THE GALAXY FUND

                        DISTRIBUTION AND SERVICES PLAN
                             FOR PRIME 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
Prime B series of shares (the "Prime B 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, Pan Asia 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 Prime 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 0.75% annually of the average daily net assets
attributable to the outstanding Prime 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 Prime B Shares of the Funds. In
determining the amounts payable on behalf of a Fund under the Plan, the net
asset value of the Prime B Shares shall be computed in the manner specified
in the Trust's then current Prospectuses and Statements of Additional
Information describing such Prime 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 Prime 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 Prime 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 "Distribution Organization")
with respect to a Fund's Prime 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' Prime B Shares. Shareholder Liaison Services shall be
provided pursuant to an agreement in substantially the forth 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 Prime B Shares of each of the Funds, which
Prime 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' Prime 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.

       (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 Prime B Shares of each of the Funds, which
Prime 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)   "Administrative Support Services" include but are not limited
to: (i) transfer agent and subtransfer agent services for beneficial owners
of Prime B Shares; (ii) aggregating and processing purchase and redemption
orders; (iii) providing beneficial owners with statements showing their
positions in Prime B Shares; (iv) processing dividend payments; (v) providing
subaccounting services for Prime 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

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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 Prime B Shares. However, joint distribution financing or other
services rendered with respect to such Prime 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 Prime B Shares on the date the public offering
of Prime 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 case 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, 2000, 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 Prime 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 Prime 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 Prime 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.

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     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
Revised:     May 25, 2000
Reapproved:  September 9, 1999


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