and Principal
Holders of Securities. . . . . See Prospectus-"Management of the Funds"

16. Investment Advisory and
Other Services . . . . . . . . Advisory, Administration, Custodian and
Transfer Agency Agreements; Distribution
and Services Plan; Distributor;
Auditors; Counsel

17. Brokerage Allocation and
Other Practices. . . . . . . . Portfolio Transactions

<PAGE>

18. Capital Stock and Other
Securities . . . . . . . . . . Description of Shares

19. Purchase, Redemption and
Pricing of Securities
Being Offered. . . . . . . . . Additional Purchase and Redemption
Information; Description of Shares

20. Tax Status . . . . . . . . . . Additional Information Concerning Taxes

21. Underwriters . . . . . . . . . Portfolio Transactions

22. Calculation of
Performance Data . . . . . . . Performance and Yield Calculation

23. Financial Statements . . . . . Auditors

<PAGE>

PRIME
SHARES

THE GALAXY FUND

STATEMENT OF ADDITIONAL INFORMATION

Equity Value Fund

Equity Growth Fund

Equity Income Fund

International Equity Fund

Small Company Equity Fund

Asset Allocation Fund

Small Cap Value Fund

Growth and Income Fund

Strategic Equity Fund

Short-Term Bond Fund

Intermediate Government Income Fund

High Quality Bond Fund

Tax-Exempt Bond Fund

___________, 1998

<PAGE>

TABLE OF CONTENTS
PAGE
THE GALAXY FUND. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . .1
Variable And Floating Rate Obligations. . . . . . . . . . . . . . . .1
Bank Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . .1
Asset-Backed Securities . . . . . . . . . . . . . . . . . . . . . . .1
Municipal Securities. . . . . . . . . . . . . . . . . . . . . . . . .2
When-Issued Securities And Forward Commitment And Delayed
Settlement Transactions . . . . . . . . . . . . . . . . . . . . . .4
Stand-By Commitments. . . . . . . . . . . . . . . . . . . . . . . . .5
Restricted And Illiquid Securities. . . . . . . . . . . . . . . . . .5
Repurchase Agreements; Reverse Repurchase Agreements; Loans Of
Portfolio Securities. . . . . . . . . . . . . . . . . . . . . . . .6
U.S. Government Securities. . . . . . . . . . . . . . . . . . . . . .6
Derivative Securities . . . . . . . . . . . . . . . . . . . . . . . .7
Additional Investment Limitations . . . . . . . . . . . . . . . . . 13
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . 17
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . 20
ADDITIONAL INFORMATION CONCERNING TAXES. . . . . . . . . . . . . . . . . 22
In General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Tax-Exempt Bond Fund. . . . . . . . . . . . . . . . . . . . . . . . 24
Taxation Of Certain Financial Instruments . . . . . . . . . . . . . 25
State Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
TRUSTEES AND OFFICERS. . . . . . . . . . . . . . . . . . . . . . . . . . 27
Shareholder And Trustee Liability . . . . . . . . . . . . . . . . . 30
ADVISORY, SUB-ADVISORY, ADMINISTRATION, CUSTODIAN AND
TRANSFER AGENCY AGREEMENTS. . . . . . . . . . . . . . . . . . . . . 31
Custodian And Transfer Agent. . . . . . . . . . . . . . . . . . . . 36
PORTFOLIO TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . 36
DISTRIBUTION PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
A Prime Shares Plan . . . . . . . . . . . . . . . . . . . . . . . . 38
B Prime Shares Plan . . . . . . . . . . . . . . . . . . . . . . . . 39
Both Distribution Plans . . . . . . . . . . . . . . . . . . . . . . 39
DISTRIBUTOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
PERFORMANCE AND YIELD INFORMATION. . . . . . . . . . . . . . . . . . . . 40
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .B-1

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<PAGE>

THE GALAXY FUND

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

This Statement of Additional Information relates to the A Prime Shares and
B Prime Shares of thirteen of those investment portfolios: the Equity Value,
Equity Growth, Equity Income, International Equity, Small Company Equity, Asset
Allocation, Small Cap Value, Growth and Income, and Strategic Equity Funds (the
"Equity Funds") and the Short-Term Bond, Intermediate Government Income, High
Quality Bond, and Tax-Exempt Bond Funds, (the "Bond Funds," and collectively
with the Equity Funds, the "Funds"). This Statement of Additional Information
provides additional investment information with respect to the Funds and should
be read in conjunction with the current Prospectuses.

The Small Cap Value and Growth and Income Funds commenced operations on
December 14, 1992, as separate investment portfolios (the "Predecessor Small Cap
Value Fund" and "Predecessor Growth and Income Fund," respectively, and
collectively the "Predecessor Funds") of The Shawmut Funds, which was organized
as a Massachusetts business trust. On December 4, 1995, the Predecessor Funds
were reorganized as new portfolios of Galaxy.

INVESTMENT OBJECTIVES AND POLICIES

VARIABLE AND FLOATING RATE OBLIGATIONS

The Funds may purchase variable and floating rate instruments in accordance
with their investment objectives and policies as described in their
Prospectuses. If such an instrument is not rated, Fleet Investment Advisors
Inc. ("Fleet"), the investment adviser to the Funds, or Oechsle International
Advisors, LLC ("Oechsle"), the sub-adviser to the International Equity Fund,
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.

BANK OBLIGATIONS

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

ASSET-BACKED SECURITIES

Asset-backed securities are generally issued as pass-through certificates,
which represent undivided fractional ownership interests in an underlying pool
of assets, or as debt instruments,

<PAGE>

which are also known as collateralized obligations, and are generally issued as
the debt of a special purpose entity organized solely for the purpose of owning
such assets and issuing such debt. Asset-backed securities are often backed by
a pool of assets representing the obligations of a number of different parties.

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

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

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

MUNICIPAL SECURITIES

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

The two principal categories of Municipal Securities include "general
obligation" and "revenue" issues. The Bond Funds' portfolios may also include
"moral obligation" issues, which are normally issued by special purpose
authorities. There are, of course, variations in the quality of Municipal
Securities, both within a particular category and between categories, and the
yields on Municipal Securities depend upon a variety of factors, including
general market conditions, the financial condition of the issuer, general
conditions of the municipal bond market, the size of a particular offering, the
maturity of the obligation, and the rating of the issue. The ratings of a

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<PAGE>

nationally recognized statistical rating organization ("NRSRO"), such as Moody's
Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Group ("S&P"),
described in the Prospectus for the Bond Funds and in Appendix A hereto,
represent such rating services' opinion as to the quality of Municipal
Securities. It should be emphasized that these ratings are general and are not
absolute standards of quality. Municipal Securities with the same maturity,
interest rate and rating may have different yields. Municipal Securities of the
same maturity and interest rate with different ratings may have the same yield.
Subsequent to its purchase by a Bond Fund, an issue of Municipal Securities may
cease to be rated or its rating may be reduced below the minimum rating required
for purchase by the Fund.

The payment of principal and interest on most Municipal Securities
purchased by the Bond Funds will depend upon the ability of the issuers to meet
their obligations. Each state, the District of Columbia, each of their
political subdivisions, agencies, instrumentalities and authorities and each
multistate agency of which a state is a member is a separate "issuer" as that
term is used in this Statement of Additional Information and the Bond Funds'
Prospectus. 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 Bond Funds may purchase short-term general
obligation notes, tax anticipation notes, bond anticipation notes, revenue
anticipation notes, 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 Bond Funds may invest in long-term tax-exempt
instruments, such as municipal bonds and private activity bonds to the extent
consistent with the limitations set forth in the Prospectus for each Bond Fund.

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

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

-3-

<PAGE>

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 Bond Funds
and the liquidity and value of their respective portfolios. In such an event,
each Bond Fund would re-evaluate its investment objective and policies and
consider possible changes in its structure or possible dissolution.

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

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

WHEN-ISSUED SECURITIES AND FORWARD COMMITMENT AND DELAYED SETTLEMENT
TRANSACTIONS

Each Fund may enter into transactions on a "when-issued" or "delayed
settlement" basis. The Bond Funds also may enter into transactions on a "forward
commitment" basis. 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.

-4-

<PAGE>

STAND-BY COMMITMENTS

Each Bond 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. 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 that are acquired subject to the commitment. Where a Fund pays
any consideration directly or indirectly for a stand-by commitment, its cost
will be reflected as unrealized depreciation for the period during which the
commitment is held by the Fund.

A Fund will enter into stand-by commitments only with banks and
broker/dealers that present minimal credit risks. In evaluating the
creditworthiness of the issuer of a stand-by commitment, Fleet will review
periodically the issuer's assets, liabilities, contingent claims and other
relevant financial information.

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

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"). Each Fund except the Tax-Exempt Bond Fund
may invest in Rule 144A securities. 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.

The ability of the Board of Trustees to determine the liquidity of certain
restricted securities is permitted under a Securities and Exchange Commission
(the "SEC") staff position set forth in the adopting release for Rule 144A (the
"Rule") under the 1933 Act. The Rule is a non-exclusive, safe-harbor for
certain secondary market transactions involving securities subject to
restrictions on resale

-5-

<PAGE>

under federal securities laws. The Rule provides an exemption from registration
for resales of otherwise restricted securities to qualified institutional
buyers. The Rule was expected to further enhance the liquidity of the secondary
market for securities eligible for resale under the Rule. Galaxy believes that
the staff of the SEC has left the question of determining the liquidity of all
restricted securities (eligible for resale under Rule 144A) for determination to
the Board of Trustees. The Board of Trustees considers the following criteria
in determining the liquidity of certain restricted securities:

- the frequency of trades and quotes for the security;

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

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

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

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

REPURCHASE AGREEMENTS; REVERSE REPURCHASE AGREEMENTS; LOANS OF PORTFOLIO
SECURITIES

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

Each Fund may enter into reverse repurchase agreements. Whenever a Fund
enters into a reverse repurchase agreement, it will place in a segregated
custodial account liquid assets such as cash or liquid 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.

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

U.S. GOVERNMENT SECURITIES

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

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<PAGE>

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.

DERIVATIVE SECURITIES

PUT AND CALL OPTIONS -- EQUITY GROWTH, EQUITY INCOME, SMALL COMPANY
EQUITY AND ASSET ALLOCATION FUNDS

The Equity Growth, Equity Income, Small Company Equity and Asset Allocation
Funds may purchase put and call options issued by the Options Clearing
Corporation which are listed on a national securities exchange. 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 call or put option positions, a Fund will be required
to enter into a "closing purchase transaction" -- the purchase of a call or put
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

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<PAGE>

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
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
fluctuation 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 -- EQUITY VALUE, EQUITY GROWTH, EQUITY INCOME,
INTERNATIONAL EQUITY, SMALL COMPANY EQUITY AND ASSET ALLOCATION FUNDS

The Equity Value, Equity Growth, Equity Income, International Equity, Small
Company Equity and Asset Allocation 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

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<PAGE>

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.

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 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.

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<PAGE>

PUT AND CALL OPTIONS -- SMALL CAP VALUE, GROWTH AND INCOME AND STRATEGIC
EQUITY FUNDS

The Small Cap Value, Growth and Income and Strategic Equity Funds may
purchase and sell put options on their portfolio securities as described in
their Prospectus.

STOCK INDEX FUTURES AND OPTIONS -- SMALL CAP VALUE, GROWTH AND INCOME AND
STRATEGIC EQUITY FUNDS

The Small Cap Value, Growth and Income and Strategic Equity Funds may
utilize stock index futures contracts and options on stocks, stock indices and
stock index futures contracts for the purposes of managing cash flows into and
out of their portfolios and potentially reducing transactional costs. The Funds
may not use stock index futures contracts and options for speculative purposes.

As a means of reducing fluctuations in the net asset value of shares of a
Fund, the Fund may attempt to hedge all or a portion of its portfolio 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.

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 its
portfolio; and (3) sell listed call options either on securities held in its
portfolio or on securities which it has the right to obtain without payment of
further consideration (or 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,"

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<PAGE>

and it is subject to change by the exchange or board of trade on which the
contract is traded. Subsequent payments to and from the broker are made on a
daily basis as the price of the index or the securities underlying the futures
contract fluctuates. These payments are known as "variation margins," and the
fluctuation in value of the long and short positions in the futures contract is
a process referred to as "marking to market." A Fund may decide to close its
position on a contract at any time prior to the contract's expiration. This is
accomplished by the Fund taking an opposite position at the then prevailing
price, thereby terminating its existing position in the contract. Because the
initial margin resembles a performance bond or good-faith deposit on the
contract, it is returned to the Fund upon the termination of the contract,
assuming that all contractual obligations have been satisfied. Therefore, the
margin utilized in futures contracts is readily distinguishable from the margin
employed in security transactions, since the margin employed in futures
contracts does not involve the borrowing of funds to finance the transaction.

RESTRICTIONS ON USE OF FUTURES CONTRACTS AND OPTIONS -- SMALL CAP VALUE,
GROWTH AND INCOME AND STRATEGIC EQUITY FUNDS

The Small Cap Value, Growth and Income and Strategic Equity Funds will not
enter into futures contracts to the extent that, immediately thereafter, the sum
of its initial margin deposits on open contracts exceeds 5% of the market value
of its total assets. Further, 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.

INDEXED SECURITIES -- SMALL CAP VALUE, GROWTH AND INCOME AND STRATEGIC
EQUITY FUNDS

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

SWAP AGREEMENTS -- SMALL CAP VALUE, GROWTH AND INCOME AND STRATEGIC EQUITY
FUNDS

As one way of managing their exposure to different types of investments,
the Small Cap Value, Growth and Income and Strategic Equity Funds may enter into
interest rate swaps, currency swaps, and other types of swap agreements such as
caps, collars, and floors. In a typical interest rate swap, one party agrees to
make regular payments equal to a floating interest rate times a "notional
principal amount," in return for payments equal to a fixed rate times the same
amount, for a specified period of time. If a swap agreement provides for
payments in different currencies, the parties might

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<PAGE>

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
a Fund's 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. A Fund may also suffer losses if
it is unable to terminate outstanding swap agreements or reduce its exposure
through offsetting transactions.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS -- EQUITY FUNDS AND SHORT-TERM BOND
FUND

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

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

The Funds may enter into foreign currency hedging transactions in an
attempt to protect against changes in foreign currency exchange rates between
the trade and settlement dates of specific securities transactions or changes in
foreign currency exchange rates that would adversely

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affect a portfolio position or an anticipated portfolio position. Since
consideration of the prospect for currency parities will be incorporated into a
Fund's long-term investment decisions, the Funds will not routinely enter into
foreign currency hedging transactions with respect to portfolio security
transactions; however, it is important to have the flexibility to enter into
foreign currency hedging transactions when it is determined that the
transactions would be in a Fund's best interest. Although these transactions
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, at the same time they tend to limit any potential gain that might be
realized should the value of the hedged currency increase. The precise matching
of the forward contract amounts and the value of the securities involved will
not generally be possible because the future value of these securities in
foreign currencies will change as a consequence of market movements in the value
of those securities between the date the forward contract is entered into and
the date it matures. The projection of currency market movements is extremely
difficult, and the successful execution of a hedging strategy is highly
uncertain.

ADDITIONAL INVESTMENT LIMITATIONS

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

Each Fund (other than the Small Cap Value and Growth and Income Funds) may
not:

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

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

3. Purchase or sell real estate; except that each Fund (other than the
Tax-Exempt Bond Fund) may purchase securities that are secured by real
estate and may purchase securities of issuers which deal in real
estate or interests therein; and except that the Tax-Exempt Bond Fund
may invest in Municipal Securities secured by real estate or interests
therein; however, the Funds will not purchase or sell interests in
real estate limited partnerships.

4. Purchase or sell commodities or commodity contracts or invest in oil,
gas, or other mineral exploration or development programs or mineral
leases; provided however, that (i) the Equity Value, Equity Growth,
Equity Income, International Equity, Small Company Equity, Asset
Allocation, and Short-Term Bond Funds may enter into forward currency
contracts and foreign currency futures contracts and related options
to the extent permitted by their respective investment objectives and
policies, (ii) the Strategic Equity Fund may engage in transactions
involving financial futures contracts or options on financial futures
contracts, (iii) the Tax-Exempt Bond Fund may enter into municipal

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bond index futures contracts, and (iv) each Bond Fund may enter into
interest rate futures contracts to the extent permitted under the
Commodity Exchange Act and the 1940 Act.

5. Invest in or sell put options, call options, straddles, spreads, or
any combination thereof; provided, however, that each of the Equity
Value, Equity Growth, Equity Income, International Equity, Small
Company Equity and Asset Allocation 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 Equity Growth,
Equity Income, International Equity, Small Company Equity and Asset
Allocation 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.

6. Invest in companies for the purpose of exercising management or
control.

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

In addition to the above, the following limitations apply:

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

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

Neither the Small Cap Value Fund nor the Growth and Income Fund:

10. May sell any securities short or purchase any securities on margin,
but each Fund may obtain such short-term credits as may be necessary
for clearance of purchases and sales of portfolio securities. A
deposit or payment by a Fund of initial or variation margin in

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<PAGE>

connection with futures contracts or related options transactions is
not considered the purchase of a security on margin.

11. May issue senior securities except that each Fund may borrow money or
engage in reverse repurchase agreements in amounts up to one-third of
the value of its total assets, including the amounts borrowed; and
except to the extent that each Fund may enter into futures contracts.
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 such 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.

12. May mortgage, pledge, or hypothecate any assets except to secure
permitted borrowings. In those cases, each 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.

13. May purchase or sell real estate or real estate limited partnerships,
although each Fund may invest in securities of issuers whose business
involves the purchase or sale of real estate or in securities which
are secured by real estate or interests in real estate.

14. May purchase or sell commodities, commodity contracts, or commodity
futures contracts except to the extent that each Fund may engage in
transactions involving financial futures contracts or options on
financial futures contracts.

15. May underwrite any issue of securities, except as a Fund may be deemed
to be an underwriter under the Securities Act of 1933 in connection
with the sale of securities in accordance with its investment
objective, policies and limitations.

16. May lend any of its assets; except that each Fund may lend portfolio
securities up to one-third of 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, it's agencies or instrumentalities, variable rate demand
notes, bonds, debentures, notes, certificates or indebtedness, or
certain debt instruments as permitted by its investment objective,
policies and limitations or Galaxy's Declaration of Trust.

17. With respect to securities comprising 75% of the value of each Fund's
total assets, will purchase securities issued by any one issuer (other
than cash, cash items, or securities issued or guaranteed by the
government of the United States or its agencies or

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<PAGE>

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. Neither
Fund will acquire more than 10% of the outstanding voting securities
of any one issuer.

18. Will invest 25% or 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, each 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.

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

19. Each of the Small Cap Value and Growth and Income Funds 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.

Neither the Small Cap Value Fund nor the Growth and Income Fund:

20. 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.

21. May purchase or sell interests in oil, gas, or other mineral
exploration or development programs or leases; except that such Funds
may purchase the securities of issuers which invest in or sponsor such
programs.

22. 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.

23. 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.

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<PAGE>

24. 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.

25. Will invest more than 15% of the value of its 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 illiquid.

26. May invest in companies for the purpose of exercising management or
control.

27. 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.

ADDITIONAL PURCHASE AND REDEMPTION INFORMATION

Shares of the Funds are sold on a continuous basis by First Data
Distributors, Inc. ("FD Distributors"), and FD Distributors has agreed to use
appropriate efforts to solicit all purchase orders. As described in the
applicable Prospectus, A Prime Shares and B Prime Shares of the Funds are sold
to customers of selected broker/dealers who have entered into agreements with FD
Distributors.

A Prime Shares of the Funds are sold to investors at the public offering
price based on a Fund's net asset value plus a front-end sales charge as
described in the applicable Prospectus. A deferred sales charge of up to 1.00%
is assessed on certain redemptions of A Prime Shares that are purchased with no
initial sales charge as part of an investment of $1,000,000 or more. B Prime
Shares of the Funds are sold to investors at the net asset value next determined
after a purchase order is received, but are subject to a contingent deferred
sales charge which is payable on redemption of such shares as described in the
applicable Prospectus.

A Prime Shares of the Funds are offered for sale with a maximum front-end
sales charge of 5.50% for the Equity Funds and 4.75% for the Bond Funds, with
certain exemptions as described in the applicable Prospectus. An illustration
of the computation of the offering price per share of A Prime Shares of the
Funds, based on the projected value of each Fund's net assets and the projected
number of outstanding A Prime Shares of each Fund on the date such Shares are
first offered for sale to public investors and the applicable maximum front-end
sales charge, is as follows:

-17-

<PAGE>

Equity Value Equity Growth
Fund Fund
------------- --------------
<S> <C> <C>
Net Assets . . . . . . . . . . . . . . . . $ 10.00 $ 10.00

Outstanding Shares . . . . . . . . . . . . 1 1

Net Asset Value Per Share. . . . . . . . . $ 10.00 10.00

Sales Charge (5.50% of the offering price) $ 0.58 0.58

Offering Price to Public . . . . . . . . . $ 10.58 $ 10.58

<CAPTION>
Equity International
Income Fund Equity Fund
------------- --------------
<S> <C> <C>
Net Assets . . . . . . . . . . . . . . . . $10.00 $10.00

Outstanding Shares . . . . . . . . . . . . 1 1

Net Asset Value Per Share. . . . . . . . . $ 10.00 $ 10.00

Sales Charge (5.50% of the offering price) $ 0.58 $ 0.58

Offering Price to Public . . . . . . . . . $ 10.58 $ 10.58

<CAPTION>
Small Company Small Cap
Equity Fund Value Fund
------------- --------------
<S> <C> <C>
Net Assets . . . . . . . . . . . . . . . . $10.00 $10.00

Outstanding Shares . . . . . . . . . . . . 1 1

Net Asset Value Per Share. . . . . . . . . $ 10.00 $ 10.00

Sales Charge (5.50% of the offering price) $ 0.58 $ 0.58

Offering Price to Public . . . . . . . . . $ 10.58 $ 10.58
</TABLE>

-18-

<PAGE>

Asset Allocation Strategic Equity
Fund Fund
----------------- ----------------
<S> <C> <C>
Net Assets . . . . . . . . . . . . . . . . $10.00 10.00

Outstanding Shares . . . . . . . . . . . . 1 1

Net Asset Value Per Share. . . . . . . . . $ 10.00 $ 10.00

Sales Charge (5.50% of the offering price) $ 0.58 $ 0.58

Offering Price to Public . . . . . . . . . $ 10.58 $ 10.58

<CAPTION>
Growth and
Income Fund
---------------
<S> <C>
Net Assets . . . . . . . . . . . . . . . . $10.00

Outstanding Shares . . . . . . . . . . . . 1

Net Asset Value Per Share. . . . . . . . . $ 10.00

Sales Charge (5.50% of the offering price) $ 0.58

Offering Price to Public . . . . . . . . . $ 10.58

<CAPTION>
Intermediate
Short-Term Government
Bond Fund Income Fund
---------------- ---------------
<S> <C> <C>
Net Assets . . . . . . . . . . . . . . . . $10.00 $10.00

Outstanding Shares . . . . . . . . . . . . 1 1

Net Asset Value Per Share. . . . . . . . . $ 10.00 $ 10.00

Sales Charge (4.75% of the offering price) $ 0.49 $ 0.49

Offering Price to Public . . . . . . . . . $ 10.49 $ 10.49
</TABLE>

-19-

<PAGE>

<TABLE>
<CAPTION>
High Quality Tax-Exempt
Bond Fund Bond Fund
------------ --------------
<S> <C> <C>
Net Assets . . . . . . . . . . . . . . . . $10.00 $10.00

Outstanding Shares . . . . . . . . . . . . 1 1

Net Asset Value Per Share. . . . . . . . . $ 10.00 $ 10.00

Sales Charge (4.75% of the offering price) $ 0.50 $ 0.50

Offering Price to Public . . . . . . . . . $ 10.50 $ 10.50
</TABLE>

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

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

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

DESCRIPTION OF SHARES

Galaxy is a Massachusetts business trust. Galaxy's Declaration of Trust
authorizes the Board of Trustees to issue an unlimited number of shares and to
classify or reclassify any unissued shares into one or more additional classes
by setting or changing in any one or more respects their respective preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, and terms and conditions of redemption. Pursuant to
such authority, the Board of Trustees has authorized the issuance of thirty
classes of shares, each representing interests in one of thirty separate
investment portfolios: Money Market Fund, Government Fund, U.S. Treasury Fund,
Tax-Exempt Fund, Connecticut Municipal Money Market Fund, Massachusetts
Municipal Money Market Fund, Prime Reserves Fund, Government Reserves Fund,
Tax-Exempt Reserves Fund, Institutional Government Money Market Fund, Equity
Value Fund, Equity Growth Fund, Equity Income Fund, International Equity Fund,
Small Company Equity Fund, MidCap 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

-20-

<PAGE>

Rhode Island Municipal Bond Fund. In addition to the A Prime Shares and B Prime
Shares offered by the Prospectuses to which this Statement of Additional
Information relates, three separate series of shares (Retail A Shares, Retail B
Shares and Trust Shares) of the Funds are offered under separate Prospectuses to
different categories of investors.

Shares have no preemptive rights and only such conversion or exchange
rights as the Board of Trustees may grant in its discretion. When issued for
payment as described in the Prospectuses, shares will be fully paid and
non-assessable. Each series of shares (i.e., A Prime Shares, B Prime Shares,
Trust Shares, Retail A Shares and Retail B Shares) bear pro rata the same
expenses and are entitled equally to a Fund's dividends and distributions 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 A Prime Shares will bear the expenses of the A Prime
Shares Distribution Plan and holders of B Prime Shares will bear the expenses of
the B Prime Shares Distribution and Services Plan. In addition, each series may
incur differing transfer agency fees and may have differing sales charges. In
the event of a liquidation or dissolution of Galaxy or an individual Fund,
shareholders of a particular Fund would be entitled to receive the assets
available for distribution belonging to such Fund, and a proportionate
distribution, based upon the relative asset values of Galaxy's respective Funds,
of any general assets of Galaxy not belonging to any particular Fund which are
available for distribution. Shareholders of a Fund are entitled to participate
in the net distributable assets of the particular Fund involved in liquidation
based on the number of shares of the Fund that are held by each shareholder,
except that currently each 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 will be entitled to vote on matters submitted to shareholders
pertaining to any distribution and/or shareholder servicing plan for such series
(e.g., only holders of A Prime Shares are entitled to vote on matters pertaining
to the A Prime Shares Distribution Plan and only holders of B Prime Shares are
entitled to vote on matters pertaining to the B Prime Shares Distribution and
Services Plan). 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.

-21-

<PAGE>

Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held. Voting rights are not cumulative
and, accordingly, the holders of more than 50% in the aggregate of Galaxy's
outstanding shares may elect all of the trustees, irrespective of the votes of
other shareholders.

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

Galaxy's Declaration of Trust authorizes the Board of Trustees, without
shareholder approval (unless otherwise required by applicable law), to (a) sell
and convey the assets of a Fund to another management investment company for
consideration which may include securities issued by the purchaser and, in
connection therewith, to cause all outstanding shares of the Fund involved to be
redeemed at a price which is equal to their net asset value and which may be
paid in cash or by distribution of the securities or other consideration
received from the sale and conveyance; (b) sell and convert a Fund's assets into
money and, in connection therewith, to cause all outstanding shares of the Fund
involved to be redeemed at their net asset value; or (c) combine the assets
belonging to a Fund with the assets belonging to another Fund of Galaxy and, in
connection therewith, to cause all outstanding shares of any Fund to be redeemed
at their net asset value or converted into shares of another class of Galaxy's
shares at the net asset value. In the event that shares are redeemed in cash at
their net asset value, a shareholder may receive in payment for such shares, due
to changes in the market prices of the Fund's portfolio securities, an amount
that is more or less than the original investment. The exercise of such
authority by the Board of Trustees will be subject to the provisions of the 1940
Act, and the Board of Trustees will not take any action described in this
paragraph unless the proposed action has been disclosed in writing to the Fund's
shareholders at least 30 days prior thereto.

ADDITIONAL INFORMATION CONCERNING TAXES

IN GENERAL

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

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

-22-

<PAGE>

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

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

Substantially all of each Fund's net capital gain (excess of net long-term
capital gain over net short-term capital loss), if any, will be distributed at
least annually to Fund shareholders. A Fund will generally have no tax
liability with respect to such gains and the distributions will be taxable to
Fund shareholders who are not currently exempt from federal income taxes as
long-term capital gain regardless of how long the shareholders have held Fund
shares and whether such gains are received in cash or reinvested in additional
shares.

Each Fund will designate the tax status of any distribution in a written
notice mailed to shareholders within 60 days after the close of its taxable
year. Shareholders should note that, upon the sale or exchange of Fund shares,
if the shareholder has not held such shares for more than six months, any loss
on the sale or exchange of those shares will be treated as long term capital
loss to the extent of the capital gain dividends received with respect to the
shares.

Ordinary income of individuals is taxable at a maximum nominal rate of
39.6%, but because of limitations on itemized deductions otherwise allowable
and the phase-out of personal exemptions, the maximum effective marginal rate
of tax for some taxpayers may be higher. An individual's long term capital
gains on stocks and securities are taxable at a maximum nominal rate of 20%.
For corporations, long term capital gains and ordinary income are both
taxable at a maximum average rate of 35% (a maximum effective marginal rate
of 39% applies in the case of corporations having taxable income between
$100,000 and $335,000).

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

-23-

<PAGE>

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."

Income received by the Funds from sources within foreign countries may be
subject to withholding and other foreign taxes. The payment of such taxes will
reduce the amount of dividends and distributions paid to a Fund's shareholders.
So long as a Fund qualifies as a regulated investment company, certain
distribution requirements are satisfied, and more than 50% of the value of the
Fund's assets at the close of the taxable year consists of stock or securities
of foreign corporations, the Fund may elect, for U.S. federal income tax
purposes, to treat foreign income taxes paid by the Fund that can be treated as
income taxes under U.S. income tax principles as paid by its shareholders. A
Fund may qualify for and make this election in some, but not necessarily all, of
its taxable years. If a Fund were to make an election, an amount equal to the
foreign income taxes paid by the Fund would be included in the income of its
shareholders and each shareholder would be entitled either (i) to credit their
portions of this amount against their U.S. tax due, if any, or (ii) if the
shareholder itemizes deductions, to deduct such portion from their U.S. taxable
income, if any, should the shareholder so choose. Shortly after any year for
which it makes such an election, a Fund will report to its shareholders, in
writing, the amount per share of such foreign tax that must be included in each
shareholder's gross income and the amount which will be available for deduction
or credit. Certain limitations are imposed on the extent to which the credit
(but not the deduction) for foreign taxes may be claimed.

Shareholders who choose to utilize a credit (rather than a deduction) for
foreign taxes will be subject to the limitation that the credit may not exceed
the shareholder's U.S. tax (determined without regard to the availability of the
credit) attributable to his or her total foreign source taxable income. For
this purpose, the portion of dividends and distributions paid by the Fund from
its foreign source income will be treated as foreign source income. A Fund's
gains and losses from the sale of securities generally will be treated as
derived from United States sources and certain foreign currency gains and losses
likewise will be treated as derived from United States sources. The limitation
on the foreign tax credit is applied separately to foreign source "passive
income," such as the portion of dividends received from a Fund which qualifies
as foreign source income. Additional limitations apply to using the foreign tax
credit to offset the alternative minimum tax imposed on corporations and
individuals. Because of these limitations, shareholders may be unable to claim
a credit for the full amount of their proportionate shares of the foreign income
taxes paid by a Fund.

TAX-EXEMPT BOND FUND

As stated in the Prospectus for the Bond Funds, an investment in the
Tax-Exempt Bond Fund is not intended to constitute a balanced investment
program. Shares of the Fund would not be suitable for tax-exempt institutions
and may not be suitable for retirement plans qualified under Section 401 of the
Code, H.R. 10 plans, and individual retirement accounts because such plans and

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<PAGE>

accounts are generally tax-exempt and, therefore, not only would the shareholder
not gain any additional benefit from the Fund's dividends being tax-exempt, but
such dividends would be ultimately taxable to the beneficiaries when
distributed. In addition, the Fund may not be an appropriate investment for
entities which are "substantial users" of facilities financed by "private
activity bonds" or "related persons" thereof. "Substantial user" is defined
under U.S. Treasury Regulations to include a non-exempt person who (i) regularly
uses a part of such facilities in his or her trade or business and whose gross
revenues derived with respect to the facilities financed by the issuance of
bonds are more than 5% of the total revenues derived by all users of such
facilities, (ii) occupies more than 5% of the usable area of such facilities or
(iii) are persons for whom such facilities or a part thereof were specifically
constructed, reconstructed or acquired. "Related persons" include certain
related natural persons, affiliated corporations, a partnership and its partners
and an S corporation and its shareholders.

In order for the Tax-Exempt Bond Fund to pay exempt-interest dividends for
any taxable year, at the close of each taxable quarter, at least 50% of the
aggregate value of the Fund's portfolio must consist of exempt-interest
obligations. Within 60 days after the close of its taxable year, the Fund will
notify its shareholders of the portion of the dividends paid by the Fund which
constitutes exempt-interest dividends with respect to such taxable year.
However, the aggregate amount of dividends so designated by the Fund cannot
exceed the excess of the amount of interest exempt from tax under Section 103 of
the Code received by the Fund over any amounts disallowed as deductions under
Sections 265 and 171(a)(2) of the Code. The percentage of total dividends paid
by 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.

TAXATION OF CERTAIN FINANCIAL INSTRUMENTS

Strategic rules govern the federal income tax treatment of financial
instruments that may be held by the Funds. These rules may have a particular
impact on the amount of income or gain that the Funds must distribute to their
respective shareholders to comply with the Distribution Requirement and on the
income or gain qualifying under the Income Requirement.

Generally, futures contracts and options on futures contracts held by the
Funds and certain foreign currency contracts entered into by the Funds (as
described above) (collectively, the "Instruments") at the close of their taxable
year are treated for federal income tax purposes as sold for their fair market
value on the last business day of such year, a process known as
"mark-to-market." Forty percent of any gain or loss resulting from such
constructive sales will be treated as short-term capital gain or loss and 60% of
such gain or loss will be treated as long-term capital gain or loss without
regard to the period a Fund has held the Instruments ("the 40-60 rule"). The
amount of any capital gain or loss actually realized by a Fund in a subsequent
sale or other disposition of those Instruments is adjusted to reflect any
capital gain or loss taken into account by the Fund in a prior year as a result
of the constructive sale of the Instruments. Losses with respect to certain
foreign currency contracts, which are regarded as parts of a "mixed straddle"
because their values fluctuate inversely to the values of specific securities
held by the Funds, are subject to certain loss

-25-

<PAGE>

deferral rules, which limit the amount of loss currently deductible on either
part of the straddle to the amount thereof that exceeds the unrecognized gain,
if any, with respect to the other part of the straddle, and to certain wash
sales regulations. With respect to certain Instruments, deductions for interest
and carrying charges may not be allowed. Notwithstanding the rules described
above, with respect to certain foreign currency contracts that are properly
identified as such, a Fund may make an election which will exempt (in whole or
in part) those identified foreign currency contracts from the Rules of Section
1256 of the Code including "the 40-60 rule" and "mark-to-market," but gains and
losses will be subject to such short sales, wash sales and loss deferral rules
and the requirement to capitalize interest and carrying charges. Under
Temporary Regulations, a Fund would be allowed (in lieu of the foregoing) to
elect either (1) to offset gains or losses from portions which are part of a
mixed straddle by separately identifying each mixed straddle to which such
treatment applies, or (2) to establish a mixed straddle account for which gains
and losses would be recognized and offset on a periodic basis during the taxable
year. Under either election, "the 40-60 rule" will apply to the net gain or
loss attributable to the Instruments, but in the case of a mixed straddle
account election, not more than 50% of any net gain may be treated as long-term
and no more than 40% of any net loss may be treated as short-term.

Certain foreign currency contracts entered into by a Fund may be subject to
the "mark-to-market" process, but gain or loss will be treated as 100% ordinary
income or loss. A foreign currency contract must meet the following conditions
in order to be subject to the mark-to-market rules described above: (1) the
contract must require delivery of, or settlement by reference to the value of, a
foreign currency of a type in which regulated futures contracts are traded; (2)
the contract must be entered into at arm's length at a price determined by
reference to the price in the interbank market; and (3) the contract must be
traded in the interbank market. The Treasury Department has broad authority to
issue regulations under the provisions respecting foreign currency contracts.
As of the date of this Statement of Additional Information, the Treasury
Department has not issued any such regulations. Other foreign currency
contracts entered into by a Fund may result in the creation of one or more
straddles for federal income tax purposes, in which case certain loss deferral,
short sales, and wash sales rules and the requirement to capitalize interest and
carrying charges may apply.

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

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<PAGE>

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

The Funds may be subject to U.S. federal income tax on a portion of any
"excess distribution" or a gain from the disposition of stock of a passive
foreign investment company even if the Fund distributes the income to its
shareholders. To avoid such tax, a Fund may instead elect to treat such a
company as a "qualified electing fund" or to mark such stock to market as of the
end of each year; under either of these alternative approaches the Fund may also
recognize taxable income in a year without receiving any corresponding amount of
cash.

STATE TAXATION

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

TRUSTEES AND OFFICERS

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

Positions with Principal Occupation During Past
Name and Address The Galaxy Fund 5 Years and Other Affiliations
---------------- --------------- ---------------------------------
<S> <C> <C>
Dwight E. Vicks, Jr. Chairman & President & Director, Vicks
Vicks Lithograph & Trustee Lithograph & Printing Corporation
Printing Corporation (book manufacturing and commercial
Commercial Drive printing); Director, Utica Fire
P.O. Box 270 Insurance Company; Trustee, Savings
Yorkville, NY 13495 Bank of Utica; Director, Monitor
Age 64 Life Insurance Company; Director,
Commercial Travelers Mutual
Insurance Company; Trustee, The
Galaxy VIP Fund; Trustee, Galaxy
Fund II.

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<PAGE>

<CAPTION>
Positions with Principal Occupation During Past
Name and Address The Galaxy Fund 5 Years and Other Affiliations
---------------- --------------- ---------------------------------
<S> <C> <C>
John T. O'Neill (1) President, Executive Vice President and CFO,
Hasbro, Inc. Treasurer & Hasbro, Inc. (toy and game
1027 Newport Avenue Trustee manufacturer); Trustee, The Galaxy
Pawtucket, RI 02862 VIP Fund; Trustee, Galaxy Fund II.
Age 53

Louis DeThomasis Trustee President, Saint Mary's College of
Saint Mary's College Minnesota; Director, Bright Day
of Minnesota Travel, Inc.; Trustee, Religious
Winona, MN 55987 Communities Trust; Trustee, The
Age 57 Galaxy VIP Fund; Trustee, Galaxy
Fund II.

Donald B. Miller Trustee Chairman, Horizon Media, Inc.
10725 Quail Covey Road (broadcast services);
Boynton Beach, FL 33436 Director/Trustee, Lexington Funds;
Age 72 Chairman, Executive Committee,
Compton International, Inc.
(advertising agency); Trustee, Keuka
College; Trustee, The Galaxy VIP
Fund; Trustee, Galaxy Fund II.

James M. Seed Trustee Chairman and President, The Astra
The Astra Ventures, Projects, Incorporated (land
Inc. development); President, The Astra
One Citizens Plaza Ventures, Incorporated (previously,
Providence, RI 02903 Buffinton Box Company - manufacturer
Age 56 of 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
2468 Ohio Street Director, Acadia Management Company
Bangor, ME 04401 (investment services); Director,
Age 66 Essex County Gas Company, until
January 1994; Director, Maine Mutual
Fire Insurance Co.; Member, Maine
Finance Authority; Trustee, The
Galaxy VIP Fund; Trustee, Galaxy
Fund II.

W. Bruce McConnel, III Secretary Partner of the law firm Drinker
Philadelphia National Biddle & Reath LLP, Philadelphia,
Bank Building Pennsylvania.
1345 Chestnut Street.
Philadelphia, PA 19107
Age 54

-28-

<PAGE>

<CAPTION>
Positions with Principal Occupation During Past
Name and Address The Galaxy Fund 5 Years and Other Affiliations
---------------- --------------- ---------------------------------
<S> <C> <C>
Jylanne Dunne Vice President Vice President and Assistant
First Data Investor and Assistant Treasurer-Vice President, First Data
Services Group, Inc. Treasurer Investor Services Group, Inc., 1990
4400 Computer Drive to present.
Westboro, MA 01581-
5108
Age 38
</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 $2,500 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.

No employee of First Data Investor Services Group, Inc., ("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
their respective affiliates, serves as a trustee,

-29-

<PAGE>

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.

Name of Aggregate Pension or Total Compensation
Person/Position Compensation Retirement From Galaxy and
--------------- from Galaxy Benefits Fund Complex*
----------- Accrued as Paid to Trustees
Part of Fund ----------------
Expenses
------------
<S> <C> <C> <C>
Bradford S. Wellman $34,591 None $38,500
Trustee

Dwight E. Vicks, Jr. $38,184 None $42,500
Chairman and
Trustee

Donald B. Miller** $34,574 None $38,500

Rev. Louis $34,591 None $38,500
DeThomasis
Trustee

John T. O'Neill $36,837 None $41,000
President,
Treasurer and
Trustee

James M. Seed** $34,574 None $38,500
Trustee
</TABLE>

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

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

** Deferred compensation (including interest) in the amounts of $35,777 and
$40,992 accrued during Galaxy's fiscal year ended October 31, 1997 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.

-30-

<PAGE>

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

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

ADVISORY, SUB-ADVISORY, ADMINISTRATION, CUSTODIAN AND TRANSFER AGENCY AGREEMENTS

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

-31-
<PAGE>

For the services provided and expenses assumed by Fleet with respect to
each Fund, Galaxy paid Fleet for the fiscal years ended October 31, 1997,
October 31, 1996, and October 31, 1995, advisory fees (net of expense
reimbursements) as set forth in the table below.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FUND 1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Value Fund $2,860,410 $2,220,230 $1,797,623
- --------------------------------------------------------------------------------
Equity Growth Fund 6,555,045 4,746,270 3,406,615
- --------------------------------------------------------------------------------
Equity Income Fund 1,947,792 1,533,644 1,097,887
- --------------------------------------------------------------------------------
International Equity Fund(1) 1,844,037 1,154,303 850,924
- --------------------------------------------------------------------------------
Small Company Equity Fund 2,610,431 1,562,481 807,983
- --------------------------------------------------------------------------------
Small Cap Value Fund 1,370,449 1,079,665(2) 1,304,952(3)
- --------------------------------------------------------------------------------
Growth and Income Fund 2,361,898 1,690,599(2) 2,067,505(3)
- --------------------------------------------------------------------------------
Asset Allocation Fund 2,313,863 1,447,310 982,310
- --------------------------------------------------------------------------------
Strategic Equity Fund * * *
- --------------------------------------------------------------------------------
Short-Term Bond Fund(4) 470,347 531,062 359,155
- --------------------------------------------------------------------------------
Intermediate Government Income 1,535,166 1,653,803 1,527,441
Fund(5)
- --------------------------------------------------------------------------------
High Quality Bond Fund(6) 1,089,506 932,381 818,510
- --------------------------------------------------------------------------------
Tax-Exempt Bond Fund(7) 789,598 696,116 657,065
- --------------------------------------------------------------------------------
</TABLE>

* Not in operation during the period.

1 For the fiscal years ended October 31, 1997, October 31, 1996, and October
31, 1995, Fleet waived advisory fees of $682,009, $464,938 and $291,265,
respectively, with respect to the International Equity Fund.

2 For the period December 4, 1995 through October 31, 1996. For the period
November 1, 1995 through December 3, 1995, the Predecessor Small Cap Value
Fund and the Predecessor Growth and Income Fund paid $128,152 and $207,833,
respectively, to Shawmut Bank, N.A., the investment adviser to such
Predecessor Funds.

3 Advisory fees for the fiscal year ended October 31, 1995 were paid by the
Predecessor Small Cap Value Fund and Predecessor Growth and Income Fund to
Shawmut Bank, N.A. For the fiscal year ended October 31, 1995, Shawmut
Bank, N.A. voluntarily waived advisory fees of $304,915 and $1,304,952 for
the Predecessor Small Cap Value Fund and Predecessor Growth and Income
Fund, respectively.

4 For the fiscal years ended October 31, 1997, October 31, 1996, and October
31, 1995, Fleet waived advisory fees of $171,035, $193,702 and $130,062,
respectively, with respect to the Short-Term Bond Fund.

5 For the fiscal years ended October 31, 1997, October 31, 1996, and October
31, 1995, Fleet waived advisory fees of $558,241, $608,385 and $557,058,
respectively, with respect to the Intermediate Government Income Fund.

6 For the fiscal years ended October 31, 1997, October 31, 1996, and October
31, 1995, Fleet waived advisory fees of $396,183, $339,047 and $297,640,
respectively, with respect to the High Quality Bond Fund.

7 For the fiscal years ended October 31, 1997, October 31, 1996, and October
31, 1995, Fleet waived advisory fees of $287,127, $253,133 and $238,933,
respectively, with respect to the Tax-Exempt Bond Fund.

-32-
<PAGE>

For the fiscal years ended October 31, 1997, October 31, 1996, and October
31, 1995, Fleet reimbursed advisory fees and/or expenses with respect to each
Fund as set forth in the table below.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FUND 1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Value Fund $26,924 $-0- $2,347
- --------------------------------------------------------------------------------
Equity Growth Fund 27,033 -0- 9,296
- --------------------------------------------------------------------------------
Equity Income Fund 38,298 -0- 24,627
- --------------------------------------------------------------------------------
International Equity Fund(1) 18,362 -0- -0-
- --------------------------------------------------------------------------------
Small Company Equity Fund 118,118 331 11,087
- --------------------------------------------------------------------------------
Small Cap Value Fund 103,101 63,394(2) -0-(3)
- --------------------------------------------------------------------------------
Growth and Income Fund 306,295 99,656(2) -0-(3)
- --------------------------------------------------------------------------------
Asset Allocation Fund 19,254 12,512 37,161
- --------------------------------------------------------------------------------
Strategic Equity Fund * * *
- --------------------------------------------------------------------------------
Short-Term Bond Fund(4) 2,300 40,375 65,354
- --------------------------------------------------------------------------------
Intermediate Government -0- -0- 60,356
Income Fund(5)
- --------------------------------------------------------------------------------
High Quality Bond Fund(6) 28,489 2,956 34,946
- --------------------------------------------------------------------------------
Tax-Exempt Bond Fund(7) 73,334 62,854 88,394
- --------------------------------------------------------------------------------
</TABLE>

* Not in operation during the period.

-33-
<PAGE>

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.

Oechsle serves as sub-adviser to the International Equity Fund. Under its
sub-advisory agreement with Fleet, Oechsle determines which securities and other
investments will be purchased, retained or sold for the International Equity
Fund; places orders for the Fund; manages the Fund's overall cash position; and
provides Fleet with foreign broker research and a quarterly review of
international economic and investment developments. Fleet, among other things,
assists and consults with Oechsle in connection with the International Equity
Fund's continuous investment program; approves lists of foreign countries
recommended by Oechsle for investment; reviews the Fund's investment policies
and restrictions and recommends appropriate changes to the Board of Trustees;
and provides the Board of Trustees and Oechsle with information concerning
relevant economic and political developments. Oechsle will provide services
under this agreement in accordance with the Fund's investment objectives,
policies and restrictions. Unless sooner terminated by Fleet or 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 fiscal year ended October 31, 1997 and for the period from August 12, 1996
through October 31, 1996, Oechsle 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 fiscal year ended October
31, 1995 and for the period from November 1, 1995 through August 11, 1996,
Wellington Management Company received sub-advisory fees of $423,376 and
$431,198, respectively, with respect to the International Equity Fund.

Investor Services Group, a wholly-owned subsidiary of First Data
Corporation, serves as Galaxy's administrator. Under the administration
agreement, Investor Services Group has agreed to maintain office facilities for
Galaxy, furnish Galaxy with statistical and research data, clerical,

-34-
<PAGE>

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.

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

For the fiscal years ended October 31, 1997, October 31, 1996, and October
31, 1995, Galaxy paid Investor Services Group and/or it predecessors
administration fees (net of waivers) as set forth in the following table.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FUND 1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Value Fund $312,596(1) $251,209 $210,049
- --------------------------------------------------------------------------------
Equity Growth Fund 711,960(1) 536,874 398,623
- --------------------------------------------------------------------------------
Equity Income Fund 216,835 174,406 130,993
- --------------------------------------------------------------------------------
International Equity Fund 222,620 141,571 97,015
- --------------------------------------------------------------------------------
Small Company Equity Fund 292,316(1) 176,590 95,582
- --------------------------------------------------------------------------------
Small Cap Value Fund 160,350 129,102(2) 131,149(3)
- --------------------------------------------------------------------------------
Growth and Income Fund 290,324 203,187(2) 207,280(3)
- --------------------------------------------------------------------------------
Asset Allocation Fund 215,871(1) 165,077 118,968
- --------------------------------------------------------------------------------
Strategic Equity Fund * * *
- --------------------------------------------------------------------------------
Short-Term Bond Fund 69,851 82,440 57,153
- --------------------------------------------------------------------------------
Intermediate Government Income 227,963 256,059 244,446
Fund
- --------------------------------------------------------------------------------
High Quality Bond Fund 161,732 143,905 130,250
- --------------------------------------------------------------------------------
Tax-Exempt Bond Fund 117,223 108,062 104,560
- --------------------------------------------------------------------------------
</TABLE>

- ---------------------
* Not in operation during the period

1 For the fiscal year ended October 31, 1997, Investor Services Group waived
administration fees of $1,640, $4,360, $4,570 and $2,010 for the Equity
Value Fund, Equity Growth Fund, Small Company Equity Fund, and Asset
Allocation Fund, respectively.

2 For the period from December 4, 1995 through October 31, 1996. For the
period from November 1, 1995 through December 3, 1995, the Predecessor
Small Cap Value Fund and the Predecessor Growth and Income Fund paid
administrative fees of

-35-
<PAGE>

$19,223 and $31,175, respectively, to Federated Administrative Services, a
subsidiary of Federated Investors, which served as administrator of such
Predecessor Funds.

3 Administrative fees for the fiscal year ended October 31, 1995 were paid by
the Predecessor Small Cap Value Fund and Predecessor Growth and Income Fund
to Federated Administrative Services.

CUSTODIAN AND TRANSFER AGENT

The Chase Manhattan Bank ("Chase Manhattan") serves as custodian to the
Funds pursuant to a Global Custody Agreement. Under its custody agreement,
Chase Manhattan has agreed to: (i) maintain a separate account or accounts in
the name of each Fund; (ii) hold and disburse portfolio securities on account of
each Fund; (iii) collect and make disbursements of money on behalf of each Fund;
(iv) collect and receive all income and other payments and distributions on
account of each Fund's portfolio securities; (v) respond to correspondence from
security brokers and others relating to its duties; and (vi) make periodic
reports to the Board of Trustees concerning the Funds' operations. Chase
Manhattan is authorized to select one or more banks or trust companies to serve
as sub-custodian for the Funds, provided that Chase Manhattan shall remain
responsible for the performance of all of its duties under the custodian
agreement and shall be liable to the Funds for any loss which shall occur as a
result of the failure of a sub-custodian to exercise reasonable care with
respect to the safekeeping of the Funds' assets. In addition, Chase Manhattan
may employ sub-custodians for the Funds upon prior approval by the Board of
Trustees in accordance with the regulations of the SEC, for the purpose of
providing custodial services for the foreign assets of those Funds held outside
the U.S. The assets of the Funds are held under bank custodianship in
compliance with the 1940 Act.

Investor Services Group also serves as Galaxy's transfer agent and dividend
disbursing agent pursuant to a Transfer Agency and Services Agreement ("Transfer
Agency Agreement"). 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.

PORTFOLIO TRANSACTIONS

Debt securities purchased or sold by the Funds are generally traded in the
over-the-counter market on a net basis (i.e., without commission) through
dealers, or otherwise involve transactions directly with the issuer of an
instrument. The cost of securities purchased from underwriters includes an
underwriting commission or concession, and the prices at which securities are
purchased from and sold to dealers include a dealer's mark-up or mark-down.
Transactions in equity securities on U.S. stock exchanges for the Funds involve
the payment of negotiated brokerage commissions. On U.S. stock exchanges on
which commissions are negotiated, the cost of transactions may vary among
different brokers. Transactions in the over-the-counter market are generally
principal transactions with dealers and the costs of such

-36-
<PAGE>

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

For the fiscal years ended October 31, 1997, October 31, 1996, and October
31, 1995, the Funds paid brokerage commissions as set forth in the following
table.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FUND 1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity Value Fund $ 934,709 $790,862 $588,613
- --------------------------------------------------------------------------------
Equity Growth Fund 1,006,331 539,416 192,433
- --------------------------------------------------------------------------------
Equity Income Fund 201,407 217,231 108,082
- --------------------------------------------------------------------------------
International Equity Fund 851,919 1,155,060 341,377
- --------------------------------------------------------------------------------
Small Company Equity Fund 354,910 258,606 109,014
- --------------------------------------------------------------------------------
Small Cap Value Fund 173,335 118,396(1) 58,543(2)
- --------------------------------------------------------------------------------
Growth and Income Fund 851,919 398,181(1) 250,125(2)
- --------------------------------------------------------------------------------
Asset Allocation Fund 155,296 112,582 101,436
- --------------------------------------------------------------------------------
Strategic Equity Fund * * *
- --------------------------------------------------------------------------------
Short-Term Bond Fund -0- -0- -0-
- --------------------------------------------------------------------------------
Intermediate Government -0- -0- -0-
Income Fund
- --------------------------------------------------------------------------------
High Quality Bond Fund -0- -0- -0-
- --------------------------------------------------------------------------------
Tax-Exempt Bond Fund -0- -0- -0-
- --------------------------------------------------------------------------------
</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 through December 3, 1995, the Predecessor
Small Cap Value Fund and the Predecessor Growth and Income Fund paid
brokerage commissions of $118,396 and $398,181, respectively.

2 Brokerage commissions disclosed for the fiscal year ended October 31, 1995
were paid by the Predecessor Small Cap Value Fund and Predecessor Growth
and Income Fund.

The Funds may engage in short-term trading to achieve their investment
objectives. Portfolio turnover may vary greatly from year to year as well as
within a particular year. In purchasing or selling securities for the Funds,
Fleet or Oechsle will seek to obtain the best net price and the most favorable
execution of orders. To the extent that the execution and price offered by more
than one broker/dealer are comparable, Fleet or Oechsle may effect transactions
in portfolio securities with broker/dealers who provide research, advice or
other services such as market investment literature.

-37-
<PAGE>

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, 1997, (1) the Asset Allocation Fund held 1,961,375 shares of
common stock of Chase Manhattan Corp. with a value of $1,961,375; (2) the Equity
Value Fund held 56,8000 shares of common stock of Chase Manhattan Corp. with a
value of $6,553,300 and held 50,000 shares of common stock of Merrill Lynch &
Co., Inc. with a value of $3,381,250; (3) the Equity Growth Fund held 175,000
shares of common stock of Chase Manhattan Corp. with a value of $20,190,625; and
(4) the Growth and Income Fund held 42,000 shares of common stock of Chase
Manhattan Corp. with a value of $4,845,750 and held 39,000 shares of J.P. Morgan
& Co., Inc. with a value of $4,280,250. Chase Manhattan Corp., J.P. Morgan &
Co., Inc., and Merrill Lynch & Co. Inc. 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.

DISTRIBUTION PLANS

Galaxy has adopted a Distribution Plan with respect to the A Prime Shares
of each Fund (the "A Prime Shares Plan") and a Distribution and Services Plan
with respect to the B Prime Shares of each Fund (the "B Prime Shares Plan," and,
together with the A Prime Shares Plan, the "Distribution Plans") pursuant to
Rule 12b-1 under the 1940 Act. The Distribution Plans are described in the
Prospectuses for the Funds.

A PRIME SHARES PLAN

Under the A Prime Shares Plan, payments by Galaxy for distribution expenses
may not exceed .30% (annualized) of the average daily net assets attributable to
the Funds' A Prime Shares.

-38-
<PAGE>

B PRIME SHARES PLAN

Under the B Prime Shares Plan, payments by Galaxy (i) for distribution
expenses may not exceed .75% (annualized) of the average daily net assets
attributable to each Fund's outstanding B Prime Shares, (ii) to a broker/dealer
for shareholder liaison services may not exceed .25% (annualized) and for
administrative support services may not exceed .25% (annualized) of the average
daily net assets attributable to each Fund's outstanding B Prime Shares which
are owned of record or beneficially by that broker/dealer's customers for whom
the broker/dealer is the dealer of record or shareholder of record or with whom
it has a servicing relationship. As of the date of this Statement of Additional
Information, Galaxy intends to limit the Funds' payments for shareholder liaison
and administrative support services under the B Prime Shares Plan to an
aggregate fee of not more than .25% (on an annualized basis) of the average
daily net asset value of B Prime Shares owned of record or beneficially by
customers of broker/dealers.

BOTH DISTRIBUTION PLANS

Payments for distribution expenses under the Plans are subject to Rule
12b-1 (the "Rule") under the 1940 Act. The Rule defines distribution expenses
to include the cost of "any activity which is primarily intended to result in
the sale of Galaxy shares." The Rule provides, among other things, that an
investment company may bear such expenses only pursuant to a plan adopted in
accordance with the Rule. In accordance with the Rule, the Distribution Plans
provide that a report of the amounts expended under the Distribution Plans, and
the purposes for which such expenditures were incurred, will be made to the
Board of Trustees for its review at least quarterly. Each Distribution Plan
provides that it may not be amended to increase materially the costs which
Shares of a Fund may bear for distribution pursuant to the Distribution 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 Distribution Plan or in any related agreements, by vote cast in person at a
meeting called for the purpose of considering such amendments (the
"Disinterested Trustees").

Galaxy's Board of Trustees has concluded that there is a reasonable
likelihood that the Distribution Plans will benefit the Funds and holders of the
A Prime Shares and B Prime Shares, respectively. Each Distribution Plan is
subject to annual reapproval by a majority of the Disinterested Trustees and is
terminable at any time with respect to any Fund by a vote of a majority of such
Trustees or by vote of the holders of a majority of the applicable Shares of the
Fund involved. Any agreement entered into pursuant to the Distribution Plans
with a broker/dealer is terminable with respect to any Fund without penalty, at
any time, by vote of a majority of the Disinterested Trustees, by vote of the
holders of a majority of the applicable Shares of such Fund, by FD Distributors
or by the broker/dealer. An agreement will also terminate automatically in the
event of its assignment.

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<PAGE>

DISTRIBUTOR

First Data Distributors, Inc., 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 A Prime
Shares of the Funds as described in the applicable Prospectus. FD Distributors
is also entitled to the payment of contingent deferred sales charges upon the
redemption of B Prime Shares of the Funds.

AUDITORS

PricewaterhouseCoopers LLP, independent certified public accountants, with
offices at One Post Office Square, Boston, Massachusetts 02109, serve as
auditors to Galaxy.

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 and will pass upon certain legal
matters on its behalf.

PERFORMANCE AND YIELD INFORMATION

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

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

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

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<PAGE>

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

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

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

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

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

With respect to mortgage or 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.

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<PAGE>

The "tax-equivalent" yield of the Tax-Exempt Bond Fund is computed by (a)
dividing the portion of the Fund's 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.

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:

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

Where: T = average annual total return;

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

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

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

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]

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' average annual total return and
aggregate total return quotations will reflect the deduction of the maximum
sales load charged in connection with purchases of A Prime Shares or redemptions
of B Prime Shares.

As stated in the Prospectus, the Funds may also calculate total return
quotations without deducting the maximum sales charge imposed on purchases of A
Prime Shares or redemptions of B Prime Shares. The effect of not deducting the
sales charge will be to increase the total return reflected.

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<PAGE>

MISCELLANEOUS

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

As of September 8, 1998, 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: Money Market Fund
- -- Fleet New York, Fleet Investment Services, 159 East Main Street,
NY/RO/TO3C, Rochester, NY 14638, Account 00000150286 (99.79%); Tax-Exempt
Money Market Fund -- Fleet New York, Fleet Investment Services, 159 East Main
Street, NY/RO/TO3C, Rochester, NY 14638, Account 00000007717 (100.00%);
Government Money Market Fund --Fleet New York, Fleet Investment Services, 159
East Main Street, NY/RO/TO3C, Rochester, NY 14368, Account 00000012621
(98.18%); U.S. Treasury Money Market Fund -- Fleet New York, Fleet Investment
Services, 159 East Main Street, NY/RO/TO3C, Rochester, NY 14638, Account
00000015922 (91.26%); Institutional Government Money Market Fund -- Fleet New
York, Fleet Investment Services, 159 East Main Street, NY/RO/TO3C, Rochester,
NY 14638, Account 00000000019 (88.02%); Luitpold Pharmaceuticals, Inc., Kirk
Sobecki, CFO, One Luitpold Drive, Shirley, NY 11967, (12.66%); Equity Value
Fund -- Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East
Main Street, NY/RO/TO4A, Rochester, NY 14683, Account 00000000064 (76.76%);
Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East Main
Street, NY/RO/TO4A, Rochester, NY 14683, Account 00000003294 (17.27%); Gales
& Co., Fleet Investment Services, Mutual Funds Unit, 159 East Main Street,
NY/RO/T04A, Rochester, NY 14683, Account 00000011551 (5.88%); Equity Growth
Fund -- Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East
Main Street, NY/RO/TO4A, Rochester, NY 14683, Account 00000000082 (69.69%);
Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East Main
Street, NY/RO/TO4A, Rochester, NY 14683, Account 00000010017 (15.72%); Gales
& Co., Fleet Investment Services, Mutual Funds Unit, 159 East Main Street,
NY/RO/TO4A, Rochester, NY 14683, Account 00000030718 (14.66%); Equity Income
Fund -- Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East
Main Street, NY/RO/TO4A, Rochester, NY 14683, Account 00000015771 (49.58%);
Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East Main
Street, NY/RO/TO4A, Rochester, NY 14683, Account 00000003748 (35.00%); Gales
& Co., Fleet Investment Services, Mutual Funds Unit, 159 East Main Street,
NY/RO/TO4A, Rochester, NY 14683, Account 00000000037 (14.37%); International
Equity Fund --Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159
East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account 00000000073
(43.72%); Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East
Main Street, NY/RO/TO4A, Rochester, NY 14638, Account 00000000876 (39.22%);
Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East Main
Street, NY/RO/TO4A, Rochester, NY 14638, Account 00000004088 (13.60%); Growth
and Income Fund -- Gales & Co., Fleet Investment Services, Mutual Funds Unit,
159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account 05000503793
(66.29%); Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East
Main Street, NY/RO/TO4A, Rochester, NY 14638, Account 05000503873 (27.27%);
Gales & Co., Fleet Investment Services, Mutual Funds Unit - NY/RO/TO4A, 159
East Main Street, Rochester, NY 14638 (6.43%); Asset Allocation Fund -- Gales
& Co., Fleet Investment Services, Mutual Funds Unit, 159 East Main Street,
NY/RO/TO4A, Rochester, NY 14638, Account 00000000073 (91.42%). Gales & Co.,
Fleet Investment Services, Mutual Funds Unit, 159 East Main Street,
NY/RO/TO4A, Rochester, NY 14638, Account 00000002598 (6.73%); Small Company
Equity -- Gales & Co., Fleet Investment

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<PAGE>

Services, Mutual Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY
14638, Account 00000000046 (66.17%); Gales & Co., Fleet Investment Services,
Mutual Funds Unit, 159 Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000001492 (24.19%); Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000006102 (7.06%); Small Cap Value Fund -- Gales & Co., Fleet Investment
Services, Mutual Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY
14638, Account 05000503999 (62.82%); Gales & Co., Fleet Investment Services,
Mutual Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638,
Account 05000503917 (18.99%); Gales & Co., Fleet Investment Services, Mutual
Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
05000503953 (17.64%); Intermediate Government Income Fund -- Gales & Co.,
Fleet Investment Services, Mutual Funds Unit, NY/RO/TO4A, Rochester, NY
14638, Account 00000038408 (39.89%); Gales & Co., Fleet Investment Services,
Mutual Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638,
Account 00000007183 (33.03%); Gales & Co., Fleet Investment Services, Mutual
Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000000037 (27.08%); High Quality Bond Fund -- Gales & Co., Fleet Investment
Services, Mutual Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY
14638, Account 00000000037 (66.15%); Gales & Co., Fleet Investment Services,
Mutual Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638,
Account 00000001465 (21.14%); Gales & Co., Fleet Investment Services, Mutual
Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000006095 (12.18%); Gales & Co., Fleet Investment Services, Mutual Funds
Unit - NY/RO/TO4A, 159 East Main Street, Rochester, NY 14638 (66.67%);
Short-Term Bond Fund -- Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000008627 (34.17%); Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000000064 (47.52%); Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000001090 (18.17%); Tax-Exempt Bond Fund -- Gales & Co., Fleet Investment
Services, Mutual Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY
14638, Account 00000005899 (39.27%); Gales & Co, Fleet Investment Services,
Mutual Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638,
Account 00000000028 (38.05%); Gales and Co., Fleet Investment Services,
Mutual Funds Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638,
Account 00000000670 (22.68%); Connecticut Municipal Bond Fund -- Gales & Co.,
Fleet Investment Services, Mutual Funds Unit, 159 East Main Street,
NY/RO/TO4A, Rochester, NY 14638, Account 00000000019 (77.47%); Gales & Co.,
Fleet Investment Services, Mutual Funds Unit, 159 East Main Street,
NY/RO/TO4A, Rochester, NY 14638, Account 00000000037 (21.91%); Massachusetts
Municipal Bond Fund -- Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000000019 (53.36%); Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000000073 (46.64%); Corporate Bond Fund -- Gales & Co., Fleet Investment
Services, Mutual Funds Unit, NY/RO/TO4A, Rochester, NY 14638, Account
00000000046 (47.32%); Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000006102 (39.21%); Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account
00000001492 (6.30%); New York

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<PAGE>

Municipal Bond Fund -- Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account 00000000019
(13.68%); Gales & Co., Fleet Investment Services, Mutual Fund Unit, 159 East
Main Street, NY/RO/TO4A, Rochester, NY 14638, Account 00000001107 (75.01%);
Gales & Co., Fleet Investment Services, Mutual Fund Unit, 159 East Main Street,
NY/RO/TO4A, Rochester, NY 14638, Account 00000005292 (11.32%); New Jersey
Municipal Bond Fund -- Gales & Co., Fleet Investment Services, Mutual Fund Unit,
159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account 05100115489
(56.67%); Gales & Co., Fleet Investment Services, Mutual Funds Unit, 159 East
Main Street, NY/RO/TO4A, Rochester, NY 14638, Account 05100115504 (43.33%); and
Strategic Equity Fund -- Gales & Co., Fleet Investment Services, Mutual Funds
Unit, 159 East Main Street, NY/RO/TO4A, Rochester, NY 14638, Account 05100115522
(95.86%).

As of September 8, 1998, 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: Money Market Fund -- US Clearing, A Division of Fleet
Securities Inc., 26 Broadway, New York, NY 10004, Account 05100115684 (5.23%);
Tax-Exempt Money Market Fund -- Hope H. Van Beuren, P.O. Box 4098, Middletown,
RI 02842, Account 00000025010 (7.61%); U.S. Treasury Money Market Fund -- US
Clearing, a Division of Fleet Securities Inc., 26 Broadway, New York, NY 10004,
Account 5100115684 (10.77%); Massachusetts Municipal Money Market Fund -- Fleet
New York, Fleet Investment Services, 159 East Main St., NY/RO/TO3C, Rochester,
NY 14638, Account 05100058503 (47.76%); Connecticut Municipal Money Market Fund
- -- Fleet New York, Fleet Investment Services, 159 East Main St., NY/RO/TO3C,
Rochester, NY 14638, Account 05100058521 (29.67%); Massachusetts Municipal Bond
Fund -- New England Realty Associates, Robert Blank, Ronald Brown, Howard Brown
& Carl Valeri, 39 Brighton Ave., Boston, MA 02128, Account 05100587013 (5.78%);
Lawrence Levine & Susan Levine (JTWROS), 40 Southpoint, Ipswich, MA 01938,
(5.08%); Rhode Island Municipal Bond Fund -- Gales & Co.. Fleet Investment
Services, Mutual Funds Unit -- NY/RO/TO4A. 159 East Main Street, Rochester, NY
14638, Account 00000001492 (38.33%); James R. McCulloch, c/o Microfibre, PO Box
1208, Pawtucket, RI 02860, Account 05000414933 (7.45%); New York Municipal Bond
Fund -- Marilyn J. Brantley, PO Box 65, 7276 Ramsey Road, Belfast, NY 14711,
Account 5100977627 (10.77%); and New Jersey Municipal Bond Fund -- Jeffery W
Golden, 7 Hampton Ridge CT, Old Tappan, NJ 07675, Account 05100780704 (23.40%);
NFSC FEBO # BHN-183671, Finley G. Auld, Virginia Auld, 25 Normandy Court, Ho Ho
Kus, NJ 07423, (55.63%).

As of September 8, 1998, 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: Money Market
Fund -- Richard Bothwell & Kyra Bothwell (JTWROS) 558 Hoyt St., Darien, CT,
06820, Account 5100588904 (17.40%); Steven R. Schwartz, 2393 Lake Elmo Avenue N,
Lake Elmo, MN 55042-8407, Account 5100583213 (6.77%); Thomas A. Dowd, Myrna L.
Dowd (JTWROS), 9 Cypress Ave., Shrewsbury, MA 01545, Account 05100563501
(6.21%); Paul Dworkin & Barbara C. Dworkin (JTWROS), 884 Meadow Lane, Niskayuna,
NY 12309, (6.80%); High Quality Bond Fund -- E.L. Bradley and

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Co., Inc., 18 Meadow Brook Lane, Unit 3, Easton, MA 02375, Account 05100649206,
(5.06%); Short-Term Bond Fund - Michael J. Palmer, 79 Candlewood Road, Groton,
CT 06340, Account 5100969967 (8.41%); Gabriella Dulac & Alain Dulac(JTWROS) 40
Dix Road, Wethersfield, CT 06109, Account 5100818032, (6.31%); Elizabeth Mugar,
10 Chestnut St. Apt. 1808, Springfield, MA 01103, Account 5100760012 (5.34%);
Tax-Exempt Bond Fund -- David Fendler & Sylvia Fendler(JTWROS), 72 Brinkerhoff
Ave., Stamford, CT 06905, Account 05100255354, (9.88%); Doris M. Peloguin, 43
Keene Street, Providence, RI 02906-1520, Account 05100506413, (6.70%); NFSC FEBO
# AAD-181030, Carol & Ali E. Guy, 14 Thomas Street, Scarsdale, NY 10583, Account
7000076164, (5.38%); and Strategic Equity Fund -- Yuet Kum Ku, 7 Mason Street,
Malden, MA 02148, Account 05100918601, (5.16%); Claire M. Dileone & Susan F.
Torre (JTWROS), 260 Waybosset Street, New Haven, CT 06513, (6.71%); Betsey Tan,
7 Donovan's Lane, Natiek, MA 01760, (13.68%).

As of September 8, the name, address and share ownership of the entities or
persons that held beneficially more than 5% of the outstanding Trust Shares of
each of Galaxy's investment portfolios were as follows: Money Market
Fund--Stable Asset Fund, c/o Norstar Trust Co., Gales & Co., 159 East Main,
Rochester, NY 14638, (8.21%); Tax-Exempt Money Fund--Robert W. Doyle Irrevocable
Trust, c/o Norstar Trust Co., Gales & Co., 159 East Main, Rochester, NY 14638,
(5.20%); Government Money Fund--Brown University Non- Exp. Fund, c/o Norstar
Trust Co., Gales & Co., 159 East Main, Rochester, NY 14638, (5.93%); U.S.
Treasury Money Fund, Loring Walcott Client Sweep Acct., c/o Norstar Trust Co.,
Gales & Co., 159 East Main, Rochester, NY 14638, (19.60%); Equity Value
Fund--Fleet Savings Plus Equity Value, c/o Norstar Trust Co., Gales & Co., 159
East Main, Rochester, NY 14638, (18.77%); Equity Growth Fund--Fleet Savings Plus
Equity Growth, c/o Norstar Trust Co., Gales & Co., 159 East Main, Rochester, NY
14638, (23.20%); Nusco Retiree Health VEBA Trust, c/o Norstar Trust Co., Gales &
Co., 159 East Main, Rochester, NY 14638, (7.22%); International Equity Fund--FFG
International Equity Fund, c/o Norstar Trust Co., Gales & Co., 159 East Main,
Rochester, NY 14638, (14.27%); Fleet Savings Plus-Intl Equity, c/o Norstar Trust
Co., Gales & Co., 159 East Main, Rochester, NY 14638, (9.77%); Intermediate
Govt. Inc.--Nusco Retiree Health VEBA Trust, c/o Norstar Trust Co., Gales & Co.,
159 East Main, Rochester, NY 14638, (5.82%); Strategic Equity Fund--FFG
Retirement & Pension VDG, c/o Fleet Financial Group, 159 East Main, Rochester,
NY 14638, (79.15%); Perstorp Retirement Trust, c/o Norstar Trust Co., Gales &
Co., 159 East Main, Rochester, NY 14638, (16.71%); High Quality Bond
Trust--Fleet Savings Plus Plan-HQ Bond, c/o Norstar Trust Co., Gales & Co., 159
East Main, Rochester, NY 14638, (23.06%); Short Term Bond Fund--Swarovski North
America Ret. Plan, c/o Norstar Trust Co., Gales & Co., 159 East Main, Rochester,
NY 14638, (6.50%); Asset Allocation Fund--Fleet Savings Plus-Asset Allocation,
c/o Norstar Trust Co., Gales & Co., 159 East Main, Rochester, NY 14638,
(27.07%); Small Company Equity Fund--Fleet Savings Plus-Small Company, c/o
Norstar Trust Co., Gales & Co., 159 East Main, Rochester, NY 14638, (31.07%);
Tax Exempt Fund Bond-- Nusco Retiree Health VEBA Trust, c/o Norstar Trust Co.,
Gales & Co., 159 East Main, Rochester, NY 14638, (36.11%); Connecticut Municipal
Bond Fund--Florence M. Roberts, IMA Agency, c/o Norstar Trust Co., Gales & Co.,
159 East Main, Rochester, NY 14638, (5.25%); Corporate Bond Fund--Cole Hersee
Pension Plan, c/o Norstar Trust Co., Gales & Co., 159 East Main, Rochester, NY
14638, (7.41%); Growth Income Fund--Fleet Savings Plus-Growth Income, c/o
Norstar Trust Co., Gales & Co., 159 East Main, Rochester, NY 14638,

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<PAGE>

(44.30%); Small Cap Value Fund--FFG Emp. Ret. Misc. Assets SNC, c/o Norstar
Trust Co., Gales & Co., 159 East Main, Rochester, NY 14638, (30.74%);
Institutional Government Fund-- Aeroflex Inc. CAPFOC, c/o Norstar Trust, c/o
Gales & Co., 159 East Main, Rochester, NY 14638, (7.43%); New Jersey Municipal
Bond Fund--Perillo Tours, c/o Norstar Trust Co., Gales & Co., 159 East Main,
Rochester, NY 14638, (27.60%); Royal Chambord IMA, c/o Norstar Trust Co., Gales
& Co., 159 East Main, Rochester, NY, 14638, (13.80%); McKee Wendell A. Marital
Trust, c/o Norstar Trust Co., Gales & Co., 159 East Main, Rochester, NY 14638,
(13.70%); Varco Inc. IMA, c/o Norstar Trust Co., Gales & Co., 159 East Main,
Rochester, NY 14638, (6.90%); Tiernan Diana V IA, c/o Norstar Trust Co., Gales &
Co., 159 East Main, Rochester, NY 14638, (5.93%); and Dunnington, Ruth U., c/o
Norstar Trust Co., Gales & Co., 159 East Main, Rochester, NY 14638, (5.51%).

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<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, ("Fitch IBCA"), Standard &
Poor's Ratings Group, Division of McGraw Hill ("S&P"), Moody's Investors
Service, Inc. ("Moody's"), and Thomson BankWatch, Inc. ("Thomson").

CORPORATE AND TAX-EXEMPT BOND RATINGS

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

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

The four highest ratings of S&P for tax-exempt and corporate bonds are
AAA, AA, A and BBB. Bonds rated AAA bear the highest rating assigned by S&P
to a debt obligation and the AAA rating indicates in its opinion an extremely
strong capacity to pay interest and repay

A-1
<PAGE>

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

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

A-2
<PAGE>

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.

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

Moody's commercial paper ratings are opinions of the ability of issuers
to repay punctually promissory obligations not having an original maturity in
excess of nine months. Issuers rated Prime-1 (or related supporting
institutions) in the opinion of Moody's "have a superior capacity for
repayment of short-term promissory obligations." Principal repayment
capacity will normally be evidenced by the following characteristics: leading
market positions in well established industries; high rates of return on
funds employed; conservative capitalization structures with moderate reliance
on debt and ample asset protection; broad margins in earning coverage of
fixed financial charges and high internal cash generation; and well
established access to a range of financial markets and assured sources of
alternate liquidity. Issuers rated Prime-2 (or related supporting
institutions) have a strong capacity for repayment of short-term promissory
obligations. This capacity will normally be evidenced by many of the
characteristics of Prime-1 rated issues, but to a lesser degree. Earnings
trends and coverage ratios, while sound, will be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected
by external conditions. Ample alternate liquidity is maintained. Issuers
rated Prime-3 (or related supporting institutions) have an acceptable
capacity for repayment of short-term promissory obligations. Issuers rated
Not Prime do not fall within any of the Prime rating categories.

A-3
<PAGE>

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 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 in the applicable Prospectuses, certain 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

B-1
<PAGE>

price, the Fund realizes a gain, and if the purchase price exceeds the
offsetting sale price, the Fund realizes a loss.

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

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

EXAMPLE OF FUTURES CONTRACT SALE. The Funds would engage in an interest
rate futures contract sale to maintain the income advantage from continued
holding of a long-term bond while endeavoring to avoid part or all of the
loss in market value that would otherwise accompany a decline in long-term
securities prices. Assume that the market value of a certain security held
by a particular Fund tends to move in concert with the futures market prices
of long-term United States Treasury bonds ("Treasury bonds"). 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

B-2
<PAGE>

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. The market price of available long-term bonds
would have decreased. The benefit of this price decrease, and thus yield
increase, will be reduced by the loss realized on closing out the futures
contract purchase.

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

II. MUNICIPAL BOND INDEX FUTURES CONTRACTS

A municipal bond index assigns relative values to the bonds included in
the index and the index fluctuates with changes in the market values of the
bonds so included. The Chicago Board of Trade has designed a futures
contract based on the Bond Buyer Municipal Bond Index. This Index is
composed of 40 term revenue and general obligation bonds, and its composition
is updated regularly as new bonds meeting the criteria of the Index are
issued and existing bonds mature. The Index is intended to provide an
accurate indicator of trends and changes in the

B-3
<PAGE>

municipal bond market. Each bond in the Index is independently priced by six
dealer-to-dealer municipal bond brokers daily. The 40 prices then are averaged
and multiplied by a coefficient. The coefficient is used to maintain the
continuity of the Index when its composition changes. The Chicago Board of
Trade, on which futures contracts based on this Index are traded, as well as
other U.S. commodities exchanges, are regulated by the Commodity Futures Trading
Commission. Transactions on such exchange are cleared through a clearing
corporation, which guarantees the performance of the parties to each contract.

The Tax-Exempt Bond Fund 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. The 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, the Fund will purchase index futures
contracts in anticipation of purchases of securities. In a substantial
majority of these transactions, the 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 the futures contract sale prior to the settlement date may
be effected by the 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 the Fund's entering into a futures contract sale. If the offsetting sale
price exceeds the purchase price, the Fund realizes a gain, and if the
purchase price exceeds the offsetting sale price, the Fund realizes a loss.

EXAMPLE OF A MUNICIPAL BOND INDEX FUTURES CONTRACT

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

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

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

B-4
<PAGE>

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

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

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

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

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

<TABLE>
<CAPTION>
Cash Market Futures Market
----------- --------------
<S> <C> <C>
February 2 $5,003,750 long Sell 50 Municipal Bond
position in municipal futures contracts at
bonds 86-09

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

$130,312 Loss $121,875 Gain
</TABLE>

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

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

III. MARGIN PAYMENTS

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

B-5
<PAGE>

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

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.

B-6
<PAGE>

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 Fleet 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

B-7
<PAGE>

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

Successful use of futures by the Funds is also subject to 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-8
<PAGE>

THE GALAXY FUND

FORM N-1A

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) None

(b) Exhibits:

(1) (a) Declaration of Trust dated March 31, 1986.(4)

(b) Amendment No. 1 to the Declaration of Trust dated as of
April 26, 1988.(4)

(d) Certificate of Classification of Shares dated December 9,
1987 pertaining to Class C, Class D and Class E shares.(4)

(e) Certificate of Classification of Shares dated November 8,
1989 pertaining to Class C - Special Series 1 and Class D -
Special Series 1 shares.(4)

(f) 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)

(g) 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

<PAGE>

- Series 1 shares; and Class O - Series 2 shares.(4)

(h) 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)

(i) Certificate of Classification of Shares dated December 7,
1994 pertaining to Class T - Series 1 shares and Class T -
Series 2 shares.(4)

(j) Form of 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.(4)

(k) Form of 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.(4)

(l) Form of Certificate of Classification of Shares pertaining
to Class A - Special Series 2 shares.(2)

(m) Form of 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.(3)

(n) Form of Certificate of Classification of Shares pertaining
to Class BB; Class CC and Class DD shares.(5)

-2-
<PAGE>

(o) Form of 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.

(2) Code of Regulations.(4)

(3) None.

(4) None.

(5) (a) 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)

(b) Addendum No. 1 to Advisory Agreement between the Registrant
and Fleet Investment Advisors Inc. with respect to the
Connecticut

-3-
<PAGE>

Municipal Money Market, Massachusetts Municipal Money
Market, Growth and Income and Small Cap Value Funds dated as
of December 1, 1995.(1)

(c) 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)

(d) Form of Addendum No. 3 to Advisory Agreement between the
Registrant and Fleet Investment Advisors Inc. with respect
to the Prime Reserves, Government Reserves and Tax-Exempt
Reserves.(5)

(e) Sub-Advisory Agreement between Fleet Investment Advisors
Inc. and Oechsle International Advisors, L.P. with respect
to the International Equity Fund dated as of August 12,
1996.(2)

(f) Form of Sub-Advisory Agreement between Fleet Investment
Advisors Inc. and Oechsle International Advisors, LLC with
respect to the International Equity Fund.

(6) (a) Distribution Agreement between the Registrant and First Data
Distributors, Inc. dated as of June 1, 1997.(3)

(b) 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)

(c) Form of Amendment No. 2 to Distribution Agreement between
the Registrant and First Data Distributors, Inc. with
respect to the Prime Reserves, Government Reserves and
Tax-Exempt Reserves.(5)

-4-
<PAGE>

(7) The Galaxy Fund/The Galaxy VIP Fund/Galaxy Fund II Deferred
Compensation Plan and Related Agreement effective as of
January 1, 1997.(2)

(8) (a) Global Custody Agreement between the Registrant and The
Chase Manhattan Bank dated as of November 1, 1991.(4)

(b) 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)

(c) 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)

(d) 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)

(9) (a) Administration Agreement between the Registrant and First
Data Investor Services Group, Inc. dated as of June 1,
1997.(3)

(b) 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)

(c) Amendment No. 2 dated as of March 5, 1998 to Administration
Agreement between the Registrant and First Data Investor
Services Group, Inc.

(d) Form of Amendment No. 3 to Administration Agreement between
the Registrant and First Data Investor Services Group, Inc.
with

-5-
<PAGE>

respect to the Prime Reserves, Government Reserves and
Tax-Exempt Reserves Fund.(5)

(e) Form of Amendment No. 4 to Administration Agreement
between the Registrant and First Data Investor Services
Group, Inc.

(f) Transfer Agency and Services Agreement between the
Registrant and First Data Investor Services Group, Inc.
dated as of June 1, 1997.(3)

(g) 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)

(h) 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.

(i) Form of Amendment No. 3 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.(5)

(j) Form of Amendment No. 4 to Transfer Agency and Services
Agreement between Registrant and First Data Investor
Services Group, Inc.

(k) Shareholder Services Plan for Trust Shares and Retail A
Shares and Related Forms of Servicing Agreements.(3)

(10) (a) Opinion of counsel dated February 27, 1998 that shares will
be validly issued, fully paid and non-assessable.(4)

(b) Opinion of counsel dated June 30, 1998 that shares will be
validly issued, fully paid and non-assessable.(5)

(11) Consent of Drinker Biddle & Reath LLP.

-6-
<PAGE>

(12) None.

(13) (a) Purchase Agreement between the Registrant and Shearson
Lehman Brothers Inc. dated July 24, 1986.(4)

(b) 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)

(c) 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)

(d) 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)

(e) Purchase Agreement between the Registrant and 440 Financial
Distributors, Inc. dated May 19, 1994 with respect to the
Corporate Bond Fund.(4)

(f) 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)

(g) Purchase Agreement between the Registrant and First Data
Distributors, Inc. with respect to the New Jersey Municipal
Bond Fund.(5)

-7-
<PAGE>

(h) Form of Purchase Agreement between the Registrant and First
Data Distributors, Inc. with respect to the MidCap Equity
Fund.(3)

(i) Purchase Agreement between the Registrant and First Data
Distributors, Inc. with respect to the Strategic Equity
Fund.(5)

(j) Form of Purchase Agreement between the Registrant and First
Data Distributors, Inc. with respect to the Prime Reserves,
Government Reserves and Tax-Exempt Reserves.(5)

(14) Individual Retirement Account Custodial Agreement and
Accompanying Disclosure Statement with Adoption Agreement
and New Account Application.(4)

(15) (a) Distribution and Services Plan for Retail B Shares and
Related Form of Servicing Agreement.

(b) Distribution and Services Plan and Related Form of Servicing
Agreement with respect to the Prime Reserves, Government
Reserves and Tax-Exempt Reserves.(5)

(d) Distribution Plan for B Prime Shares and Related Form of
Servicing Agreement.

(16) (a) Schedules for computation of performance quotations for the
Money Market and Government Funds.(4)

(b) Schedules for computation of performance quotations for the
Intermediate Government Income and Equity Value Funds.(4)

(d) Schedule for computation of performance quotations - Equity
Growth Fund.(4)

-8-
<PAGE>

(e) Schedule for computation of performance quotations - Equity
Income Fund.(4)

(f) Schedule for computation of performance quotations - High
Quality Bond Fund.(4)

(g) Schedule for computation of performance quotations -
International Equity Fund.(4)

(h) Schedule for computation of performance quotations - Small
Company Equity Fund.(4)

(i) Schedule for computation of performance quotations - Asset
Allocation Fund.(4)

(j) Schedule for computation of performance quotations -
Short-Term Bond Fund.(4)

(k) Schedule for computation of performance quotations -
Tax-Exempt Bond Fund.(4)

(l) Schedule for computation of performance quotations - New
York Municipal Bond Fund.(4)

(m) Schedule for computation of performance quotations -
Connecticut Municipal Bond Fund.(4)

(n) Schedule for computation of performance quotations -
Massachusetts Municipal Bond Fund.(4)

(o) Schedule for computation of performance quotations -
Institutional Government Money Market (formerly
Institutional Treasury Money Market) Fund.(4)

(p) Schedule for computation of performance quotations - Rhode
Island Municipal Bond Fund.(4)

(q) Schedule for computation of performance quotations -
Corporate Bond Fund.(4)

(r) Schedule for computation of performance quotations - U.S.
Treasury Fund.(1)

-9-
<PAGE>

(s) Schedule for computation of performance quotations -
Connecticut Municipal Money Market Fund.(1)

(t) Schedule for computation of performance quotations -
Massachusetts Municipal Money Market Fund.(1)

(u) Schedule for computation of performance quotations - Small
Cap Value Fund.(1)

(v) Schedule for computation of performance quotations - Growth
and Income Fund.(1)

(18) Amended and Restated Plan Pursuant to Rule 18f-3 for
Operation of a Multi-Class System.

(27) None

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

(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 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.

-10-
<PAGE>

Item 25. Persons Controlled By or Under Common Control with
Registrant

Registrant is controlled by its Board of Trustees.

Item 26. Number of Holders of Securities

The following is as of September 8, 1998:

Title of Class Number of Record Holders
-------------- ------------------------
<S> <C>
Class A Shares 113,542
Class A -
Special Series 1 Shares 22
Class A -
Special Series 2 Shares 71
Class B Shares 18,503
Class B -
Special Series 1 Shares 75
Class C Shares 12
Class C-
Special Series 1 Shares 24,492
Class C -
Special Series 2 Shares 3,411
Class D Shares 4
Class D -
Special Series 1 Shares 4,575
Class D -
Special Series 2 Shares 0
Class E Shares 3,291
Class E -
Special Series 1 Shares 2
Class F Shares 22,617
Class F -
Special Series 1 Shares 17
Class G - Series 1 Shares 13
Class G - Series 2 Shares 11,711
Class G - Series 3 Shares 0
Class H - Series 1 Shares 11
Class H - Series 2 Shares 30,738
Class H - Series 3 Shares 4,614
Class I - Series 1 Shares 6
Class I - Series 2 Shares 16,532
Class I - Series 3 Shares 0
Class J - Series 1 Shares 4
Class J - Series 2 Shares 2,653
Class J - Series 3 Shares 266

-11-
<PAGE>

Class K - Series 1 Shares 12
Class K - Series 2 Shares 18,254
Class K - Series 3 Shares 3,150
Class L - Series 1 Shares 4
Class L - Series 2 Shares 1,609
Class L - Series 3 Shares 74
Class M - Series 1 Shares 3
Class M - Series 2 Shares 899
Class M - Series 3 Shares 78
Class N - Series 1 Shares 7
Class N - Series 2 Shares 21,643
Class N - Series 3 Shares 4,594
Class O - Series 1 Shares 3
Class O - Series 2 Shares 1,225
Class P - Series 1 Shares 4
Class P - Series 2 Shares 791
Class Q - Series 1 Shares 3
Class Q - Series 2 Shares 949
Class R - Series 1 Shares 0
Class R - Series 2 Shares 214
Class S Shares 7
Class T - Series 1 Shares 688
Class T - Series 2 Shares 0
Class U - Series 1 Shares 7
Class U - Series 2 Shares 22,472
Class U - Series 3 Shares 6,517
Class V Shares 1,433
Class W Shares 919
Class X - Series 1 Shares 40
Class X - Series 2 Shares 15,625
Class X - Series 3 Shares 0
Class Y - Series 1 Shares 3
Class Y - Series 2 Shares 11
Class Z - Series 1 Shares 0
Class Z - Series 2 Shares 0
Class Z - Series 3 Shares 0
Class AA - Series 1 Shares 4
Class AA - Series 2 Shares 669
Class AA - Series 3 Shares 86
Class BB Shares 0
Class CC Shares 0
Class DD Shares 0
</TABLE>

Item 27. Indemnification

Indemnification of the Registrant's principal underwriter, custodian and
transfer agent against certain losses is provided

-12-
<PAGE>

for, respectively, in Section 1.19 of the Distribution Agreement incorporated
herein by reference as Exhibit (6)(a), in Section 12 of the Global Custody
Agreement incorporated herein by reference as Exhibit (8)(a) and in Article 10
of the Transfer Agency and Services Agreement incorporated herein by reference
as Exhibit 9(c). 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 (1)(a) hereto,
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 undertaking to reimburse the Trust
in the event it is

-13-
<PAGE>

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 28. (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

-14-
<PAGE>

pursuant to the Advisers Act (SEC File No. 801-20312).

(b) Business and Other Connections of Sub-Adviser

Oechsle International Advisors, L.P. ("Oechsle") is an investment
adviser registered under the Investment Advisers Act of 1940 (the
"Advisers Act").

The list required by this Item 28 of the partners of Oechsle,
together with information as to any business profession, vocation
or employment of a substantial nature engaged in by such partners
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 29. 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, Alleghany 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, Westboro, MA
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).

-15-
<PAGE>

(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.

Item 30. 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, L.P., 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, Westboro,
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,
Westboro, 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

-16-
<PAGE>

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 31. Management Services

Inapplicable.

Item 32. 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.

-17-
<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. 34 to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pawtucket, State of Rhode
Island, on the 11th day of September, 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. 33 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 September 11, 1998
- ------------------------ and Treasurer
John T. O'Neill

*/s/Dwight E. Vicks, Jr. Chairman of the Board September 11, 1998
- ------------------------ of Trustees
Dwight E. Vicks, Jr.

*/s/Donald B. Miller Trustee September 11, 1998
- ------------------------
Donald B. Miller

*/s/Louis DeThomasis Trustee September 11, 1998
- ------------------------
Louis DeThomasis

*/s/Bradford S. Wellman Trustee September 11, 1998
- ------------------------
Bradford S. Wellman

*/s/James M. Seed Trustee September 11, 1998
- ------------------------
James M. Seed

*By:/s/John T. O'Neill
- ------------------------
John T. O'Neill
Attorney-In-Fact

-18-
<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 4, 1996 /s/Dwight E. Vicks, Jr.
--------------------------------------------
Dwight E. Vicks, Jr.

<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 5, 1996 /s/Brother Louis DeThomasis
------------------------------------------
Brother Louis DeThomasis

<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/James M. Seed
-----------------------------------
James M. Seed

<PAGE>
EXHIBIT INDEX

Exhibit No. Description
----------- -----------

(1)(o) Form of Certificate of Classification of Shares.

(5)(f) Form of Sub-Advisory Agreement between Fleet
Investment Advisors Inc. and Oechsle International
Advisors, LLC with respect to the International
Equity Fund.

(9)(c) Amendment No. 2 dated as of March 5, 1998 to
Administration Agreement between the Registrant and
First Data Investor Services Group, Inc.

(9)(e) Form of Amendment No. 4 to Administration Agreement
between Registrant and First Data Investor Services
Group, Inc.

(9)(h) 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.

(9)(j) Form of Amendment No. 4 to Transfer Agency and
Services Agreement between Registrant and First Data
Investor Services Group, Inc.

(10)(c) Opinion of counsel dated September 11, 1998 that
shares will be validly issued, fully paid and non-
assessable.

(11) Consent of Drinker Biddle & Reath LLP.

(15)(a) Distribution and Services Plan for Retail B Shares
and Related Form of Servicing Agreement.

(15)(c) Distribution Plan for A Prime Shares.

(15)(d) Distribution and Services Plan for B Prime Shares
and Related Servicing Agreement.

(18) Amended and Restated Plan Pursuant to Rule 18f-3 for
Operation of a Multi-Class System.

<PAGE>

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 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-

<PAGE>

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, 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 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

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<PAGE>

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 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,

-3-
<PAGE>

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>

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 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-

-5-
<PAGE>

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 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

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<PAGE>

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).

(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 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 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 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 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 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,

-7-
<PAGE>

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.

(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

-8-
<PAGE>

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 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

-9-
<PAGE>

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:

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 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.

-------------------------
W. Bruce McConnel, III

Dated: September __, 1998

Commonwealth of Pennsylvania :
: ss
County of Philadelphia :

Subscribed and sworn to
before me this __ day
of ______, 1998

- ----------------------
Notary Public
My Commission Expires:

-11-

<PAGE>

THE GALAXY FUND

SUB-ADVISORY AGREEMENT

INTERNATIONAL EQUITY FUND

AGREEMENT made as of _________, 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

-2-
<PAGE>

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, 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.

-3-
<PAGE>

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 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

-4-
<PAGE>

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 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

-5-
<PAGE>

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

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

-6-
<PAGE>

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.

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:
----------------------------

OECHSLE INTERNATIONAL
ADVISORS, LLC

By: Oechsle Group, LLC,
Managing Member

By:
----------------------------

-7-

<PAGE>
AMENDMENT NO. 2 TO ADMINISTRATION AGREEMENT

This Amendment No. 2, dated as of March 5, 1998, is entered into
between FIRST DATA INVESTOR SERVICES GROUP, INC., a Massachusetts corporation
("FDISG") and THE GALAXY FUND, a Massachusetts business trust (the "Company").

WHEREAS, FDISG and the Company have entered into an Administration
Agreement, dated as of June 1, 1997, as amended on February 27, 1998 (the
"Administration Agreement"), pursuant to which the Company appointed FDISG to
act as Administrator for the Company's portfolios; and

WHEREAS, Section 9 of the Administration Agreement provides that no
change, termination, modification, or waiver of any term or condition of the
Administration Agreement shall be valid unless in writing signed by each party;

NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. The following sub-section is added to the Administration
Agreement as sub-section (f) to Section 3:

"(f) FDISG agrees to perform the services set forth herein in
accordance with the performance standards set forth in Appendix I to this
Agreement."

2. Sub-section (f) to Section 8 of the Administration Agreement is
amended and restated in its entirety to read as follows:

"(f) In the event this Agreement is terminated by the Company
pursuant to Sections 8(c) or 8(d) hereof or pursuant to paragraph (b) of the
performance standards set forth in Appendix I hereto, all reasonable expenses
associated with movement of records and materials and conversion thereof to a
successor administrator will be borne by FDISG and the Company shall not be
responsible for FDISG's costs associated with such termination. In the event of
termination of this Agreement pursuant to any other Section of this Agreement,
all reasonable expenses associated with conversation to a successor
administrator will be borne by the Company."

3. Appendix I attached hereto is added as an Appendix to the
Administration Agreement.

4. The changes effected by this Amendment No. 2 shall be effective
as of May 1, 1998. Except to the extent amended hereby, the Administration
Agreement shall remain unchanged and in full force and effect and is hereby
ratified and confirmed in all respects as amended hereby.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 2
as of the day and year first above written.

FIRST DATA INVESTOR SERVICES
GROUP, INC.

By: /s/ Jylanne Dunne
-----------------------------
Name: Jylanne Dunne
Title: Vice President

THE GALAXY FUND

By: /s/ John T. O'Neill
-----------------------------
Name: John T. O'Neill
Title: President

-2-

<PAGE>

Appendix I

Pursuant to Article 3 of this Agreement, FDISG has agreed to perform
the services described in this Agreement in accordance with the Performance
Standards set forth in this Appendix I. The parties agree that such Performance
Standards, which are described below, may be revised from time to time upon the
mutual agreement of the parties.

Each of the performance standards will be monitored by a Quality
Assurance Team:

(a) In the event that FDISG fails to meet a particular Performance
Standard (except for any failure due to circumstances beyond its control) in any
particular month, FDISG agrees to take appropriate corrective action within the
following thirty (30) day period.

(b) In the event that FDISG fails to meet a particular Performance
Standard (except for any failure due to circumstances beyond its control) for
any three (3) months within a six (6) month period, the Company shall have the
right to terminate this Agreement upon forty-five (45) days' written notice to
FDISG.

CATEGORY STANDARD
- -------- --------
All NAV's to NASDAQ by the 98% accuracy rate as measured
NASDAQ reporting deadline by information available on
the day of reporting*

All daily yield and days to 98% accuracy rate as measured
maturity data along with the by information available on
7-day yield data reported to the day of reporting*
NASDAQ by the NASDAQ reporting
deadline

Release of the "Fleet Export 90% of the time**
File" by 8:00 p.m. each
business day

Cash availability provided to 90% accuracy rate as measured
investment advisers each morning by information available on
by 9:45 a.m. the day of reporting***

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

* assumes all vendor-provided data to FDISG is correct and on time; also that
all trade data provided by investment advisers is correct and on time.

** assumes that there are normal market conditions and that all
vendor-supplied data to FDISG is provided on time.

*** assumes that all data provided by any transfer agent or sub-transfer agent
to FDISG is accurate and on time.

<PAGE>

AMENDMENT NO. 4 TO ADMINISTRATION AGREEMENT

This Amendment No. 4, dated as of ___________, 1998, is entered into
between FIRST DATA INVESTOR SERVICES GROUP, INC., a Massachusetts corporation
("FDISG") and THE GALAXY FUND, a Massachusetts business trust (the "Company").

WHEREAS, FDISG and the Company have entered into an Administration
Agreement, dated as of June 1, 1997, as amended on March 3, 1998, March 5, 1998,
and ___________, 1998 (the "Administration Agreement"), pursuant to which the
Company appointed FDISG to act as Administrator for the Company's portfolios
(the "Funds"); and

NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. Section 8(a) of the Administration Agreement is amended and
restated in its entirety to read as follows:

"(a) This Agreement shall continue in effect with respect to each
Fund until May 31, 2001 (the "Initial Term"), unless earlier terminated pursuant
to the terms of this Agreement. Thereafter, this Agreement shall continue with
respect to each Fund for additional terms of one (1) year ("Renewal Terms")
each, provided such continuance is specifically reviewed and approved at least
annually (i) by the vote of a majority of the Company's Board of Trustees or by
the vote of a majority of the outstanding voting securities of such Fund and
(ii) by a majority of the Company's Trustees who are not parties to the
Agreement or interested persons (as defined in the 1940 Act) of any party to the
Agreement."

2. The section of Schedule B of the Administration Agreement
entitled "Administration Fees" is amended and restated in its entirety to read
as follows:

"ADMINISTRATION FEES:

"FDISG shall be paid an annual administration fee at the annual
rate of .09% of the first $2.5 billion of the Funds' combined average daily
net assets, .085% of the next $2.5 billion of combined average daily net
assets, .075% of the next $7 billion of combined average daily net assets,
.065% of the next $3 billion of combined average daily net assets, .06% of
the next $3 billion of combined average daily net assets and .0575% of
combined average daily net assets in excess of $18 billion."

<PAGE>

3. The following paragraph is added to the Administration Agreement
as Section 17:

"17. YEAR 2000. FDISG's services hereunder shall be rendered,
and its computer systems used in rendering such services shall operate and
function, without any Year 2000 Error. The term "Year 2000 Error" means:

(a) any failure of FDISG's systems to properly record,
store, process, calculate or present calendar dates falling on and after (and,
if applicable, spans of time including) January 1, 2000 as a result of the
occurrence or use of data consisting of such dates;

(b) any failure of FDISG's systems to calculate any
information dependent on or relating to dates on or after January 1, 2000 in the
same manner, and with the same functionality, date integrity and performance, as
such systems record, store, process, calculate and present calendar dates on or
before December 31, 1999, or information dependent on or relating to such dates;
or

(c) any loss of functionality or performance with respect
to the introduction of records or processing of data containing dates falling on
or after January 1, 2000."

4. Except to the extent amended hereby, the Administration Agreement
shall remain unchanged and in full force and effect and is hereby ratified and
confirmed in all respects as amended hereby.

IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 4
as of the day and year first above written.

FIRST DATA INVESTOR SERVICES
GROUP, INC.

By:
---------------------------
Name:
Title:

THE GALAXY FUND

By:
---------------------------
Name:
Title:

-2-

<PAGE>
AMENDMENT NO. 2 TO
TRANSFER AGENCY AND SERVICES AGREEMENT

This Amendment No. 2, dated as of March 5, 1998, is entered into
between THE GALAXY FUND (the "Fund"), a Massachusetts business trust, and FIRST
DATA INVESTOR SERVICES GROUP, INC. ("FDISG"), A Massachusetts corporation.

WHEREAS, the Fund and FDISG have entered into a Transfer Agency and
Services Agreement, dated as of June 1, 1997, as amended on February 27, 1998
(the "Transfer Agency Agreement"), pursuant to which the Fund appointed FDISG to
act as the transfer agent, dividend disbursing agent and agent in connection
with certain other activities for the Fund's portfolios; and

WHEREAS, Section 25.1 of the Transfer Agency Agreement provides, in
part, that no change, termination, modification or waiver of any term or
condition of the Transfer Agency Agreement shall be valid unless in writing
signed by each party;

NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. The following paragraph is added to Schedule A of the Transfer
Agency Agreement as Section 10:

"10. FULFILLMENT.

FDISG will process and mail Fund marketing literature. Tasks include
kit assembly, order processing and mailing of materials. This service may be
terminated by the Fund upon ninety (90) days' written notice to FDISG."

2. The following is added to Schedule B of the Transfer Agency
Agreement:

<PAGE>

"FULFILLMENT PRICING
- --------------------
Shareholder Kits
- -----------------
<S> <C>
Self Mailer (68-71) .1480

Bond, Equity and Asset Allocation Kits (53-59) .1480

Fleet Payroll Kits - Money Market, Bond, Equity
(10, 11, 31-33) .3500

Money Mkt., Variable Instit. Kits, A/P Form IRA .4300
& Reg (12, 63, 72, 50, 62)

Annuity Kit, Exchange and Transfer (93-98) .4800

IRA, VIP & Retirement Kits (61, 85, 89, 90, 91) .6100

Total Service IRA Kit (91, 100) 1.3000

Annuity Fulfillment (99) .4800

COLLEGE INVESTMENT KIT (100) 2.0000

NEW KITS (102, 110, 13) .4000

NET WEST S/H KIT (103) .3500

NEW KITS (20, 200, 201, 220-222, 109) .3500

NEW KITS (461A) .3500

New Broker Kit (FND-FIS) 55.0000

Investment Spec Report Dec. 1997 .1800

PK (Pro Kit w/supplements) (1-313) .0500

Individual Items - Components .0500

Other Fulfillment Charges 9./pallet
- --------------------------
Warehouse Storage

Transportation Charges - pass through/out-of-
pocket

Print Charges - pass through/out of pocket

</TABLE>

3. Appendix I to the Transfer Agency Agreement is amended and
restated in its entirety to read as set forth in Appendix I hereto.

4. The changes to the Transfer Agency Agreement effected by this
Amendment No. 2 shall be effective as of May 1, 1998. Except to the extent
amended hereby, the Transfer Agency Agreement shall remain unchanged and in full
force and effect and

-2-

<PAGE>

is hereby ratified and confirmed in all respects as amended hereby.

IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 2
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 INVESTOR
SERVICES GROUP, INC.

By: /s/ Jylanne Dunne
---------------------------
Name: Jylanne Dunne
Title: Vice President

-3-
<PAGE>

Appendix I

Pursuant to Article 2 of this Agreement, FDISG has agreed to perform the
services described in this Agreement in accordance with the Performance
Standards set forth in this Appendix I. The parties agree that such
Performance Standards, which are described below, may be revised from time to
time upon the mutual agreement of the parties.

Each of the performance standards will be monitored by a Quality
Assurance Team:

(a) In the event that FDISG fails to meet a particular Performance
Standard (except any failure due to circumstances beyond its control) in any
particular month, FDISG agrees to take appropriate corrective action within
the following thirty (30) day period.

(b) In the event that FDISG fails to meet a particular Performance
Standard (except for any failure due to circumstances beyond its control) in
two (2) consecutive months, the fee payable to FDISG hereunder for such
service shall be reduced by one percent (1%) for the second of those two
months.

(c) In the event that FDISG fails to meet a particular Performance
Standard (except for any failure due to circumstances beyond its control) for
any three (3) consecutive months, the fee payable to FDISG hereunder for such
service shall be reduced by one and one-half percent (1.5%) for the third of
those three months.

(d) In the event that FDISG fails to meet a particular Performance
Standard (except for any failure due to circumstances beyond its control) for
any three (3) months within a six (6) month period, the Fund shall have the
right to terminate this Agreement upon forty-five (45) days' written notice
to FDISG.

(e) In the event that there is no specific fee for a particular service
set forth in Schedule A hereto, then any reduction in the fee payable to
FDISG as a result of a failure to meet a particular performance standard for
that service hereunder shall be taken as a reduction in the annual per
account maintenance fee.

(f) The Performance Standards shall be as follows:

REQUIRED
--------
PERFORMANCE
-----------
CATEGORY COMPONENTS LEVEL
- -------- ---------- -----

QUALITY PERFORMANCE SCORE (Accuracy rating based on routine sampling and
accuracy analysis by Quality Assurance Area of FDISG)

1. Financials Purchases, Redemptions, Exchanges, 98%
Adjustments (both financial and
non-financial adjustments)

-4-
<PAGE>

2. Non-Financials Maintenance (including address 98%
changes, option changes, ROA/LOI),
Legal Transfers, New Accounts

3. Print/Mail Statements, Confirms, Checks 98%

4. Correspondence Financial and Non-Financial 98%
Correspondence

PRODUCTIVITY PERFORMANCE SCORE

1. Completed on day of Purchases, Redemptions, Exchanges, 98%
receipt Financial Adjustments, New Accounts

2. Completed within five Maintenance, non-financial, Legal 98%
business days of receipt Transfers

Print/Mail:

3. Mailed on trade date + 1 Shareholder Checks 98%

4. Mailed on trade date + 2 Shareholder Confirms 98%

5. Mailed within 5 business Statements 98%
days following the end of the
reporting period

Shareholder Services:

6. Mailed within two business Financial Correspondence 98%
days of receipt

7. Mailed within four Non-Financial Correspondence 98%
business days of receipt

Phones:

8. Abandonment Rate 3% or less

9. Average Speed of Answer 20 seconds
or less

10. Service Level of Receipt 90% of all
calls
answered in
20 seconds
or less

11. Fulfillment Mailing Processed within 24 hours of receipt 98%

-5-

<PAGE>

AMENDMENT NO. 4 TO
TRANSFER AGENCY AND SERVICES AGREEMENT

This Amendment No. 4, dated as of _____, 1998, is entered into between
THE GALAXY FUND (the "Fund"), a Massachusetts business trust, and FIRST DATA
INVESTOR SERVICES GROUP, INC. ("FDISG"), a Massachusetts corporation.

WHEREAS, the Fund and FDISG have entered into a Transfer Agency and
Services Agreement, dated as of June 1, 1997, as amended on March 3, 1998, March
5, 1998 and ______, 1998 (the "Transfer Agency Agreement"), pursuant to which
the Fund appointed FDISG to act as the transfer agent, dividend disbursing agent
and agent in connection with certain other activities for the Fund's portfolios;
and

NOW THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:

1. Section 13.1 of the Transfer Agency Agreement is amended and
restated to read as follows:

"13.1. This Agreement shall continue in effect until May 31, 2001
(the "Initial Term")."

2. The following paragraph is added to Schedule A of the Transfer
Agency Agreement as Section 11:

"11. OTHER SERVICES.

(a) FDISG shall manage and fund the process of redesigning
and recreating the Fund's web site pursuant to the requirements of the Marketing
Department of Fleet Investment Management.

(b) FDISG shall enable its ImpressNET product and link it
to the Fund's web site and will waive all fees associated with ImpressNET's
set-up, customization and annual software and hardware maintenance.

(c) FDISG shall provide at no cost to the Fund a two-person
dedicated programming team to focus exclusively on Fund systems priorities
as identified by Fleet Investment Management."

<PAGE>

3. The following is added to Schedule B of the Transfer Agency
Agreement:

"IMPRESSNET TRANSACTION FEES

Account inquiry $. 10/ea

Financial trades $ .50/transaction

Registration fee $ 2.50/one-time fee"

4. The following paragraph is added to the Transfer Agency Agreement
as Article 26:

"ARTICLE 26 YEAR 2000.

FDISG's services hereunder shall be rendered, and its
computer systems used in rendering such services shall operate and function,
without any Year 2000 Error. The term "Year 2000 Error" means:

(c) any loss of functionality or performance with respect
to the introduction of records or processing of data containing dates falling on
or after January 1, 2000."

5. Except to the extent amended hereby, the Transfer Agency
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. 4
as of the day and year first above written.

THE GALAXY FUND

By:
-------------------------
Name:
Title:

FIRST DATA INVESTOR SERVICES
GROUP, INC.

By:
-------------------------
Name:
Title:

-3-

<PAGE>

LAW OFFICES
DRINKER BIDDLE & REATH LLP
PHILADELPHIA NATIONAL BANK BUILDING
1345 CHESTNUT STREET
PHILADELPHIA, PA 19107-3496
TELEPHONE: (215) 988-2700
FAX: (215) 988-2757

September 11, 1998

The Galaxy Fund
4400 Computer Drive
Westboro, MA 01581-5108

Re: Shares Registered by Post-Effective Amendment No. 34 to Registration
Statement on Form N-1A (File Nos. 33-4806 and 811-4636)
---------------------------------------------------------------------

Ladies and Gentlemen:

We have acted as counsel to The Galaxy Fund (the "Trust") in connection with
the preparation and filing with the Securities and Exchange Commission of
Post-Effective Amendment No. 34 (the "Amendment") to the Trust's Registration
Statement on Form N-1A under the Securities Act of 1933, as amended,
registering (a) Class C - Special Series 3 and Class C - Special Series 4
shares of beneficial interest representing interests in the Equity Value
Fund, (b) Class D - Special Series 3 and Class D - Special Series 4 shares of
beneficial interest representing interests in the Intermediate Government
Income Fund, (c) Class G - Series 4 and Class G - Series 5 shares of
beneficial interest representing interests in the International Equity Fund,
(d) Class H - Series 4 and Class H - Series 5 shares of beneficial interest
representing interests in the Equity Growth Fund, (e) Class I - Series 4 and
Class I - Series 5 shares of beneficial interest representing interests in
the Equity Income Fund, (f) Class J - Series 4 and Class J - Series 5 shares
of beneficial interest representing interests in the High Quality Bond Fund,
(g) Class K - Series 4 and Class K - Series 5 shares of beneficial interest
representing interests in the Small Company Equity Fund, (h) Class L - Series
4 and Class L - Series 5 shares of beneficial interest representing interests
in the Short-Term Bond Fund, (i) Class M - Series 4 and Class M - Series 5
shares of beneficial interest representing interests in the Tax-Exempt Bond
Fund, (j) Class N - Series 4 and Class N - Series 5 shares of beneficial
interest representing interests in the Asset Allocation Fund, (k) Class U -
Series 4 and Class U - Series 5 shares of beneficial interest representing
interests in the Growth and Income Fund, (l) Class X - Series 4 and Class X -
Series 5 shares of beneficial interest representing interests in the Small
Cap Value Fund and (m) Class AA - Series 4 and Class AA - Series 5 shares of
beneficial interest representing interests in the Strategic Equity Fund
(collectively, the "Shares"). The Amendment seeks to register an indefinite
number of the Shares.

<PAGE>

The Galaxy Fund
September 11, 1998
Page 2

We have reviewed the Trust's Declaration of Trust, its Code of Regulations,
resolutions adopted by its Board of Trustees and shareholders and such other
legal and factual matters as we have deemed appropriate.

This opinion is based exclusively on the laws of the Commonwealth of
Massachusetts and the federal laws of the United States of America. We have
relied upon an opinion of Ropes & Gray, special Massachusetts counsel to the
Trust, insofar as our opinion relates to matters arising under the laws of the
Commonwealth of Massachusetts.

Based upon the foregoing, it is our opinion that the Shares, when issued
for payment as described in the Trust's prospectuses relating to the Shares and
for not less than $.001 per share, will be validly issued, fully paid and
non-assessable by the Trust.

We note that under certain circumstances, the shareholders of a
Massachusetts business trust may be subject to assessment at the instance of
creditors to pay the obligations of such trust in the event that such trust's
assets are insufficient for that purpose. However, the Declaration of Trust
disclaims shareholder liability for acts or obligations of the Trust and
requires that notice of such disclaimer be given in each note, bond, contract,
order or other undertaking issued by or on behalf of the Trust or the Trustees
relating to the Trust or any class of shares of beneficial interest of the
Trust. The Declaration of Trust provides for indemnification out of the assets
of the particular class of shares for all loss and expense of any shareholder of
that class held personally liable solely by reason of his being or having been a
shareholder. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which that class
of shares itself would be unable to meet its obligations.

We hereby consent to the filing of this opinion as an exhibit to the
Amendment.

Very truly yours,

/s/ Drinker Biddle & Reath LLP
---------------------------------------
DRINKER BIDDLE & REATH LLP

-2-

<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. 34 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
September 11, 1998

<PAGE>

THE GALAXY FUND

DISTRIBUTION AND SERVICES PLAN
FOR RETAIL B SHARES

This Distribution and Services Plan (the "Plan") has been adopted by
the Board of Trustees of The Galaxy Fund (the "Trust") in connection with the
Retail B series of shares (the "B Shares") in each of the following investment
portfolios of the Trust: Small Company Equity Fund, Small Cap Value Fund,
MidCap Equity Fund, Equity Growth Fund, Equity Income Fund, International Equity
Fund, Asset Allocation Fund, Equity Value Fund, Growth and Income Fund,
Strategic Equity Fund, Short-Term Bond Fund, Intermediate Government Income
Fund, High Quality Bond Fund, Tax-Exempt Bond Fund and Money Market Fund
(collectively, the "Funds"). The Plan has been adopted pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended (the "1940 Act").

Section 1. EXPENSES. The Trust may incur expenses under the Plan in an
amount not to exceed 1.15% annually of the average daily net assets attributable
to the outstanding B Shares of each of the Funds.

Section 2. DISTRIBUTION PAYMENTS. (a) The Trust may pay the
distributor of the Trust (the "Distributor") (or any other person) a fee (a
"Distribution Fee") of up to 0.65% annually of the average daily net assets
attributable to the outstanding B Shares of each of the Funds. The Distribution
Fee shall be calculated and accrued daily, paid monthly and shall be in
consideration for distribution services and the assumption of related expenses
(including the payment of commissions and transaction fees) in conjunction with
the offering and sale of B Shares of the Funds. In determining the amounts
payable on behalf of a Fund under the Plan, the net asset value of the B Shares
shall be computed in the manner specified in the Trust's then current
Prospectuses and Statements of Additional Information describing such B Shares.

(b) Payments to the Distributor under subsection (a) above shall be used
by the Distributor to cover expenses and activities primarily intended to result
in the sale of B Shares. Such expenses and activities may include but are not
limited to: (i) direct out-of-pocket promotional expenses incurred by the
Distributor in advertising and marketing B Shares; (ii) expenses incurred in
connection with preparing, printing, mailing, and distributing or publishing
advertisements and sales literature; (iii) expenses incurred in connection with
printing and mailing Prospectuses and Statements of Additional Information to
other than current shareholders; (iv) periodic payments or commissions to one or
more securities dealers, brokers, financial institutions or other industry
professionals, such as investment advisors, accountants, and estate planning
firms (each a

<PAGE>

"Distribution Organization") with respect to a Fund's B Shares beneficially
owned by customers for whom the Distribution Organization is the Distribution
Organization of record or shareholder of record; (v) the direct or indirect cost
of financing the payments or expenses included in (i) and (iv) above; or (vi)
such other services as may be construed by any court or governmental agency or
commission, including the Securities and Exchange Commission (the "Commission"),
to constitute distribution services under the 1940 Act or rules and regulations
thereunder.

Section 3. PAYMENTS FOR SHAREHOLDER LIAISON SERVICES COVERED BY
PLAN.(a) The Trust may also pay securities dealers, brokers, financial
institutions or other industry professionals, such as investment advisors,
accountants, and estate planning firms (each a "Service Organization") for
Shareholder Liaison Services (as hereinafter defined) provided with respect to
their customers' B Shares. Shareholder Liaison Services shall be provided
pursuant to an agreement in substantially the form attached hereto ("Servicing
Agreement"). Any organization providing distribution assistance may also become
a Service Organization and receive fees for Shareholder Liaison Services
pursuant to a Servicing Agreement under this Plan.

(b) Fees paid to a Service Organization under subsection (a) above may be
paid at an annual rate of up to 0.25% of the average daily net assets
attributable to the outstanding B Shares of each of the Funds, which B Shares
are owned of record or beneficially by that Service Organization's customers for
whom such Service Organization is the dealer of record or shareholder of record
or with whom it has a servicing relationship. Such fees shall be calculated and
accrued daily, paid monthly and computed in the manner set forth in the
Servicing Agreement.

(c) "Shareholder Liaison Services" means "personal service and/or the
maintenance of shareholder accounts" within the meaning of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., such as
responding to customers' inquiries and providing information on their
investments.

Section 4. PAYMENTS FOR ADMINISTRATIVE SUPPORT SERVICES COVERED BY
PLAN. (a) The Trust may also pay Service Organizations for Administrative
Support Services (as hereinafter defined) provided with respect to its
Customers' B Shares. Administrative Support Services shall be provided pursuant
to a Servicing Agreement. Any organization that receives fees under Section 2
or Section 3 of this Plan may also receive fees pursuant to this Section 4.

-2-
<PAGE>

or beneficially by that Service Organization's customers for whom such Service
Organization is the dealer of record or shareholder of record or with whom it
has a servicing relationship. Such fees shall be calculated and accrued daily,
paid monthly and computed in the manner set forth in the Servicing Agreement.

(c) "Administrative Support Services" include but are not limited to:
(i) transfer agent and subtransfer agent services for beneficial owners of B
Shares; (ii) aggregating and processing purchase and redemption orders;
(iii) providing beneficial owners with statements showing their positions in B
Shares; (iv) processing dividend payments; (v) providing subaccounting services
for 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, tabulating, and
transmitting proxies executed by beneficial owners; PROVIDED, however, that such
term does not include Shareholder Liaison Services.

Section 5. EXPENSES ALLOCATED; COMPLIANCE. Amounts paid by a Fund
under the Plan must be for services rendered for or on behalf of the holders of
such Fund's B Shares. However, joint distribution financing or other services
rendered with respect to such B Shares (which may involve other investment funds
or companies that are affiliated persons of the Trust or affiliated persons of
the Distributor) is authorized to the extent permitted by law.

Section 6. REPORTS TO TRUST. So long as this Plan is in effect, the
Distributor shall provide the Trust's Board of Trustees, and the Trustees shall
review, at least quarterly, a written report of the amounts expended pursuant to
the Plan and the purposes for which such expenditures were made.

Section 7. APPROVAL OF PLAN. This Plan will become effective with
respect to a particular Fund's B Shares on the date the public offering of B
Shares commences upon the approval by a majority of the Board of Trustees,
including a majority of those trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust and who have no direct or indirect
financial interest in the operation of the Plan or in any agreements entered
into in connection with the Plan (the "Disinterested Trustees"), pursuant to a
vote cast in person at a meeting called for the purpose of voting on the
approval of the Plan.

Section 8. CONTINUANCE OF PLAN. Unless sooner terminated in accordance
with the terms hereof, this Plan shall continue until September 7, 1998, and
thereafter for so long as its continuance is specifically approved at least
annually by the Trust's Board of Trustees in the manner described in Section 7
hereof.

-3-
<PAGE>

Section 9. AMENDMENTS. This Plan may be amended at any time by the
Board of Trustees provided that (a) any amendment to increase materially the
costs which the B Shares of a Fund may bear for distribution pursuant to the
Plan shall be effective only upon approval by a vote of a majority of the
outstanding B Shares affected by such matter, and (b) any material amendments of
the terms of the Plan shall become effective only upon approval in the manner
described in Section 7 hereof.

Section 10. TERMINATION. This Plan, as to any Fund, is terminable
without penalty at any time by (a) a vote of a majority of the Disinterested
Trustees, or (b) a vote of a majority of the outstanding B Shares of such Fund.

Section 11. SELECTION/NOMINATION OF TRUSTEES. While this Plan is in
effect, the selection and nomination of those Disinterested Trustees shall be
committed to the discretion of such Disinterested Trustees.

Section 12. 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.

Adopted: September 7, 1995
Revised: December 5, 1996, December 4, 1997, May 28, 1998
Reapproved: September 5, 1996, December 4, 1997

-4-
<PAGE>

THE GALAXY FUND

SERVICING AGREEMENT
to
DISTRIBUTION AND SERVICES PLAN
FOR RETAIL B SHARES

Ladies and Gentlemen:

We wish to enter into this Servicing Agreement with you concerning the provision
of shareholder liaison and/or administrative support services to your customers
who may from time to time be the record or beneficial owners of Retail B Shares
(such shares referred to herein as the "B Shares") of one or more of our
investment portfolios (individually, a "Fund" and collectively, the "Funds"),
which are listed on Appendix A.

The terms and conditions of this Servicing Agreement are as follows:

Section 1. You agree to provide Shareholder Liaison Services to your
customers ("Clients") who may from time to time own of record or beneficially a
Fund's B Shares. "Shareholder Liaison Services" means "personal service and/or
the maintenance of shareholder accounts" within the meaning of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., such as
responding to customers' inquiries and providing information on their
investments.

Section 2. You agree to provide Administrative Support Services to Clients
who may from time to time own of record or beneficially a Fund's B Shares.
"Administrative Support Services" include but are not limited to: (i) transfer
agent and subtransfer agent services for beneficial owners of B Shares;
(ii) aggregating and processing purchase and redemption orders; (iii) providing
beneficial owners with statements showing their positions in B Shares;
(iv) processing dividend payments; (v) providing subaccounting services for 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, tabulating, and
transmitting proxies executed by beneficial owners; PROVIDED, however, that such
term does not include Shareholder Liaison Services.

Section 3. You will provide such office space and equipment, telephone and
personnel (which may be any part of the space, equipment and facilities
currently used in your business, or any personnel employed by you) as may be
reasonably necessary or beneficial in order to provide the aforementioned
services to Clients.

Section 4. Neither you nor any of your officers, employees or agents is
authorized to make any representations concerning us, a Fund, or its B Shares
except those contained in our then current prospectuses for such B Shares,
copies of which will be supplied by us to you, or in such supplemental
literature or advertising as may be authorized by us in writing.

Section 5. For all purposes of this Agreement you will be deemed to be an
independent contractor, and will have no authority to act as agent for us in any
matter or in any respect. You will not engage in activities pursuant to this
Agreement which constitute acting as a broker or dealer under state law unless
you have obtained the licenses required by law. You and your employees will,
upon request, be available during normal business hours to consult with us or
our designees concerning the performance of your responsibilities under this
Agreement.

Section 6. In consideration of the services and facilities provided by you
pursuant to Section 1 hereof, we will pay to you, and you will accept as full
payment therefor, a fee at the annual rate of (a) .25% of the average daily net
asset value of B Shares of the Small Company Equity Fund, Small Cap Value, Fund,
MidCap Equity Fund, Equity Growth Fund, Equity Income Fund, International Equity
Fund, Asset Allocation Fund, Equity Value Fund, Growth and Income Fund and
Strategic Equity Fund (collectively, the "Equity Funds") owned of record or
beneficially by Clients from time to time for whom you are the dealer of record
or holder of record or with whom you have a servicing relationship, (b) .15% of
the average daily net asset value of B Shares of the Short-Term Bond Fund,

<PAGE>

Intermediate Government Income Fund, High Quality Bond Fund and Tax-Exempt Bond
Fund (collectively, the "Bond Funds") owned of record or beneficially by Clients
from time to time for whom you are the dealer of record or holder of record or
with whom you have a servicing relationship, and (c) .05% of the average daily
net asset value of B Shares of the Money Market Fund owned of record or
beneficially by Clients from time to time for whom you are the dealer of record
or holder of record and with whom you have a servicing relationship. In
consideration of the services provided by you pursuant to Section 2 hereof, we
will pay to you, and you will accept as full payment therefor, a fee at the
annual rate of (a) .25% of the average daily net asset value of B Shares of the
Equity Funds, (b) .15% of the average daily net asset value of B Shares of the
Bond Funds, and (c) .05% of the average daily net asset value of B Shares of the
Money Market Fund. Said fee will be computed daily and payable monthly. For
purposes of determining the fees payable under this Section 6, the average daily
net asset value of Clients' B Shares will be computed in the manner specified in
our then current Registration Statement in connection with the computation of
the net asset value of the particular Fund's B Shares for purposes of purchases
and redemptions. The fee rates stated above may be prospectively increased or
decreased by us, in our sole discretion, at any time upon notice to you.
Further, we may, in our discretion and without notice, suspend or withdraw the
sale of B Shares, including the sale of such Shares to you for the account of
any Clients.

Section 7. You acknowledge that you will provide to our Board of Trustees,
at least quarterly, separate written reports of the amounts expended pursuant to
this Agreement for Shareholder Liaison Services and for Administrative Support
Services, respectively, and the purposes for which such expenditures were made.
In connection with such reports, you will furnish us or our designees with such
information as we or they may reasonably request (including, without limitation,
periodic certifications confirming the provision to Clients of some or all of
the services described herein), and will otherwise cooperate with us and our
designees (including, without limitation, any auditors designated by us), in
connection with the preparation of reports to our Board of Trustees concerning
this Agreement and the monies paid or payable by us pursuant hereto, as well as
any other reports or filings that may be required by law.

Section 8. We may enter into other similar Servicing Agreements with any
other person or persons without your consent.

Section 9. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of B Shares; (ii) the
compensation payable to you hereunder, together with any other compensation you
receive from Clients in connection with the investment of their assets in B
Shares of the Funds, will be disclosed to Clients, will be authorized by Clients
and will not be excessive or unreasonable.

Section 10. This Agreement will become effective on the date a fully executed
copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue until [September 7, 1998], and
thereafter will continue automatically for successive annual periods provided
such continuance is specifically approved at least annually by us in the manner
described in Section 13 hereof. This Agreement is terminable with respect to
any Fund, without penalty, at any time by us (which termination may be by vote
of a majority of our Disinterested Trustees as defined in Section 13 hereof or
by vote of the holders of a majority of the outstanding B Shares of such Fund)
or by you upon notice to us. This Agreement will terminate in the event of its
assignment, as defined in the Investment Company Act of 1940 (the "Act").

Section 11. All notices and other communications to either you or us will be
duly given if mailed, telegraphed, telexed or transmitted by similar
telecommunications device to the appropriate address shown above.

Section 12. This Agreement will be construed in accordance with the laws of
the Commonwealth of Massachusetts without giving effect to principles of
conflict of laws.

Section 13. This Agreement has been approved by vote of a majority of (i) our
Board of Trustees and (ii) those Trustees who are not "interested persons" (as
defined in the Act) of us and have no direct or indirect financial interest in
the operation of the Distribution and Services Plan adopted by us regarding the
provision of shareholder liaison and/or administrative support services to the
record or beneficial owners of B Shares or in any agreements

-2-
<PAGE>

related thereto ("Disinterested Trustees"), cast in person at a meeting called
for the purpose of voting on such approval.

Section 14. 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 at 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
the Trust personally, but bind only the Trust property, and all persons dealing
with any class of shares of the Trust must look solely to the Trust property
belonging to such class for the enforcement of any claims against the Trust.

If you agree to be legally bound by the provisions of this
Agreement, please sign a copy of this letter where indicated below and
promptly return it to us, c/o First Data Investor Services Group, Inc., 4400
Computer Drive, Westboro, Massachusetts 01581-5108.

Very truly yours,

THE GALAXY FUND

By:
-----------------------------------
Authorized Officer

Accepted and Agreed to:

- --------------------------------------
Name of Organization

By:
-----------------------------------
Authorized Officer

Date:
---------------------------------

- --------------------------------------
Taxpayer Identification Number

- --------------------------------------
Account Number

- --------------------------------------
Dealer Code

-3-
<PAGE>

APPENDIX A
----------

Please check the appropriate boxes to indicate the Funds for
which you wish to act as a Service Organization with respect to B Shares:

SHAREHOLDER LIAISON SERVICES ADMINISTRATIVE SUPPORT SERVICES

/ / Small Company Equity Fund / / Small Company Equity Fund

/ / Small Cap Value Fund / / Small Cap Value Fund

/ / MidCap Equity Fund / / MidCap Equity Fund

/ / Equity Growth Fund / / Equity Growth Fund

/ / Equity Income Fund / / Equity Income Fund

/ / International Equity Fund / / International Equity Fund

/ / Asset Allocation Fund / / Asset Allocation Fund

/ / Equity Value Fund / / Equity Value Fund

/ / Growth and Income Fund / / Growth and Income Fund

/ / Strategic Equity Fund / / Strategic Equity Fund

/ / Short-Term Bond Fund / / Short-Term Bond Fund

/ / Intermediate Government Income / / Intermediate Government Income
Fund Fund

/ / High Quality Bond Fund / / High Quality Bond Fund

/ / Tax-Exempt Bond Fund / / Tax-Exempt Bond Fund

/ / Money Market Fund / / Money Market Fund

- --------------------------------------
(Service Organization Name)

By:
-----------------------------------

-----------------------------------
Authorized Officer

Dated:
--------------------------------

A-1

<PAGE>

THE GALAXY FUND

DISTRIBUTION PLAN
FOR A PRIME SHARES

This Distribution Plan (the "Plan") has been adopted by the Board of
Trustees of The Galaxy Fund (the "Trust") in connection with the A Prime series
of shares (the "A Prime Shares") in each of the following investment portfolios
of the Trust: Small Company Equity Fund, Small Cap Value Fund, MidCap Equity
Fund, Equity Growth Fund, Equity Income Fund, International Equity Fund, Asset
Allocation Fund, Equity Value Fund, Growth and Income Fund, Strategic Equity
Fund, Short-Term Bond Fund, Intermediate Government Income Fund, High Quality
Bond Fund and Tax-Exempt Bond Fund (collectively, the "Funds"). The Plan has
been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act").

Section 1. DISTRIBUTION PAYMENTS. (a) The Trust may pay the
distributor of the Trust (the "Distributor") (or any other person) a fee (a
"Distribution Fee") of up to 0.30% annually of the average daily net assets
attributable to the outstanding A Prime Shares of each of the Funds. The
Distribution Fee shall be calculated and accrued daily, paid monthly and shall
be in consideration for distribution services and the assumption of related
expenses (including the payment of commissions and transaction fees) in
conjunction with the offering and sale of A Prime Shares of the Funds. In
determining the amounts payable on behalf of a Fund under the Plan, the net
asset value of the A Prime Shares shall be computed in the manner specified in
the Trust's then current Prospectuses and Statements of Additional Information
describing such A Prime Shares.

(b) Payments to the Distributor under subsection (a) above shall be
used by the Distributor to cover expenses and activities primarily intended to
result in the sale of A Prime Shares. Such expenses and activities may include
but are not limited to: (i) direct out-of-pocket promotional expenses incurred
by the Distributor in advertising and marketing A Prime Shares; (ii) expenses
incurred in connection with preparing, printing, mailing, and distributing or
publishing advertisements and sales literature; (iii) expenses incurred in
connection with printing and mailing Prospectuses and Statements of Additional
Information to other than current shareholders; (iv) periodic payments or
commissions to one or more securities dealers, brokers, financial institutions
or other industry professionals, such as investment advisors, accountants, and
estate planning firms (each a "Distribution Organization") with respect to a
Fund's A Prime Shares beneficially owned by customers for whom the Distribution
Organization is the Distribution Organization of record or shareholder of
record; (v) the direct or indirect cost of financing the payments or expenses
included in (i) and (iv) above; or (vi) such other services as may be construed
by any court or governmental agency or commission, including the Securities and
Exchange Commission (the "Commission"), to constitute distribution services
under the 1940 Act or rules and regulations thereunder.

Section 2. EXPENSES ALLOCATED; COMPLIANCE. Amounts paid by a Fund
under the Plan must be for distribution services rendered for or on behalf of
the holders of such Fund's

<PAGE>

A Prime Shares. However, joint distribution financing or other services
rendered with respect to such A Prime Shares (which may involve other investment
funds or companies that are affiliated persons of the Trust or affiliated
persons of the Distributor) is authorized to the extent permitted by law.

Section 3. REPORTS TO TRUST. So long as this Plan is in effect,
the Distributor shall provide the Trust's Board of Trustees, and the Trustees
shall review, at least quarterly, a written report of the amounts expended
pursuant to the Plan and the purposes for which such expenditures were made.

Section 4. APPROVAL OF PLAN. This Plan will become effective with
respect to a particular Fund's A Prime Shares on the date the public offering of
A Prime Shares commences upon the approval by a majority of the Board of
Trustees, including a majority of those trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
entered into in connection with the Plan (the "Disinterested Trustees"),
pursuant to a vote cast in person at a meeting called for the purpose of voting
on the approval of the Plan.

Section 5. CONTINUANCE OF PLAN. Unless sooner terminated in
accordance with the terms hereof, this Plan shall continue until May 28, 1999
and thereafter for so long as its continuance is specifically approved at least
annually by the Trust's Board of Trustees in the manner described in Section 4
hereof.

Section 6. AMENDMENTS. This Plan may be amended at any time by
the Board of Trustees provided that (a) any amendment to increase materially the
costs which the A Prime Shares of a Fund may bear pursuant to the Plan shall be
effective only upon approval by a vote of a majority of the outstanding A Prime
Shares affected by such matter, and (b) any material amendments of the terms of
the Plan shall become effective only upon approval in the manner described in
Section 4 hereof.

Section 7. TERMINATION. This Plan, as to any Fund, is terminable
without penalty at any time by (a) a vote of a majority of the Disinterested
Trustees, or (b) a vote of a majority of the outstanding A Prime Shares of such
Fund.

Section 8. SELECTION/NOMINATION OF TRUSTEES. While this Plan is
in effect, the selection and nomination of those Disinterested Trustees shall be
committed to the discretion of such Disinterested Trustees.

Section 9. 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.

Adopted: May 28, 1998

-2-

<PAGE>

THE GALAXY FUND

DISTRIBUTION AND SERVICES PLAN
FOR B PRIME SHARES
-------------------------------

This Distribution and Services Plan (the "Plan") has been adopted by
the Board of Trustees of The Galaxy Fund (the "Trust") in connection with the B
Prime series of shares (the "B Prime Shares") in each of the following
investment portfolios of the Trust: Small Company Equity Fund, Small Cap Value
Fund, Equity Growth Fund, Equity Income Fund, International Equity Fund, Asset
Allocation Fund, Equity Value Fund, Growth and Income Fund, Strategic Equity
Fund, Short-Term Bond Fund, Intermediate Government Income Fund, High Quality
Bond Fund and Tax-Exempt Bond Fund (collectively, the "Funds"). The Plan has
been adopted pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended (the "1940 Act").

Section 1. EXPENSES. The Trust may incur expenses under the Plan
in an amount not to exceed 1.25% annually of the average daily net assets
attributable to the outstanding B Prime Shares of each of the Funds.

Section 2. DISTRIBUTION PAYMENTS. (a) The Trust may pay the
distributor of the Trust (the "Distributor") (or any other person) a fee (a
"Distribution Fee") of up to 0.75% annually of the average daily net assets
attributable to the outstanding B Prime Shares of each of the Funds. The
Distribution Fee shall be calculated and accrued daily, paid monthly and shall
be in consideration for distribution services and the assumption of related
expenses (including the payment of commissions and transaction fees) in
conjunction with the offering and sale of B Prime Shares of the Funds. In
determining the amounts payable on behalf of a Fund under the Plan, the net
asset value of the B Prime Shares shall be computed in the manner specified in
the Trust's then current Prospectuses and Statements of Additional Information
describing such B Prime Shares.

(b) Payments to the Distributor under subsection (a) above shall be
used by the Distributor to cover expenses and activities primarily intended to
result in the sale of B Prime Shares. Such expenses and activities may include
but are not limited to: (i) direct out-of-pocket promotional expenses incurred
by the Distributor in advertising and marketing B Prime Shares; (ii) expenses
incurred in connection with preparing, printing, mailing, and distributing or
publishing advertisements and sales literature; (iii) expenses incurred in
connection with printing and mailing Prospectuses and Statements of Additional
Information to other than current shareholders; (iv) periodic payments or
commissions to one or more securities dealers, brokers, financial institutions
or other industry professionals, such as investment advisors, accountants, and
estate planning firms (each a "Distribution Organization") with respect to a
Fund's B Prime Shares beneficially owned by customers for whom the Distribution
Organization is the Distribution Organization of record or shareholder of
record; (v) the direct or indirect cost of financing the payments or expenses
included in (i) and (iv) above; or (vi) such other services as may be construed
by any court or governmental agency or commission, including the Securities

<PAGE>

and Exchange Commission (the "Commission"), to constitute distribution services
under the 1940 Act or rules and regulations thereunder.

Section 3. PAYMENTS FOR SHAREHOLDER LIAISON SERVICES COVERED BY
PLAN. (a) The Trust may also pay securities dealers, brokers, financial
institutions or other industry professionals, such as investment advisors,
accountants, and estate planning firms (each a "Service Organization") for
Shareholder Liaison Services (as hereinafter defined) provided with respect to
their customers' B Prime Shares. Shareholder Liaison Services shall be provided
pursuant to an agreement in substantially the form attached hereto ("Servicing
Agreement"). Any organization providing distribution assistance may also become
a Service Organization and receive fees for Shareholder Liaison Services
pursuant to a Servicing Agreement under this Plan.

(b) Fees paid to a Service Organization under subsection (a) above
may be paid at an annual rate of up to 0.25% of the average daily net assets
attributable to the outstanding B Prime Shares of each of the Funds, which B
Prime Shares are owned of record or beneficially by that Service Organization's
customers for whom such Service Organization is the dealer of record or
shareholder of record or with whom it has a servicing relationship. Such fees
shall be calculated and accrued daily, paid monthly and computed in the manner
set forth in the Servicing Agreement.

Section 4. PAYMENTS FOR ADMINISTRATIVE SUPPORT SERVICES COVERED BY
PLAN. (a) The Trust may also pay Service Organizations for Administrative
Support Services (as hereinafter defined) provided with respect to its
Customers' B Prime Shares. Administrative Support Services shall be provided
pursuant to a Servicing Agreement. Any organization that receives fees under
Section 2 or Section 3 of this Plan may also receive fees pursuant to this
Section 4.

(c) "Administrative Support Services" include but are not limited to:
(i) transfer agent and subtransfer agent services for beneficial owners of B
Prime Shares; (ii) aggregating and processing purchase and redemption orders;
(iii) providing beneficial owners with statements showing their positions in B
Prime Shares; (iv) processing dividend payments; (v) providing subaccounting
services for B Prime 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, tabulating,
and transmitting

-2-
<PAGE>

proxies executed by beneficial owners; PROVIDED, however, that such term does
not include Shareholder Liaison Services.

Section 5. EXPENSES ALLOCATED; COMPLIANCE. Amounts paid by a Fund
under the Plan must be for services rendered for or on behalf of the holders of
such Fund's B Prime Shares. However, joint distribution financing or other
services rendered with respect to such B Prime Shares (which may involve other
investment funds or companies that are affiliated persons of the Trust or
affiliated persons of the Distributor) is authorized to the extent permitted by
law.

Section 6. REPORTS TO TRUST. So long as this Plan is in effect,
the Distributor shall provide the Trust's Board of Trustees, and the Trustees
shall review, at least quarterly, a written report of the amounts expended
pursuant to the Plan and the purposes for which such expenditures were made.

Section 7. APPROVAL OF PLAN. This Plan will become effective with
respect to a particular Fund's B Prime Shares on the date the public offering of
B Prime Shares commences upon the approval by a majority of the Board of
Trustees, including a majority of those trustees who are not "interested
persons" (as defined in the 1940 Act) of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements
entered into in connection with the Plan (the "Disinterested Trustees"),
pursuant to a vote cast in person at a meeting called for the purpose of voting
on the approval of the Plan.

Section 8. CONTINUANCE OF PLAN. Unless sooner terminated in
accordance with the terms hereof, this Plan shall continue until September 10,
1999, and thereafter for so long as its continuance is specifically approved at
least annually by the Trust's Board of Trustees in the manner described in
Section 7 hereof.

Section 9. AMENDMENTS. This Plan may be amended at any time by
the Board of Trustees provided that (a) any amendment to increase materially the
costs which the B Prime Shares of a Fund may bear for distribution pursuant to
the Plan shall be effective only upon approval by a vote of a majority of the
outstanding B Prime Shares affected by such matter, and (b) any material
amendments of the terms of the Plan shall become effective only upon approval in
the manner described in Section 7 hereof.

Section 11. SELECTION/NOMINATION OF TRUSTEES. While this Plan is
in effect, the selection and nomination of those Disinterested Trustees shall be
committed to the discretion of such Disinterested Trustees.

Section 12. 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.

Adopted: September 10, 1998

-3-
<PAGE>

GALAXY FUND

SERVICING AGREEMENT
to
DISTRIBUTION AND SERVICES PLAN
FOR B PRIME SHARES

Ladies and Gentlemen:

We wish to enter into this Servicing Agreement with you concerning the provision
of shareholder liaison and/or administrative support services to your customers
who may from time to time be the record or beneficial owners of B Prime Shares
of one or more of our investment portfolios (individually, a "Fund" and
collectively, the "Funds"), which are listed on Appendix A.

The terms and conditions of this Servicing Agreement are as follows:

Section 1. You agree to provide Shareholder Liaison Services to your
customers ("Clients") who may from time to time own of record or beneficially a
Fund's B Prime Shares. "Shareholder Liaison Services" means "personal service
and/or the maintenance of shareholder accounts" within the meaning of the Rules
of Fair Practice of the National Association of Securities Dealers, Inc., such
as responding to customers' inquiries and providing information on their
investments.

Section 2. You agree to provide Administrative Support Services to Clients
who may from time to time own of record or beneficially a Fund's B Prime Shares.
"Administrative Support Services" include but are not limited to: (i) transfer
agent and subtransfer agent services for beneficial owners of B Prime Shares;
(ii) aggregating and processing purchase and redemption orders; (iii) providing
beneficial owners with statements showing their positions in B Prime Shares;
(iv) processing dividend payments; (v) providing subaccounting services for B
Prime 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, tabulating, and
transmitting proxies executed by beneficial owners; PROVIDED, however, that such
term does not include Shareholder Liaison Services.

Section 4. Neither you nor any of your officers, employees or agents is
authorized to make any representations concerning us, a Fund, or its B Prime
Shares except those contained in our then current prospectuses for such B Prime
Shares, copies of which will be supplied by us to you, or in such supplemental
literature or advertising as may be authorized by us in writing.

Section 6. In consideration of the services and facilities provided by you
pursuant to Section 1 hereof, we will pay to you, and you will accept as full
payment therefor, a fee at the annual rate of [.125%] of the average daily net
asset value of B Prime Shares of each Fund owned of record or beneficially by
Clients from time to time for whom you are the dealer of record or holder of
record or with whom you have a servicing

<PAGE>

relationship. In consideration of the services provided by you pursuant to
Section 2 hereof, we will pay to you, and you will accept as full payment
therefor, a fee at the annual rate of [.125%] of the average daily net asset
value of B Prime Shares of each Fund. Said fee will be computed daily and
payable monthly. For purposes of determining the fees payable under
this Section 6, the average daily net asset value of Clients' B Prime Shares
will be computed in the manner specified in our then current Registration
Statement in connection with the computation of the net asset value of the
particular Fund's B Prime Shares for purposes of purchases and redemptions. The
fee rates stated above may be prospectively increased or decreased by us, in our
sole discretion, at any time upon notice to you. Further, we may, in our
discretion and without notice, suspend or withdraw the sale of B Prime Shares,
including the sale of such Shares to you for the account of any Clients.

Section 8. We may enter into other similar Servicing Agreements with any
other person or persons without your consent.

Section 9. By your written acceptance of this Agreement, you represent,
warrant and agree that: (i) in no event will any of the services provided by you
hereunder be primarily intended to result in the sale of B Prime Shares; (ii)
the compensation payable to you hereunder, together with any other compensation
you receive from Clients in connection with the investment of their assets in B
Prime Shares of the Funds, will be disclosed to Clients, will be authorized by
Clients and will not be excessive or unreasonable.

Section 10. This Agreement will become effective on the date a fully executed
copy of this Agreement is received by us or our designee. Unless sooner
terminated, this Agreement will continue until [September 10, 1999], and
thereafter will continue automatically for successive annual periods provided
such continuance is specifically approved at least annually by us in the manner
described in Section 13 hereof. This Agreement is terminable with respect to
any Fund, without penalty, at any time by us (which termination may be by vote
of a majority of our Disinterested Trustees as defined in Section 13 hereof or
by vote of the holders of a majority of the outstanding B Prime Shares of such
Fund) or by you upon notice to us. This Agreement will terminate in the event
of its assignment, as defined in the Investment Company Act of 1940 (the "Act").

Section 12. This Agreement will be construed in accordance with the laws of
the Commonwealth of Massachusetts without giving effect to principles of
conflict of laws.

-2-
<PAGE>

If you agree to be legally bound by the provisions of this Agreement,
please sign a copy of this letter where indicated below and promptly return it
to us, c/o First Data Investor Services Group, Inc., 4400 Computer Drive,
Westboro, Massachusetts 01581-5108.

Very truly yours,

THE GALAXY FUND

By:
------------------------------------------
Authorized Officer

Accepted and Agreed to:

- ---------------------------------------------
Name of Organization

By:
------------------------------------------
Authorized Officer

Date:
----------------------------------------

- ---------------------------------------------
Taxpayer Identification Number

- ---------------------------------------------
Account Number

- ---------------------------------------------
Dealer Code

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<PAGE>

APPENDIX A

Please check the appropriate boxes to indicate the Funds for which you wish
to act as a Service Organization with respect to B Prime Shares:

<TABLE>
<CAPTION>
Shareholder Liaison Services Administrative Support Services
- ---------------------------- -------------------------------
<S> <C>
/ / Small Company Equity Fund / / Small Company Equity Fund

/ / Small Cap Value Fund / / Small Cap Value Fund

/ / Equity Growth Fund / / Equity Growth Fund

/ / Equity Income Fund / / Equity Income Fund

/ / International Equity Fund / / International Equity Fund

/ / Asset Allocation Fund / / Asset Allocation Fund

/ / Equity Value Fund / / Equity Value Fund

/ / Growth and Income Fund / / Growth and Income Fund

/ / Strategic Equity Fund / / Strategic Equity Fund

/ / Short-Term Bond Fund / / Short-Term Bond Fund

/ / Intermediate Government Income / / Intermediate Government Income
Fund Fund

/ / High Quality Bond Fund / / High Quality Bond Fund

/ / Tax-Exempt Bond Fund / / Tax-Exempt Bond Fund
</TABLE>

(Service Organization Name)
By:
------------------------------------------

----------------------------------------
Authorized Officer

Dated:
---------------------------------------

A-1

<PAGE>

THE GALAXY FUND
("Galaxy")

AMENDED AND RESTATED
PLAN PURSUANT TO RULE 18f-3 FOR OPERATION OF
A MULTI-CLASS SYSTEM

I. INTRODUCTION

On February 23, 1995, the Securities and Exchange Commission (the
"Commission") promulgated Rule 18f-3 under the Investment Company Act of 1940,
as amended (the "1940 Act"), which permits the creation and operation of a
multi-class distribution structure without the need to obtain an exemptive order
under Section 18 of the 1940 Act. Rule 18f-3, which became effective on April
3, 1995, requires an investment company to file with the Commission a written
plan specifying all of the differences among the classes, including the various
services offered to shareholders, the different distribution arrangements for
each class, the methods for allocating expenses relating to those differences
and any conversion features or exchange privileges. On May 25, 1995, the Board
of Trustees of Galaxy authorized Galaxy to operate its multi-class distribution
structure in compliance with Rule 18f-3. On October 10, 1995, Galaxy filed a
Plan pursuant to Rule 18f-3 for operation of a multi-class system (the "1995
Prior Plan"), which had been approved by the Board of Trustees of Galaxy on
September 7, 1995, with the Commission. Prior to the filing of the 1995 Prior
Plan, Galaxy operated a multi-class distribution structure pursuant to an
exemptive order granted by the Commission on February 19, 1992. On March 1,
1996, Galaxy filed an Amended and Restated Plan pursuant to Rule 18f-3 for
operation of a multi-class system (the "1996-1 Prior Plan"), which had been
approved by the Board of Trustees of Galaxy on December 7, 1995. On
December 30, 1996, Galaxy filed an Amended and Restated Plan pursuant to Rule
18f-3 for operation of a multi-class system (the "1996-2 Prior Plan"), which had
been approved by the Board of Trustees of Galaxy on December 5, 1996. On
September 4, 1997 the Board of Trustees of Galaxy approved an Amended and
Restated Plan pursuant to Rule 18f-3 for operation of a multi-class system (the
"1997-1 Prior Plan"). On December 15, 1997, Galaxy filed an Amended and
Restated Plan pursuant to Rule 18f-3 for operation of a multi-class system (the
"1997-2 Prior Plan"), which had been approved by the Board of Trustees of Galaxy
on December 4, 1997. The Amended and Restated Plan pursuant to Rule 18f-3 for
operation of a multi-class system presented herewith, which was approved by the
Board of Trustees of Galaxy on May 28, 1998 and on September 10, 1998 as
revised, supersedes the 1995 Prior Plan, the 1996-1 Prior Plan, the 1996-2 Prior
Plan, the 1997-1 Prior Plan and the 1997-2 Prior Plan.

<PAGE>

II. ATTRIBUTES OF CLASSES

A. GENERALLY

EQUITY FUNDS

Galaxy shall offer (a) five classes of shares -- Retail A Shares,
Retail B Shares, A Prime Shares, B Prime Shares and Trust Shares -- in the
Equity Value Fund, Equity Growth Fund, Equity Income Fund, International Equity
Fund, Small Company Equity Fund, Small Cap Value Fund, Asset Allocation Fund,
Growth and Income Fund and Strategic Equity Fund, and (b) three classes of
shares -- Retail A Shares, Retail B Shares and Trust Shares -- in the MidCap
Equity Fund (each a "Fund" and collectively, the "Equity Funds").

BOND FUNDS

Galaxy shall offer (a) five classes of shares -- Retail A Shares,
Retail B Shares, A Prime Shares, B Prime Shares and Trust Shares -- in the
Short-Term Bond Fund, Intermediate Government Income Fund, High Quality Bond
Fund and Tax-Exempt Bond Fund, and (b) two classes of shares -- Retail A Shares
and Trust Shares -- in the Corporate 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 (each a "Fund" and
collectively, the "Bond Funds").

MONEY MARKET FUNDS

Galaxy shall offer (a) three classes of shares -- Retail A Shares,
Retail B Shares and Trust Shares -- in the Money Market Fund, and (b) two
classes of shares -- Retail A Shares and Trust Shares -- in the Government Fund,
Tax-Exempt Fund and U.S. Treasury Fund (each a "Fund" and collectively, the
"Money Market Funds").

In general, shares of each class shall be identical except for
different expense variables (which will result in different returns for each
class), certain related rights and certain shareholder services. More
particularly, the Retail A Shares, the Retail B Shares, the A Prime Shares,
the B Prime Shares and the Trust Shares of each Fund shall represent
interests in the same portfolio of investments of the particular Fund, and
shall be identical in all respects, except for: (a) the impact of (i)
expenses assessed to a class pursuant to the Shareholder Services Plan,
Distribution and Services Plan or Distribution Plan adopted for that class,
(ii) transfer agency expenses, and (iii) any other incremental expenses
identified from time to time that should be properly allocated to one class
so long as any changes in expense allocations are reviewed and approved by a
vote of the Board of Trustees, including a majority of the independent
Trustees; (b) the fact that (i) the Retail A Shares shall vote separately on
any matter submitted to holders of Retail A Shares that pertains to the
Shareholder Services Plan adopted for that class; (ii) the Retail B Shares
shall vote separately on any matter submitted to holders of Retail B Shares
that pertains to the Distribution and Services Plan adopted for that class;
(iii) the A Prime Shares shall vote separately on any matter submitted to
holders of A Prime Shares that pertains to the

-2-
<PAGE>

Distribution Plan adopted for that class; (iv) the B Prime Shares shall vote
separately on any matter submitted to holders of B Prime Shares that pertains
to the Distribution and Services Plan adopted for that class; (v) the Trust
Shares shall vote separately on any matter submitted to holders of Trust
Shares that pertains to the Shareholder Services Plan adopted for that class;
and (vi) each class shall vote separately on any matter submitted to
shareholders that pertains to the class expenses borne by that class; (c) the
exchange privileges of each class of shares; (d) the designation of each
class of shares; and (e) the different shareholder services relating to a
class of shares.

B. DISTRIBUTION ARRANGEMENTS, EXPENSES AND SALES CHARGES

1. EQUITY FUNDS

RETAIL A SHARES

Retail A Shares of the Equity Funds shall be offered to
individuals or corporations who submit a purchase application to Galaxy,
purchasing directly either for their own accounts or for the accounts of others
("Direct Investors") and shall be offered to FIS Securities, Inc., Fleet
Brokerage Securities, Inc., Fleet Securities, Inc., Fleet Enterprises, Inc.,
Fleet Financial Group, Inc., its affiliates, their correspondent banks and other
qualified banks, savings and loan associations and broker/dealers
("Institutions") who purchase the shares on behalf of their customers
("Customers") who are the beneficial owners of the shares.

Retail A Shares of the Equity Funds shall be subject to a
front-end sales charge which shall not initially exceed 3.75% of the offering
price of Retail A Shares of those Funds (subject to the reductions and
exemptions described in the prospectus for such Shares). When the aggregate
offering price of Retail A Shares of the Equity and Bond Funds purchased by an
investor qualifies the investor to purchase such Retail A Shares without payment
of a front-end sales charge, a contingent deferred sales charge of 1% may be
imposed if such Retail A Shares are redeemed within one year of purchase.

Retail A Shares of the Equity Funds shall further be subject to a
fee payable pursuant to the Shareholder Services Plan adopted for that class of
up to .25% (on an annualized basis) of the average daily net asset value of
Retail A Shares beneficially owned by Customers of Institutions. Services
provided by Institutions for such fee may include: (a) aggregating and
processing purchase and redemption requests and placing net purchase and
redemption orders with the distributor; (b) processing dividend payments from an
Equity Fund; (c) providing sub-accounting with respect to Retail A Shares or the
information necessary for sub-accounting; and (d) providing periodic mailings to
Customers.

Retail A Shares of the Equity Funds shall further be subject to a
separate fee payable pursuant to the same Shareholder Services Plan adopted for
that class of up to .25% (on an annualized basis) of the average daily net asset
value of Retail A Shares beneficially owned by Customers of Institutions.
Services provided by Institutions for such separate fee may include: (a)
providing Customers with information as to their positions in Retail A Shares;
(b)

-3-
<PAGE>

responding to Customer inquiries; and (c) providing a service to invest the
assets of Customers in Retail A Shares.

Galaxy shall initially limit the total fees payable by Retail A
Shares of the Equity Funds pursuant to the Shareholder Services Plan adopted for
that class to an amount which shall not initially exceed .30% (on an annualized
basis) of the average daily net asset value of Retail A Shares beneficially
owned by Customers of Institutions.

RETAIL B SHARES

Retail B Shares of the Equity Funds shall be offered to Direct
Investors and to Institutions who purchase the shares on behalf of Customers who
are the beneficial owners of the shares.

Retail B Shares of the Equity Funds, if redeemed within six years
of purchase, shall be subject to a contingent deferred sales charge which shall
not initially exceed 5.0% of the original purchase price or redemption proceeds,
whichever is lower (subject to the reductions and exemptions described in the
prospectus for such Shares).

Retail B Shares of the Equity Funds shall be further subject to a
fee payable pursuant to the Distribution and Services Plan adopted for the class
(a) for distribution expenses, which shall not initially exceed .65% (on an
annualized basis) of the average daily net asset value of the Equity Funds'
respective outstanding Retail B Shares, (b) for shareholder liaison services,
which shall not initially exceed .25% (on an annualized basis) of the average
daily net assets attributable to Retail B Shares of the respective Equity Funds
that are owned of record or beneficially by customers of securities dealers,
brokers, financial institutions or other industry professionals ("Service
Organizations") that provide shareholder liaison services with respect to such
customers' Retail B Shares, and (c) for administrative support services, which
shall not initially exceed .25% (on an annualized basis) of the average daily
net assets attributable to Retail B Shares of the respective Equity Funds that
are owned of record or beneficially by customers of Service Organizations that
provide administrative support services with respect to such customers' Retail B
Shares.

Galaxy shall initially limit the total fees payable by Retail B
Shares of the Equity Funds for shareholder liaison services and administrative
support services pursuant to the Distribution and Services Plan adopted for that
class to an amount not to exceed .30% (on an annualized basis) of the average
daily net asset value of Retail B Shares owned of record or beneficially by
customers of Service Organizations.

Shareholder liaison services provided under the Distribution and
Services Plan means "personal service and/or the maintenance of shareholder
accounts" within the meaning of the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. ("NASD"), such as responding to customer
inquiries and providing information on their investments.

-4-
<PAGE>

Administrative support services provided under the Distribution
and Services Plan may include, but are not limited to, (a) transfer agent and
subtransfer agent services for beneficial owners of Retail B Shares; (b)
aggregating and processing purchase and redemption orders; (c) providing
beneficial owners with statements showing their positions in Retail B Shares;
(d) processing dividend payments; (e) providing sub-accounting services for
Retail B Shares held beneficially; (f) forwarding shareholder communications,
such as proxies, shareholder reports, dividend and tax notices, and updating
prospectuses to beneficial owners; and (g) reviewing, tabulating and
transmitting proxies executed by beneficial owners.

A PRIME SHARES

A Prime Shares of the Equity Funds shall be offered through
selected broker-dealers to individual or institutional customers.

A Prime Shares of the Equity Funds shall be subject to a
front-end sales charge which shall not initially exceed 5.50% of the offering
price of A Prime Shares of those Funds (subject to the reductions and exemptions
described in the prospectus for such Shares). When the aggregate offering price
of A Prime Shares of the Equity and Bond Funds purchased by an investor
qualifies the investor to purchase such A Prime Shares without payment of a
front-end sales charge, a contingent deferred sales charge of 1% may be imposed
if such A Prime Shares are redeemed within one year of purchase.

A Prime Shares of the Equity Funds shall further be subject to a
fee payable pursuant to the Distribution Plan adopted for that class for
distribution expenses, which shall not initially exceed .30% (on an annualized
basis) of the average daily net asset value of the Equity Funds' respective
outstanding A Prime Shares.

B PRIME SHARES

B Prime Shares of the Equity Funds shall be offered through
selected broker-dealers to individual or institutional customers.

B Prime Shares of the Equity Funds, if redeemed within six years
of purchase, shall be subject to a contingent deferred sales charge which shall
not initially exceed 5.0% of the original purchase price or redemption proceeds,
whichever is lower (subject to the reductions and exemptions described in the
prospectus for such Shares).

B Prime Shares of the Equity Funds shall be further subject to a
fee payable pursuant to the Distribution and Services Plan adopted for the class
(a) for distribution expenses, which shall not initially exceed .65% (on an
annualized basis) of the average daily net asset value of the Equity Funds'
respective outstanding B Prime Shares, (b) for shareholder liaison services,
which shall not initially exceed .25% (on an annualized basis) of the average
daily net assets attributable to B Prime Shares of the respective Equity Funds
that are owned of record or beneficially by customers of securities dealers,
brokers, financial institutions or other industry professionals ("Service
Organizations") that provide shareholder liaison services with respect to such
customers' B Prime Shares, and (c) for administrative support services, which

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<PAGE>

shall not initially exceed .25% (on an annualized basis) of the average daily
net assets attributable to B Prime Shares of the respective Equity Funds that
are owned of record or beneficially by customers of Service Organizations that
provide administrative support services with respect to such customers' B Prime
Shares.

Galaxy shall initially limit the total fees payable by B Prime
Shares of the Equity Funds for shareholder liaison services and administrative
support services pursuant to the Distribution and Services Plan adopted for that
class to an amount not to exceed .30% (on an annualized basis) of the average
daily net asset value of B Prime Shares owned of record or beneficially by
customers of Service Organizations.

Shareholder liaison services provided under the Distribution and
Services Plan means "personal service and/or the maintenance of shareholder
accounts" within the meaning of the Rules of Fair Practice of the NASD, such as
responding to customer inquiries and providing information on their investments.

Administrative support services provided under the Distribution
and Services Plan may include, but are not limited to, (a) transfer agent and
subtransfer agent services for beneficial owners of B Prime Shares; (b)
aggregating and processing purchase and redemption orders; (c) providing
beneficial owners with statements showing their positions in B Prime Shares; (d)
processing dividend payments; (e) providing subaccounting services for B Prime
Shares held beneficially; (f) forwarding shareholder communications, such as
proxies, shareholder reports, dividend and tax notices, and updating
prospectuses to beneficial owners; and (g) reviewing, tabulating and
transmitting proxies executed by beneficial owners.

TRUST SHARES

Trust Shares of the Equity Funds shall be offered 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. Trust Shares of the
International Equity Fund also shall be offered to clients, partners and
employees of Oechsle International Advisors, L.P., the sub-adviser to that Fund.

Trust Shares of the Equity Funds shall not be subject to a sales
charge and shall not initially be subject to the shareholder servicing fee
payable pursuant to the Shareholder Services Plan adopted but not yet
implemented with respect to such class.

2. BOND FUNDS

RETAIL A SHARES

Retail A Shares of the Bond Funds shall be offered to Direct
Investors and shall be offered to Institutions who purchase shares on behalf of
Customers. As of the date of filing of this Plan with the Commission, Retail A
Shares of the Corporate Bond Fund shall not initially be offered to investors.

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<PAGE>

Retail A Shares of the Bond Funds shall be subject to a front-end
sales charge which shall not initially exceed 3.75% of the offering price of
Retail A Shares of those Funds (subject to the reductions and exemptions
described in the prospectus for such Shares). When the aggregate offering price
of Retail A Shares of the Equity and Bond Funds purchased by an investor
qualifies the investor to purchase such Retail A Shares without payment of a
front-end sales charge, a contingent deferred sales charge of 1% may be imposed
if such Retail A Shares are redeemed within one year of purchase.

Retail A Shares of the Bond Funds shall further be subject to a
fee payable pursuant to the Shareholder Services Plan adopted for that class of
up to .15% (on an annualized basis) of the average daily net asset value of
Retail A Shares beneficially owned by Customers of Institutions. Services
provided by Institutions for such fee may include: (a) aggregating and
processing purchase and redemption requests and placing net purchase and
redemption orders with the distributor; (b) processing dividend payments from a
Bond Fund; (c) providing sub-accounting with respect to Retail A Shares or the
information necessary for sub-accounting; and (d) providing periodic mailings to
Customers.

Retail A Shares of the Bond Funds shall further be subject to a
separate fee payable pursuant to the same Shareholder Services Plan adopted for
that class of up to .15% (on an annualized basis) of the average daily net asset
value of Retail A Shares beneficially owned by Customers of Institutions.
Services provided by Institutions for such separate fee may include: (a)
providing Customers with information as to their positions in Retail A Shares;
(b) responding to Customer inquiries; and (c) providing a service to invest the
assets of Customers in Retail A Shares.

Galaxy shall initially limit the total fees payable by Retail A
Shares of the Bond Funds pursuant to the Shareholder Services Plan adopted for
that class to an amount which shall not initially exceed .15% (on an annualized
basis) of the average daily net asset value of Retail A Shares beneficially
owned by Customers of Institutions.

RETAIL B SHARES

Retail B Shares of the Bond Funds shall be offered to Direct
Investors and to Institutions who purchase the shares on behalf of Customers who
are the beneficial owners of the shares.

Retail B Shares of the Bond Funds, if redeemed within six years
of purchase, shall be subject to a contingent deferred sales charge which shall
not initially exceed 5.0% of the original purchase price or redemption proceeds,
whichever is lower (subject to the reductions and exemptions described in the
prospectus for such Shares).

Retail B Shares of the Bond Funds shall be further subject to a
fee payable pursuant to the Distribution and Services Plan adopted for the class
(a) for distribution expenses, which shall not initially exceed .65% (on an
annualized basis) of the average daily net asset value of the Bond Funds'
respective outstanding Retail B Shares, (b) for shareholder liaison services,
which shall not initially exceed .25% (on an annualized basis) of the average
daily net assets

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<PAGE>

attributable to Retail B Shares of the respective Bond Funds that are owned of
record or beneficially by customers of securities dealers, brokers, financial
institutions or other industry professionals ("Service Organizations") that
provide shareholder liaison services with respect to such customers' Retail B
Shares, and (c) for administrative support services, which shall not initially
exceed .25% (on an annualized basis) of the average daily net assets
attributable to Retail B Shares of the respective Bond Funds that are owned of
record or beneficially by customers of Service Organizations that provide
administrative support services with respect to such customers' Retail B Shares.

Galaxy shall initially limit the total fees payable by Retail B
Shares of the Bond Funds for shareholder liaison services and administrative
support services pursuant to the Distribution and Services Plan adopted for that
class to an amount not to exceed .15% (on an annualized basis) of the average
daily net asset value of Retail B Shares owned of record or beneficially by
customers of Service Organizations.

Shareholder liaison services provided under the Distribution and
Services Plan means "personal service and/or the maintenance of shareholder
accounts" within the meaning of the Rules of Fair Practice of the NASD, such as
responding to customer inquiries and providing information on their investments.

Administrative support services provided under the Distribution
and Services Plan may include, but are not limited to, (a) transfer agent and
subtransfer agent services for beneficial owners of Retail B Shares; (b)
aggregating and processing purchase and redemption orders; (c) providing
beneficial owners with statements showing their positions in Retail B Shares;
(d) processing dividend payments; (e) providing subaccounting services for
Retail B Shares held beneficially; (f) forwarding shareholder communications,
such as proxies, shareholder reports, dividend and tax notices, and updating
prospectuses to beneficial owners; and (g) reviewing, tabulating and
transmitting proxies executed by beneficial owners.

A PRIME SHARES

A Prime Shares of the Bond Funds shall be offered through
selected broker-dealers to individual or institutional customers.

A Prime Shares of the Bond Funds shall be subject to a front-end
sales charge which shall not initially exceed 4.75% of the offering price of A
Prime Shares of those Funds (subject to the reductions and exemptions described
in the prospectus for such Shares). When the aggregate offering price of Retail
A Shares of the Equity and Bond Funds purchased by an investor qualifies the
investor to purchase such Retail A Shares without payment of a front-end sales
charge, a contingent deferred sales charge of 1% may be imposed if such Retail A
Shares are redeemed within one year of purchase.

A Prime Shares of the Bond Funds shall further be subject to a
fee payable pursuant to the Distribution Plan adopted for that class for
distribution expenses, which shall not initially exceed .30% (on an annualized
basis) of the average daily net asset value of the Bond Funds' respective
outstanding A Prime Shares.

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<PAGE>

B PRIME SHARES

B Prime Shares of the Bond Funds shall be offered through
selected broker-dealers to individual or institutional customers.

B Prime Shares of the Bond Funds, if redeemed within six years of
purchase, shall be subject to a contingent deferred sales charge which shall not
initially exceed 5.0% of the original purchase price or redemption proceeds,
whichever is lower (subject to the reductions and exemptions described in the
prospectus for such Shares).

B Prime Shares of the Bond Funds shall be further subject to a
fee payable pursuant to the Distribution and Services Plan adopted for the class
(a) for distribution expenses, which shall not initially exceed .65% (on an
annualized basis) of the average daily net asset value of the Bond Funds'
respective outstanding B Prime Shares, (b) for shareholder liaison services,
which shall not initially exceed .25% (on an annualized basis) of the average
daily net assets attributable to B Prime Shares of the respective Bond Funds
that are owned of record or beneficially by customers of securities dealers,
brokers, financial institutions or other industry professionals ("Service
Organizations") that provide shareholder liaison services with respect to such
customers' B Prime Shares, and (c) for administrative support services, which
shall not initially exceed .25% (on an annualized basis) of the average daily
net assets attributable to B Prime Shares of the respective Bond Funds that are
owned of record or beneficially by customers of Service Organizations that
provide administrative support services with respect to such customers' B Prime
Shares.

Galaxy shall initially limit the total fees payable by B Prime
Shares of the Bond Funds for shareholder liaison services and administrative
support services pursuant to the Distribution and Services Plan adopted for that
class to an amount not to exceed .15% (on an annualized basis) of the average
daily net asset value of B Prime Shares owned of record or beneficially by
customers of Service Organizations.

Shareholder liaison services provided under the Distribution and
Services Plan means "personal service and/or the maintenance of shareholder
accounts" within the meaning of the Rules of Fair Practice of the NASD, such as
responding to customer inquiries and providing information on their investments.

Administrative support services provided under the Distribution
and Services Plan may include, but are not limited to, (a) transfer agent and
subtransfer agent services for beneficial owners of B Prime Shares; (b)
aggregating and processing purchase and redemption orders; (c) providing
beneficial owners with statements showing their positions in B Prime Shares; (d)
processing dividend payments; (e) providing subaccounting services for B Prime
Shares held beneficially; (f) forwarding shareholder communications, such as
proxies, shareholder reports, dividend and tax notices, and updating
prospectuses to beneficial owners; and (g) reviewing, tabulating and
transmitting proxies executed by beneficial owners.

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<PAGE>

TRUST SHARES

Trust Shares of the Bond Funds shall be offered to investors
maintaining qualified accounts at bank and trust institutions, including
subsidiaries of Fleet Financial Group, Inc. and, with respect to each Bond Fund
other than the tax-exempt Bond Funds, to participants in employer-sponsored
defined contribution plans. Trust Shares of the Corporate Bond Fund shall also
be offered to Direct Investors and to Institutions who purchase shares on behalf
of Customers. As of the date of filing of this Plan with the Commission, Trust
Shares of the Rhode Island Municipal Bond Fund shall not initially be offered to
investors.

Trust Shares of the Bond Funds shall not be subject to a sales
charge and shall not initially be subject to the shareholder servicing fee
payable pursuant to the Shareholder Services Plan adopted but not yet
implemented with respect to such class.

3. MONEY MARKET FUNDS

RETAIL A SHARES

Retail A Shares of the Money Market Funds shall be offered to
Direct Investors and shall be offered to Institutions who purchase shares on
behalf of Customers.

Retail A Shares of the Money Market Funds shall not be subject to
a sales charge.

Retail A Shares of the Money Market Funds shall be subject to a
shareholder servicing fee payable pursuant to the Shareholder Services Plan
adopted for that class of up to .25% (on an annualized basis) of the average
daily net asset value of the Retail A Shares beneficially owned by Customers of
Institutions.

Services provided by Institutions for such fee may include: (a)
aggregating and processing purchase and redemption requests and placing net
purchase and redemption orders with Galaxy's distributor; (b) processing
dividend payments from a Money Market Fund; (c) providing customers with
information as to their position in shares; (d) providing sub-accounting with
respect to Retail A Shares or the information necessary for sub-accounting; and
(e) providing periodic mailings to Customers.

Galaxy shall initially limit the shareholder servicing fee
payable by Retail A Shares of the Money Market Funds pursuant to the Shareholder
Services Plan adopted for that class to an amount which shall not initially
exceed .10% (on an annualized basis) of the average daily net asset value of
Retail A Shares beneficially owned by Customers of Institutions.

RETAIL B SHARES

Retail B Shares of the Money Market Fund shall be offered to
Direct Investors and to Institutions who purchase the shares on behalf of
Customers who are the beneficial owners of the shares.

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<PAGE>

Retail B Shares of the Money Market Fund, if redeemed within six
years of purchase, shall be subject to a contingent deferred sales charge which
shall not initially exceed 5.0% of the original purchase price or redemption
proceeds, whichever is lower (subject to the reductions and exemptions described
in the prospectus for such Shares).

Retail B Shares of the Money Market Fund shall be further subject
to a fee payable pursuant to the Distribution and Services Plan adopted for the
class (a) for distribution expenses, which shall not initially exceed .65% (on
an annualized basis) of the average daily net asset value of the Money Market
Fund's outstanding Retail B Shares, (b) for shareholder liaison services, which
shall not initially exceed .05% (on an annualized basis) of the average daily
net assets attributable to Retail B Shares of the Money Market Fund that are
owned of record or beneficially by customers of securities dealers, brokers,
financial institutions or other industry professionals ("Service Organizations")
that provide shareholder liaison services with respect to such customers' Retail
B Shares, and (c) for administrative support services, which shall not initially
exceed .05% (on an annualized basis) of the average daily net assets
attributable to Retail B Shares of the Money Market Fund that are owned of
record or beneficially by customers of Service Organizations that provide
administrative support services with respect to such customers' Retail B Shares.

Shareholder liaison services provided under the Distribution and
Services Plan means "personal service and/or the maintenance of shareholder
accounts" within the meaning of the Rules of Fair Practice of the NASD, such as
responding to customer inquiries and providing information on their investments.

TRUST SHARES

Trust Shares in the Money Market Funds shall be offered to
investors maintaining qualified accounts at bank and trust institutions,
including subsidiaries of Fleet Financial Group, Inc., and with respect to each
Money Market Fund other than the Tax-Exempt Fund, to participants in
employer-sponsored defined contribution plans.

Trust Shares in the Money Market Funds shall not be subject to a
sales charge and shall not initially be subject to the shareholder servicing fee
payable pursuant to the Shareholder Services Plan adopted but not yet
implemented with respect to such class.

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<PAGE>

C. EXCHANGE PRIVILEGES

RETAIL A SHARES

Holders of Retail A Shares generally shall be permitted to
exchange their Retail A Shares in a Fund for Retail A Shares of other Funds
of Galaxy or shares of other funds advised by Fleet Investment Advisors Inc.
or its affiliates in which the shareholders maintain an existing account. No
additional sales charge will be incurred when exchanging Retail A Shares of a
Fund for Retail A Shares of another Fund that imposes a sales charge. Galaxy
shall not initially charge any exchange fee.

RETAIL B SHARES

Holders of Retail B Shares generally shall be permitted to
exchange their Retail B Shares in a Fund for Retail B Shares of other Funds
of Galaxy without paying any exchange fee or contingent deferred sales charge
at the time the exchange is made.

A PRIME SHARES

Holders of A Prime Shares generally shall be permitted to
exchange their A Prime Shares in a Fund for A Prime Shares of other Funds of
Galaxy. No additional sales charge will be incurred when exchanging A Prime
Shares of a Fund for A Prime Shares of another Fund. Galaxy shall not
initially charge any exchange fee.

B PRIME SHARES

Holders of B Prime Shares generally shall be permitted to
exchange their B Prime Shares in a Fund for B Prime Shares of other Funds of
Galaxy without paying any exchange fee or contingent deferred sales charge at
the time the exchange is made.

TRUST SHARES

Galaxy shall not initially offer holders of Trust Shares an
exchange privilege.

D. CONVERSION FEATURES

RETAIL A SHARES

Galaxy shall not initially offer a conversion feature to
holders of Retail A Shares.

RETAIL B SHARES

Retail B Shares acquired by purchase generally shall convert
automatically to Retail A Shares, based on relative net asset value, six
years after the beginning of the calendar month in which the Shares were
purchased.

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<PAGE>

Retail B Shares acquired through a reinvestment of dividends
or distributions generally shall convert automatically to Retail A Shares,
based on relative net asset value, at the earlier of (a) six years after the
beginning of the calendar month in which the reinvestment occurred or (b) the
date of the most recently purchased Retail B Shares that were not acquired
through reinvestment of dividends or distributions.

A PRIME SHARES

Galaxy shall not initially offer a conversion feature to
holders of A Prime Shares.

B PRIME SHARES

B Prime Shares acquired by purchase generally shall convert
automatically to A Prime Shares, based on relative net asset value, eight
years after the beginning of the calendar month in which the Shares were
purchased.

B Prime Shares acquired through a reinvestment of dividends or
distributions generally shall convert automatically to A Prime Shares, based
on relative net asset value, at the earlier of (a) eight years after the
beginning of the calendar month in which the reinvestment occurred or (b) the
date of the most recently purchased B Prime Shares that were not acquired
through reinvestment of dividends or distributions.

TRUST SHARES

Galaxy shall not initially offer a conversion feature to
holders of Trust Shares.

E. SHAREHOLDER SERVICES

1. RETIREMENT PLANS

RETAIL A SHARES AND RETAIL B SHARES

Galaxy shall initially make Retail A Shares and Retail B
Shares of the Funds (other than the tax-exempt Funds) available for purchase
in connection with the following tax-deferred prototype retirement plans:
individual retirement accounts, simplified employee pension plans,
multi-employee retirement plans and Keogh plans.

A PRIME SHARES, B PRIME SHARES AND TRUST SHARES

Galaxy shall not initially make A Prime Shares, B Prime Shares or
Trust Shares of the Funds available for purchase in connection with any
retirement plans.

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<PAGE>

2. CHECKWRITING PRIVILEGE

RETAIL A SHARES AND RETAIL B SHARES - MONEY MARKET FUNDS

Galaxy shall initially offer a checkwriting privilege to holders
of Retail A Shares and/or Retail B Shares of the Money Market Funds. A charge
for use of the checkwriting privilege may be imposed by Galaxy.

RETAIL A SHARES AND RETAIL B SHARES - EQUITY FUNDS AND BOND FUNDS

Galaxy shall not initially offer a checkwriting privilege to
holders of Retail A Shares or Retail B Shares of the Equity or Bond Funds.

A PRIME SHARES, B PRIME SHARES AND TRUST SHARES

Galaxy shall not initially offer a checkwriting privilege to
holders of A Prime Shares, B Prime Shares or Trust Shares.

3. AUTOMATIC INVESTMENT PROGRAM

RETAIL A SHARES AND RETAIL B SHARES

Direct Investors shall initially be offered an automatic
investment program whereby a Direct Investor generally may purchase Retail A
Shares and/or Retail B Shares of a Fund on a monthly or quarterly basis by
having a specific amount of money debited from his/her account at a financial
institution.

Galaxy shall not initially offer an automatic investment program
to Customers of Institutions.

A PRIME SHARES, B PRIME SHARES AND TRUST SHARES

Galaxy shall not initially offer an automatic investment program
to holders of A Prime Shares, B Prime Shares or Trust Shares.

4. SYSTEMATIC WITHDRAWAL PLAN

RETAIL A SHARES AND RETAIL B SHARES

Direct Investors shall initially be offered a systematic
withdrawal plan which, in general, shall permit a Direct Investor to
automatically redeem Retail A Shares and/or Retail B Shares on a monthly,
quarterly, semi-annual or annual basis.

Galaxy shall not initially offer a systematic withdrawal plan to
Customers of Institutions.

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<PAGE>

A PRIME SHARES, B PRIME SHARES AND TRUST SHARES

Galaxy shall not initially offer a systematic withdrawal plan to
holders of A Prime Shares, B Prime Shares or Trust Shares.

5. COLLEGE INVESTMENT PROGRAM

RETAIL A SHARES AND RETAIL B SHARES

Direct Investors shall initially be offered a college investment
program whereby a Direct Investor may purchase Retail A Shares and/or Retail B
Shares of a Fund as a means to finance a college savings plan.

Galaxy shall not initially offer a college investment program to
Customers of Institutions.

A PRIME SHARES, B PRIME SHARES AND TRUST SHARES

Galaxy shall not initially offer a college investment program to
holders of A Prime Shares, B Prime Shares or Trust Shares.

6. DIRECT DEPOSIT PROGRAM

RETAIL A SHARES AND RETAIL B SHARES

Direct Investors receiving social security benefits shall
initially be eligible for a direct deposit program whereby a Direct Investor
generally may purchase Retail A Shares and/or Retail B Shares of a Fund by
having social security payments automatically deposited into his or her Fund
account.

Galaxy shall not initially offer a direct deposit program to
Customers of Institutions.

A PRIME SHARES, B PRIME SHARES AND TRUST SHARES

Galaxy shall not initially offer a direct deposit program to
holders of A Prime Shares, B Prime Shares or Trust Shares.

7. INFORMATION SERVICES

RETAIL A SHARES AND RETAIL B SHARES

Holders of Retail A Shares and Retail B Shares shall initially be
able to obtain Fund performance and investment information 24 hours a day, 7
days a week by telephoning the Galaxy Information Center - 24 Hour Information
Service.

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<PAGE>

Galaxy shall initially offer Direct Investors a Voice Response
System which, in general, will provide a Direct Investor with automated
telephone access to Fund and account information and the ability to make
telephone exchanges and redemptions. Galaxy shall not initially offer Customers
of Institutions a voice response system.

Galaxy shall initially offer Direct Investors a Galaxy
Shareholder Services telephone number which, in general, will provide a Direct
Investor with account information and recent exchange transaction information.
Galaxy shall not initially offer Customers of Institutions a shareholder
services telephone number.

A PRIME SHARES, B PRIME SHARES AND TRUST SHARES

Galaxy shall initially offer holders of A Prime Shares, B Prime
Shares and Trust Shares a telephone number to call for applications and
information concerning initial purchases and current performance and a telephone
number to call for additional purchases, redemptions, exchanges and other
shareholder services.

Galaxy shall initially offer holders of Trust Shares in the
Corporate Bond Fund the information services described for Retail Shares.

8. PAYROLL DEDUCTION PROGRAM

RETAIL A SHARES AND RETAIL B SHARES

Direct Investors shall initially be offered a payroll deduction
program whereby a Direct Investor may purchase Retail A Shares and/or Retail B
Shares of a Fund each pay period by having a specific amount of money debited
from his/her paycheck.

Galaxy shall not initially offer a payroll deduction program to
Customers of Institutions.

A PRIME SHARES, B PRIME SHARES AND TRUST SHARES

Galaxy shall not initially offer a payroll deduction program to
holders of A Prime Shares, B Prime Shares or Trust Shares.

F. METHODOLOGY FOR ALLOCATING EXPENSES AMONG CLASSES

Class-specific expenses of a Fund shall be allocated to the specific
class of shares of that Fund. Non-class-specific expenses of a Fund shall be
allocated in accordance with Rule 18f-3(c) under the 1940 Act.

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