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[GALAXY FUNDS LOGO]
[COVER PHOTO]
TAX-FREE BOND FUNDS REPORT
TAX-EXEMPT BOND FUND - NEW YORK MUNICIPAL BOND FUND
CONNECTICUT MUNICIPAL BOND FUND - MASSACHUSETTS MUNICIPAL BOND FUND -
RHODE ISLAND MUNICIPAL BOND FUND
SEMI-ANNUAL
REPORT
FOR THE SIX MONTHS
ENDED APRIL 30, 1996
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TRUSTEES
AND OFFICERS
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
Neil Forrest
Vice President &
Assistant Treasurer
INVESTMENT ADVISER
Fleet Investment
Advisors Inc.
50 Kennedy Plaza
Providence, Rhode Island
02903
DISTRIBUTOR
440 Financial
Distributors, Inc.
4400 Computer Drive
Westboro,
Massachusetts 01581
ADMINISTATOR
First Data Investor Services Group, Inc.
(formerly The Shareholder Services Group, Inc.
d/b/a 440 Financial)
4400 Computer Drive
Westboro,
Massachusetts 01581-5108
This report is submitted for the general information of shareholders of The
Galaxy Fund. It is not authorized for distribution to prospective investors
unless accompanied or preceded by an effective prospectus for the Fund, which
contains more information concerning the Fund's investment policies, as well as
fees and expenses and other pertinent information. Read the prospectus carefully
before you invest.
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 the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other agency. Investment return
and principal value will vary as a result of market conditions or other factors
so that shares of the funds, when redeemed, may be worth more or less than their
original cost. An investment in the funds involves investment risks, including
the possible loss of principal.
[Recycled Paper Logo]
This report was printed on recycled paper.
<PAGE> 3
CHAIRMAN'S
MESSAGE
Dear Shareholder:
Enclosed is the semi-annual report for the Galaxy Tax-Free Bond Funds for the
six months ended April 30, 1996. Inside you'll find a Market Overview that
details the primary events of the period affecting bond prices and yields -- as
well as individual Portfolio Reviews that describe how Fleet Investment Advisors
Inc. managed the Funds' bond portfolios in this environment.
Over the last six months rising interest rates caused an abrupt reversal
in bond prices and yields. After rallying for most of 1995, bond prices declined
in the first months of 1996. Although inflation remained moderate, higher
commodity prices and a stronger economy dashed investor hopes for lower interest
rates. Once investors realized these conditions might be temporary, bond prices
began to stabilize. Although fears of stronger growth and higher inflation may
prove unfounded, there may be further market unease in the months to come.
While Fleet Investment Advisors tries to take advantage of current market
opportunities, it also manages the Galaxy Tax-Free Bond Funds with a long-term
view. The Funds' portfolio managers focus on high-quality investments with
strong liquidity that can provide attractive returns over time. Such investments
tend to outperform market averages when markets are unsettled. The portfolio
managers also seek to enhance Fund yields while managing the Funds within
prescribed risk guidelines.
You can get further information about the management and performance of
the Galaxy Tax-Free Bond Funds from a fund representative by calling
800-628-0414. The representatives can also provide information on other mutual
funds managed by Fleet Investment Advisors.
Sincerely,
/s/ Dwight E. Vicks, Jr.
- ---------------------------------
Dwight E. Vicks, Jr.
Chairman of the Board of Trustees
Mutual Funds:
- - are not bank
deposits
- - are not FDIC
insured
- - are not
obligations of Fleet
Bank
- - are not guaranteed
by Fleet Bank
- - are subject to
investment risk
including possible
loss of principal
amount invested
<PAGE> 4
TAX FREE BOND REPORT
MARKET OVERVIEW
"Interest rates reversed course at the start of 1996 on signs that the economy
was strengthening and chances for a balanced budget were weakening."
TAX-FREE BOND MARKET OVERVIEW
By Fleet Investment Advisors Inc.
In the six months ended April 30, 1996, evidence of stronger growth in the
economy raised new fears of inflation. This drove interest rates higher and bond
prices lower during the period. The decline in prices for municipal bonds was
generally smaller than that for taxable issues, however. With attention to
investments that typically do well in uncertain markets, the Galaxy Tax-Free
Bond Funds earned competitive returns during the period.
A REVERSAL IN INTEREST RATES
Interest rates continued to fall in the final months of 1995, as the economy
showed signs of slowing. The gross domestic product ("GDP"), a measure of goods
and services, improved by an annualized rate of just 0.5% in the fourth quarter
- -- after advancing 3.6% in the third quarter. Expecting the Federal Reserve
Board (the "Fed") to prevent a recession by cutting interest rates, investors
drove bond prices higher.
The Fed fulfilled investor expectations on December 19, slicing its Fed
Funds rate from 5.75% to 5.5%. Interest rates continued to slide through the end
of the year, as investors looked for further cuts from the Fed and legislation
to balance the Federal budget. By the end of December, the yield for 30-year
Treasury bonds had dropped to 5.94%, from 6.33% at the end of October. Still
rebounding from earlier fears of losing its tax advantage, the municipal market
enjoyed an even stronger advance. When 1995 ended, the yield for The Bond Buyer
Index stood at 5.41%, down from 5.76% at the end of October.
Interest rates reversed course at the start of 1996 on signs that the
economy was strengthening and chances for a balanced budget were weakening. With
inflation still moderate, the Fed cut short-term rates to 5.25% on January 31.
But investors remained jittery. Hope for further rate cuts then vanished as the
Labor Department reported unexpectedly strong levels of employment and commodity
prices started to rise. Bond prices fell through the first week in April and
then stabilized in the weeks that followed. By the end of April, this left the
yield for long-term Treasury bonds at 6.9%.
PERFORMANCE AT-A-GLANCE
Average Annual Returns* as of April 30, 1996
Trust Shares
TAX-EXEMPT BOND FUND
Inception Date 12/30/91
[GRAPH]
0.74%
6.67%
4.63%
6.58%
NEW YORK MUNICIPAL BOND FUND
Inception Date 12/31/91
[GRAPH]
0.82%
7.34%
4.53%
6.25%
CONNECTICUT MUNICIPAL BOND FUND
Inception Date 3/16/93
[GRAPH]
0.83%
7.96%
4.58%
4.59%
MASSACHUSETTS MUNICIPAL BOND FUND
Inception Date 3/12/93
[GRAPH]
0.14%
6.99%
4.34%
4.05%
Six Months*
1 Year
3 Years
5 Years
Life of Fund
*Six month returns are total returns.
1
<PAGE> 5
MARKET OVERVIEW
"Toward the end of 1995, when it looked like interest rates might be bottoming,
we added shorter-term issues to many of the Funds' portfolios."
"Fleet Investment Advisors Inc. believes that recent signs of a stronger economy
may simply be a rebound from an especially difficult winter and so may prove to
be short-lived."
The reversal was much less severe in the municipal market as pessimism
about tax reform continued to lift and a decrease in municipal supplies helped
keep tax-free yields from rising as much as taxable yields. With a smaller
decline in prices, municipal yields changed less, too. At the end of April, the
Bond Buyer Index had a yield of 5.91%.
ADJUSTING TO MARKET CHANGES
When the period began, the Galaxy Tax-Free Bond Funds held many municipals with
longer maturities. These issues benefited most from the continued rally in bond
prices and waning interest in tax reform. Because most of these issues could not
be called in for at least 10 years, the Funds maintained strong yields in the
face of falling interest rates. The Funds also benefited from heavy
concentrations of bonds bought at discount prices, which generally outperform
other issues in a rally.
Toward the end of 1995, when it looked like interest rates might be
bottoming, we added shorter-term issues to many of the Funds' portfolios. Since
shorter-term bonds tend to suffer less in price when interest rates rise than
longer-term issues do, this helped buffer the value of the Fund's shares when
interest rates rose.
As interest rates and bond prices became more stable, we made the most of
the higher yields by purchasing issues with longer maturities. We gave
particular attention to higher-coupon issues selling at premium prices, which
tend to outperform issues selling at discount prices or par in unsettled
markets.
FUTURE OPPORTUNITIES
Fleet Investment Advisors Inc. believes that recent signs of a stronger economy
may simply be a rebound from an especially difficult winter and so may prove to
be short-lived. If, as we expect, economic growth becomes more moderate, the GDP
should improve by 2% to 2.5% in 1996, and inflation should remain below 3%.
PERFORMANCE AT-A-GLANCE**
Average Annual Returns* as of April 30, 1996
Retail A Shares
TAX-EXEMPT BOND FUND
Inception Date 12/30/91
[GRAPH]
- -3.16%
2.42%
3.20%
5.56%
NEW YORK MUNICIPAL BOND FUND
Inception Date 12/31/91
[GRAPH]
- -3.08%
3.06%
3.11%
5.25%
CONNECTICUT MUNICIPAL BOND FUND
Inception Date 3/16/93
[GRAPH]
- -3.05%
3.68%
3.13%
3.20%
MASSACHUSETTS MUNICIPAL BOND FUND
Inception Date 3/12/93
[GRAPH]
- -3.71%
2.74%
2.92%
2.70%
RHODE ISLAND MUNICIPAL BOND FUND
Inception Date 12/20/94
[GRAPH]
- -2.95%
3.04%
5.82%
Six Months*
1 Year
3 Years
5 Years
Life of Fund
* Six month returns are total returns.
**Return figures have been restated to include the effect of the maximum 3.75%
front end sales charge which became effective December 1, 1995.
2
<PAGE> 6
PORTFOLIO REVIEWS
Once investors realize that inflation won't be a problem, bond prices
should become more stable -- or even decline. In this environment, we would
expect yields for long-term Treasury bonds to remain between 6.25% and 7%.
If talk of tax reform continues to wane, and municipal supplies remain
relatively tight, we would expect municipal prices to outpace Treasury prices in
the months to come. For this reason, we expect to maintain positions in
longer-maturity issues. As protection against near-term price fluctuations, we
will likely emphasize issues selling at par or a modest premium.
PERFORMANCE AT-A-GLANCE
Total Returns as of April 30, 1996
Retail B Shares*
TAX-EXEMPT BOND FUND
Inception Date 3/4/96
[GRAPH]
- -2.64%
- -7.49%
Life of Fund returns before Contingent Deferred Sales Charge deducted.
Life of Fund returns after Contingent Deferred Sales Charge deducted as if
shares were redeemed at end of period.
*Retail B Shares are subject to a 5.00% Contingent Deferred Sales Charge if
shares are redeemed within the first year. The charge decreases to 4.00%,
3.00%, 3.00%, 2.00% and 1.00% for redemption made during the second through
sixth years, respectively. Retail B Shares automatically convert to Retail A
Shares after six years. Total returns are from the date of inception.
3
<PAGE> 7
PORTFOLIO REVIEWS
GALAXY TAX-EXEMPT BOND FUND
By Mary McGoldrick
Portfolio Manager
[PHOTO]
In a changing municipal market, we emphasized investments in the Galaxy
Tax-Exempt Bond Fund that made the most of rising prices at the end of 1995 and
the most of rising yields at the start of 1996. This helped the Fund weather the
recent reversal in municipal bond prices relatively well.
For the six months ended April 30, 1996, the Fund's Trust Shares had a
total return of 0.74% and its Retail A Shares had a total return of 0.62% before
the deduction of the maximum 3.75% front-end sales charge. These returns compare
to 0.67% for the average general municipal bond fund tracked by Lipper
Analytical Services and 1.11% for the Lehman Brothers Municipal Bond Index.
Retail B Shares had a total return of -2.64% before the deduction of the
contingent deferred sales charge for the period since their initial public
offering on March 4, 1996 through April 30, 1996.
MANAGING A MARKET REVERSAL
When talk of tax reform weakened municipal bond prices in the third quarter of
1995, we added longer-term issues, whose prices and yields had become especially
attractive, to the Fund's portfolio. In making these purchases, we focused on
issues selling at discount prices. Because longer-term bonds and discounted
issues generally benefit most in a market rally, these investments provided the
Fund with strong gains when bond prices rose in the fourth quarter of the year.
When interest rates and prices reversed course in the first months of
1996, we tried to take advantage of the higher yields that became available
while protecting the value of Fund shares. To enhance the Fund's yield, we
purchased bonds with maturities of 20 to 25 years. Because these were highly
liquid issues that could not be called in by their issuers, they held up fairly
well as bond prices ebbed. As the slide in bond prices deepened, we gave greater
attention to issues selling at premium prices. When bond prices fall, these
bonds tend to hold their value as compared to issues selling at a discount or
par, because of the strong income that they provide.
With these strategies, at the end of April 1996, the Fund's Trust Shares
had a 30-day SEC yield of 4.85%, its Retail A Shares had a 30-day SEC yield of
4.44% and Retail B Shares had a 30-day SEC yield of 4.03%. These yields are
equal to taxable yields of 7.58% for Trust Shares, 6.94% for Retail A Shares and
6.30% of Retail B Shares for shareholders in the 36% Federal income tax bracket.
FUTURE STRATEGIES
If economic growth remains moderate and municipal prices stabilize, as we
expect, we may add more investments with maturities of 20 to 25 years. These
issues should continue to offer yields that are quite close to those for 30-year
municipals and would suffer less if bond prices continued to slide.
Because the bond market may experience further uncertainty in the months
ahead, we expect to maintain our emphasis on issues selling at premium prices
that enjoy good call protection and relatively strong supply.
Mary McGoldrick has managed the Galaxy Tax-Exempt Bond Fund since July of 1992.
She has managed portfolios at Fleet and other banks for ten years.
GALAXY TAX-EXEMPT BOND FUND
Distribution of Total Net Assets
as of April 30, 1996
[PICTURE OF PIE CHART]
South 23%
East 38%
Pacific 11%
Other States & Territories 4%
Mountain 3%
North Central 19%
Net Other Assets and Liabilities 2%
*Since inception on 12/30/91. Performance figures for Retail A Shares have been
restated to include the effect of the maximum 3.75% front-end sales charge
which became effective on December 1, 1995. The Lehman Brothers Municipal Bond
Index is an unmanaged index in which investors cannot invest. Results for the
index do not reflect the expenses and investment management fees incurred by
the Fund.
GALAXY TAX-EXEMPT BOND FUND
Growth of $10,000 investment*
[CLIENT TO SUPPLY COPY]
1991 4/30/96
- - Lehman Brothers Municipal Bond Index $10,000 $13,360
- - Galaxy Tax-Exempt Bond Fund - Retail A Shares 9,625 12,645
- - Galaxy Tax-Exempt Bond Fund - Trust Shares 10,000 13,180
4
<PAGE> 8
PORTFOLIO REVIEWS
GALAXY NEW YORK MUNICIPAL BOND FUND
By Mary McGoldrick
Portfolio Manager
When interest rates fall and bond prices rise, prices of longer-maturity issues
tend to improve more than prices of shorter-term issues. When interest rates
rise, prices for shorter-term issues generally are more stable than prices of
longer maturities. By adjusting the maturities of investments in the Galaxy New
York Municipal Bond Fund to make the most of changes in interest rates, we
helped the Fund perform relatively well in the six months ended April 30, 1996.
During that time, the Fund's Trust Shares produced a total return of 0.82%
and its Retail A Shares of the Fund had a total return of 0.70% before the
deduction of the maximum 3.75% front-end sales charge. These returns compared to
a return of 0.47% for the average New York tax-exempt bond fund tracked by
Lipper Analytical Services. Over the same period, the Lehman Brothers Municipal
Bond Index returned 1.11%.
STRUCTURING PORTFOLIO MATURITIES
When municipal prices rallied in the fourth quarter of 1995, the Fund benefited
from its investments in longer-maturity issues which enjoyed exceptional gains.
These gains were especially strong due to the fact that supplies of municipals
were somewhat tight in New York. By emphasizing bonds that could not be called
in by their issuers, the Fund also earned attractive income at a time when
interest rates and yields were falling.
As it looked like interest rates might be bottoming, we placed greater
emphasis on municipals with shorter maturities. Because shorter-term issues
generally suffer less when prices fall, this helped to protect the value of Fund
shares when interest rates rose early in 1996.
Once it seemed that interest rates had stabilized at the higher levels, we
added longer-maturity issues to the Fund's portfolio to enhance income for
shareholders. We tried to buffer the Fund against further market fluctuations by
continuing to emphasize municipals with good liquidity that could not be called
in by their issuers.
At the end of April 1996, the Fund's Trust and Retail A Shares had SEC
30-day yields of 4.77% and 4.37%, respectively, on an annualized basis. These
are the same as taxable yields of 7.45% and 6.83%, respectively, for taxpayers
in the 36% Federal income tax bracket who live in the State of New York.
IMPROVING FUND YIELDS
There may be additional opportunities to enhance Fund yields in the months to
come. If inflation remains under control, as we believe it will, and interest in
tax reform continues to ebb, we expect to increase investments in longer-term
municipals and lock in the higher yields that are available. As before, we will
strive to protect the Fund against future market uncertainty by stressing
investments with good call protection and liquidity.
Mary McGoldrick has managed the Galaxy New York Municipal Bond Fund since March
of 1996. She has managed portfolios at Fleet and other banks for ten years.
GALAXY NEW YORK MUNICIPAL BOND FUND
Growth of $10,000 investment*
[CLIENT TO SUPPLY COPY]
1991 4/30/96
- - Lehman Brothers Municipal Bond Index $10,000 13,360
- - Galaxy New York Municipal Bond Fund - Retail A Shares 9,625 12,482
- - Galaxy New York Municipal Bond Fund - Trust Shares 10,000 13,007
*Since inception on 12/31/91. Performance figures for Retail A Shares have been
restated to include the effect of the maximum 3.75% front-end sales charge
which became effective on December 1, 1995. The Lehman Brothers Municipal Bond
Index is an unmanaged index in which investors cannot invest. Results for the
index do not reflect the expenses and investment management fees incurred by
the Fund.
5
<PAGE> 9
PORTFOLIO REVIEWS
GALAXY CONNECTICUT MUNICIPAL BOND FUND
By Mary McGoldrick
Portfolio Manager
In the six months ended April 30, 1996, the Galaxy Connecticut Municipal Bond
Fund benefited from the mix of maturities in its portfolio and its continued
focus on municipals that could not be called in by their issuers for at least 10
years. These strategies helped the Fund's Trust Shares earn a total return of
0.83%. Retail A Shares of the Fund earned a total return of 0.73% for the period
before the deduction of the maximum 3.75% front-end sales charge. These returns
compare with a return of 0.72% for the average Connecticut municipal bond fund
tracked by Lipper Analytical Services and a return of 1.11% for the Lehman
Brothers Municipal Bond Index.
RESPONDING TO SHIFTS IN RATES
When interest rates were falling at the end of 1995, the Fund enjoyed strong
returns from its investments in issues with longer maturities and issues that we
had bought at discount prices. The prices of such securities typically do better
in a bond rally than prices for municipals as a whole. By emphasizing issues
with good call protection, we were also able to give shareholders an attractive
income while municipal yields were declining.
We continued to stress call protection as municipal yields rose early in
1996. When yields rise and prices fall, bonds with good call protection usually
fare better than other issues do.
Because there were few attractive investment opportunities when prices
first began to fall, we allowed the Fund's cash reserve to rise. This shortened
the average maturity of the Fund's investments, which also protected the value
of Fund shares. After the decline in prices had made municipal bonds more
attractive, we put these cash reserves to work.
As of April 30, 1996, the Fund's Trust and Retail A Shares had SEC 30-day
yields of 4.37% and 4.04%, respectively, on an annualized basis. These equal
taxable yields of 6.83% and 6.31%, respectively, for taxpayers in the 36%
Federal income tax bracket who live in the State of Connecticut.
NEW INVESTMENTS
Believing that economic growth and inflation will remain moderate, we think bond
prices will stabilize further in the months to come. This, plus reduced fear of
tax reform, should provide a good climate for municipal bond investing. As we
look for opportunities to put the Fund's cash to work, we may give greater
attention to higher-coupon issues selling at premium prices. By choosing issues
with good call protection that are available in ample supply, we hope to give
shareholders stronger yields with little extra price risk.
Mary McGoldrick has managed the Galaxy Connecticut Municipal Bond Fund since
March of 1996. She has managed portfolios at Fleet and other banks for ten
years.
GALAXY CONNECTICUT MUNICIPAL BOND FUND
Growth of $10,000 investment*
[CLIENT TO SUPPLY COPY]
1993 4/30/96
- - Lehman Brothers Municipal Bond Index $10,000 12,734
- - Galaxy Connecticut Municipal Bond Fund - Retail A Shares 9,625 11,507
- - Galaxy Connecticut Municipal Bond Fund - Trust Shares 10,000 11,036
*Since inception on 3/16/93. Performance figures for Retail A Shares have been
restated to include the effect of the maximum 3.75% front-end sales charge
which became effective on December 1, 1995. The Lehman Brothers Municipal Bond
Index is an unmanaged index in which investors cannot invest. Results for the
index are calculated since 3/31/93 because the index returns are calculated at
month-end only. Results for the index do not reflect the expenses and
investment management fees incurred by the fund.
6
<PAGE> 10
PORTFOLIO REVIEWS
GALAXY MASSACHUSETTS
MUNICIPAL BOND FUND
By Mary McGoldrick
Portfolio Manager
By stressing longer-term issues when bond prices were rising, and shorter-term
issues when prices were falling, the Galaxy Massachusetts Municipal Bond Fund
delivered competitive returns in a changing interest rate environment.
For the six months ended April 30, 1996, the Fund's Trust Shares enjoyed a
total return of 0.14%. Retail A Shares of the Fund had a total return of 0.04%
during the period before the deduction of the maximum 3.75% front-end sales
charge. These returns compare to a total return of 0.40% for the average
Massachusetts municipal bond fund tracked by Lipper Analytical Services. Over
the same time period, the benchmark Lehman Brothers Municipal Bond Index had a
return of 1.11%.
MAKING THE MOST OF CHANGE
During the period, we tried to make the most of changes in bond prices. When
prices were still rising at the end of 1995, the Fund benefited from large
investments in longer-term municipals. Generally, longer-term issues tend to
outperform shorter-term issues when bond prices rally. During this period, the
comparative performance of longer-term issues versus shorter-term issues was
even more substantial because prices for longer-term municipals had declined as
a result of concerns about tax reform, giving more room for prices to rise
during the ensuing rally.
As it looked like interest rates might be bottoming, we gave greater
attention to shorter-term securities. Since these issues tend to be less
sensitive to rising interest rates, this strategy helped protect the value of
Fund shares when bond prices fell. After prices had dropped enough to make
longer-term issues more attractive, we increased the Fund's commitment to
longer-term municipals again so we could lock in the higher yields that were
available.
We further enhanced the Fund's yield by continuing to stress investments
that could not be called in by their issuers for at least 10 years. At the end
of April 1996, the Fund's Trust and Retail A Shares had SEC 30-day yields of
4.73% and 4.36%, respectively, on an annualized basis. These are equal to
taxable yields of 7.39% and 6.81%, respectively, for taxpayers in the 36%
Federal income tax bracket who live in the Commonwealth of Massachusetts.
GOING FORWARD
In an environment of stable bond prices and reduced concern about tax reform, we
feel municipal bonds should perform well in coming months. From time to time,
however, we believe uncertainty about the economy and interest rates may give
rise to further fluctuations in prices.
With this in mind, we may now give greater attention to higher-coupon
issues selling at premium prices, which tend to fare better than other
municipals in uneven markets. By also emphasizing high-quality issues with good
call protection and liquidity, we hope to help the Galaxy Massachusetts
Municipal Bond Fund weather future market changes favorably.
Mary McGoldrick has managed the Galaxy Massachusetts Municipal Bond Fund since
March of 1996. She has managed portfolios at Fleet and other banks for ten
years.
GALAXY MASSACHUSETTS
MUNICIPAL BOND FUND
Growth of $10,000 investment*
[CLIENT TO SUPPLY COPY]
1993 4/30/96
- - Lehman Brothers Municipal Bond Index $10,000 12,734
- - Galaxy Massachusetts Municipal Bond Fund - Retail A Shares 9,625 10,873
- - Galaxy Massachusetts Municipal Bond Fund - Trust Shares 10,000 11,328
*Since inception on 3/12/93. Performance figures for Retail A Shares have been
restated to include the effect of the maximum 3.75% front-end sales charge
which became effective on December 1, 1995. The Lehman Brothers Municipal Bond
Index is an unmanaged index in which investors cannot invest. Results for the
index are calculated since 3/31/93 because the index returns are calculated at
month-end only. Results for the index do not reflect the expenses and
investment management fees incurred by the Fund.
7
<PAGE> 11
TAX - FREE BOND REPORT
PORTFOLIO REVIEWS
GALAXY RHODE ISLAND
MUNICIPAL BOND FUND
By Mary McGoldrick
Portfolio Manager
In the six months ended April 30, 1996, we took several steps to enhance the
yield of the Galaxy Rhode Island Municipal Bond Fund. This helped the Fund hold
up relatively well as interest rates and bond prices changed direction. During
the period, Retail A Shares of the Fund had a total return of 0.83% before the
deduction of the maximum 3.75% front-end sales charge. That compares with a
return of 1.11% for the Lehman Brothers Municipal Bond Index.
FOCUS ON YIELD
During the last two months of 1995, the Fund had sizable investments in
municipals with longer maturities. This gave the Fund added yield while interest
rates were still falling and added appreciation while bond prices were rising.
We further boosted the Fund's yield by continuing to focus on municipals that
could not be called in by their issuers and on municipals available in stronger
supply. The greater supply put downward pressure on the prices of those
securities, which kept upward pressure on their yields.
Generally, however, supplies of municipals in Rhode Island remained
relatively tight. This helped their prices hold up better when interest rates
reversed course at the start of 1996. Later in the period, after interest rates
and bond prices had stabilized, we purchased more longer-term issues for the
Fund to lock in the higher yields that were then available. We continued to
emphasize municipals with good call protection and liquidity. As always, we
remained committed to quality and diversification in the Fund's portfolio.
At the end of April 1996, the Fund's Retail A Shares had a 30-day SEC
yield of 4.62%. This equals a taxable yield of 7.22% for taxpayers in the 36%
Federal income tax bracket who live in the State of Rhode Island.
GOING FORWARD
We expect to increase the Fund's investments in longer-maturity municipals in
the months to come, if the economy grows at a moderate pace and bond prices
continue to stabilize. Most of such purchases would likely be bonds maturing in
20 to 25 years. These issues have yields that are close to those for 30-year
municipals, without the added price sensitivity.
We also expect to give greater attention to municipals selling at premium
prices. With good call protection, such issues could further enhance the Fund's
yield. They would also tend to perform better than issues selling at par or
discount prices if additional market uncertainty reduce bond prices again.
Mary McGoldrick has managed the Galaxy Rhode Island Municipal Bond Fund since
March of 1996. She has managed portfolios at Fleet and other banks for ten
years.
- --------------------------------------------------------------------------------
Investment returns and principal values will vary with market conditions so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. The Investment Adviser is presently waiving fees and/or
reimbursing expenses. Without such waivers and/or reimbursements, performance
would be lower. Past performance is no guarantee of future results. Total return
figures in this report include changes in share price, and reinvestment of
dividends and capital gains distributions, if any.
GALAXY RHODE ISLAND MUNICIPAL BOND FUND
Growth of $10,000 investment*
[CLIENT TO SUPPLY COPY]
1994 4/30/96
- - Lehman Brothers Municipal Bond Index $10,000 $11,527
- - Galaxy Rhode Island Municipal Bond Fund - Retail A Shares 9,625 10,801
*Since inception on 12/20/94 Performance figures for Retail A Shares have been
restated to include the effect of the maximum 3.75% front-end sales charge
which became effective on December 1, 1995. The Lehman Brothers Municipal Bond
Index is an unmanaged index in which investors cannot invest. Results for the
index are calculated since 12/31/94 because the results are calculated at
month-end only. Results for the index do not reflect the expenses and
investment management fees incurred by the Fund.
8
<PAGE> 12
THE GALAXY FUND
TAX-EXEMPT BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- --------- ------------
<S> <C> <C>
MUNICIPAL SECURITIES - 97.59%
ALASKA - 1.41%
$ 375,000 Alaska Municipal Bond Authority, GO, Series B
6.60%, 07/01/99
Insured: MBIA ...................................... $ 383,900
1,275,000 Anchorage Alaska Hospital
Sisters of Providence Project
6.75%, 10/01/00 .................................... 1,369,031
------------
1,752,931
------------
ARIZONA - 5.10%
1,000,000 Maricopa County, Unified School District #97,
GO, Deer Valley Project of 1986, Series D
6.80%, 07/01/00
Insured: MBIA ...................................... 1,087,500
1,455,000 Salt River Agricultural Improvement
and Power District, Electric System Revenue,
Series A
7.10%, 01/01/00 .................................... 1,540,481
2,000,000 Salt River Agricultural Improvement
and Power District, Electric System Revenue,
Series B
5.25%, 01/01/13 .................................... 1,892,500
2,000,000 Salt River Agricultural Improvement
and Power District, Electric System Revenue,
Series C
5.00%, 01/01/13 .................................... 1,837,500
------------
6,357,981
------------
CONNECTICUT - 4.71%
1,000,000 Connecticut State HEFA
St. Francis Hospital and Medical Center,
Series C
5.00%, 07/01/13
Insured: FGIC ...................................... 913,750
985,000 Connecticut State Housing Finance Authority
Housing Mortgage Finance Program, Series A
6.10%, 05/15/13 .................................... 992,388
1,000,000 Connecticut State Housing Finance Authority
Housing Mortgage Finance Program,
Subseries B-1
6.25%, 05/15/11 .................................... 1,010,000
2,000,000 Connecticut State Special Tax Obligation
Transportation Infrastructure, Series A
5.40%, 09/01/10 .................................... 1,935,000
500,000 Connecticut State Special Tax Obligation
Transportation Infrastructure, Series B
6.10%, 09/01/07 .................................... 524,375
500,000 South Central Regional Water Authority
Water System Revenue, Series 11
5.75%, 08/01/12
Insured: FGIC ...................................... 498,125
------------
5,873,638
------------
FLORIDA - 7.19%
1,000,000 Delray Beach, GO, Series A
5.10%, 02/01/13
Insured: FGIC ...................................... 916,250
1,070,000 Florida State Board of Education
Capital Outlay, GO,
Public Education, Series D
5.13%, 06/01/18 .................................... 967,013
1,000,000 Florida State Board of Education
Capital Outlay, GO,
Public Education, Series E
5.00%, 06/01/20 .................................... 883,750
2,000,000 Jacksonville Electric Authority
Bulk Power, Scherer 4 Project, Series A
5.20%, 10/01/10 .................................... 1,922,500
1,400,000 Orange County Sales Tax Revenue, Series A
5.25%, 01/01/16
Insured: FGIC ...................................... 1,300,250
1,500,000 Orlando Utilities Commission,
Water and Electric Revenue
5.00%, 10/01/13 .................................... 1,359,375
1,500,000 Pinellas County Resource Recovery Revenue,
Series A
6.60%, 10/01/00
Insured: MBIA ...................................... 1,625,625
------------
8,974,763
------------
GEORGIA - 2.28%
2,000,000 De Kalb County, GO
5.25%, 01/01/20 .................................... 1,840,000
1,000,000 Fulton County School District, GO
5.60%, 01/01/11 .................................... 1,002,500
------------
2,842,500
------------
IDAHO - 0.45%
500,000 Boise-Kuna Irrigation District Revenue
Lucky Peak Hydroelectric Project
6.60%, 07/01/05 .................................... 562,500
------------
ILLINOIS - 4.07%
2,000,000 Chicago, GO, Series B
5.13%, 01/01/22
Insured: AMBAC ..................................... 1,800,000
1,000,000 Cook County, GO
7.25%, 11/01/07
Insured: MBIA ...................................... 1,150,000
50,000 Illinois State Revenue, GO
6.60%, 12/01/11 .................................... 51,828
1,000,000 Peoria Public Building Commission
School Building and Facilities, District #150
6.50%, 12/01/00
Insured: AMBAC ..................................... 1,050,000
1,000,000 Regional Transportation Authority, Series A
6.25%, 06/01/15 .................................... 1,028,750
------------
5,080,578
------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 13
THE GALAXY FUND
TAX-EXEMPT BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- --------- ------------
<S> <C> <C>
INDIANA - 3.60%
$1,000,000 Indiana State Office Building Commission
Capital Complex, Government Center North,
Series B
5.25%, 07/01/15
Insured: AMBAC $ 912,500
2,000,000 Indianapolis Local Public
Improvement Bond Bank, Series A
6.00%, 01/10/18 1,995,000
1,730,000 Vinton-Tecumseh School Building Corp.
First Mortgage
5.25%, 01/15/16
Insured: MBIA 1,578,625
------------
4,486,125
------------
IOWA - 0.40%
500,000 Linn-Mar Community School District, GO
5.90%, 05/01/11
Insured: MBIA 502,500
------------
KENTUCKY - 1.68%
1,000,000 Kentucky Housing Corp. Revenue Guaranteed,
Series C-3
5.70%, 01/01/11 990,000
1,000,000 Kentucky State Turnpike Authority,
Economic Development
Road Revenue, Revitalization Projects
7.13%, 05/15/01 1,105,000
------------
2,095,000
------------
MAINE - 3.14%
250,000 Kennebec Water District Revenue
6.00%, 12/01/13 250,938
500,000 Kennebec Water District Revenue
5.30%, 12/01/14 461,875
500,000 Maine Health and Higher Educational
Facilities Authority, Series A
5.50%, 07/01/11
Insured: FSA 485,625
1,000,000 Maine Health and Higher Educational
Facilities Authority
Maine Medical Center, Series C
5.00%, 11/15/13
Insured: FSA 895,000
250,000 Maine Municipal Bond Bank, Series B
6.75%, 11/01/12 268,750
500,000 Maine Municipal Bond Bank,
Sewer and Water Revenue
SRF Program, Series A
6.50%, 11/01/08 527,500
1,000,000 Maine State Housing Authority Mortgage
Purchase, Series C-1
6.50%, 11/15/11 1,026,250
------------
3,915,938
------------
MARYLAND - 1.32%
1,750,000 Washington Suburban Sanitary District
Sewerage Disposal, GO and Revenue
5.25%, 06/01/13 1,651,563
------------
MASSACHUSETTS - 7.15%
790,000 Boston Revenue, Boston City Hospital, Series A
6.95%, 08/15/99
Insured: FHA 851,225
250,000 Massachusetts Bay Transportation Authority
Transportation System, Series C
6.10%, 03/01/07 262,188
1,000,000 Massachusetts Municipal Wholesale Electric
Copower Supply System, Series D
6.00%, 07/01/11
Insured: MBIA 1,015,000
2,000,000 Massachusetts State, GO, Series A
5.50%, 02/01/11 1,955,000
1,000,000 Massachusetts State HEFA
Capital Asset Program, Series F
6.70%, 10/01/98
Insured: MBIA 1,055,000
2,000,000 Massachusetts State HEFA
Baystate Medical Center, Series D
5.00%, 07/01/12
Insured: FGIC 1,837,500
50,000 Massachusetts State HEFA
Brigham and Women's Hospital, Series D
6.50%, 07/01/04 53,313
200,000 Massachusetts State HEFA
South Shore Hospital, Series D
6.50%, 07/01/10 215,000
50,000 Massachusetts State Housing Finance Agency
Residential Development, Series C
6.88%, 11/15/11 53,500
640,000 Massachusetts State Housing Finance Agency
Single Family, Series 22
6.10%, 06/01/16 643,200
1,000,000 Massachusetts State, SP OB, Series A
5.80%, 06/01/14 982,500
------------
8,923,426
------------
MICHIGAN - 2.61%
1,000,000 Central Michigan University
6.00%, 10/01/13
Insured: MBIA 1,018,750
1,375,000 Hartford Public Schools Building and Site, GO
5.25%, 05/01/20
Insured: MBIA 1,235,781
1,000,000 Michigan Public Power Agency
Belle River Project, Series A
5.50%, 01/01/13 950,000
50,000 Michigan State Trunk Line, Series A
6.00%, 08/15/19 50,125
------------
3,254,656
------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE> 14
THE GALAXY FUND
TAX-EXEMPT BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- --------- ------------
<S> <C> <C>
MINNESOTA - 0.88%
$ 1,000,000 Minnesota Public Facilities Authority
Water Pollution Control, Series A
6.90%, 03/01/00 .................................... $ 1,098,750
------------
NEVADA - 2.02%
1,000,000 Clark County, GO and Revenue, Series A
6.00%, 06/01/02
Insured: AMBAC ..................................... 1,065,000
1,000,000 Las Vegas Sewer, GO and Revenue, Series B
5.00%, 01/01/09
Insured: MBIA ...................................... 937,500
500,000 Nevada State, GO, Series B
6.00%, 05/01/10 .................................... 513,750
------------
2,516,250
------------
NEW HAMPSHIRE - 1.00%
1,000,000 Manchester, GO, Series B
5.25%, 07/01/08 .................................... 990,000
250,000 New Hampshire State Turnpike System
6.00%, 04/01/13 .................................... 251,250
------------
1,241,250
------------
NEW JERSEY - 0.80%
1,000,000 Mercer County Improvement Authority
Customer Receipts, Justice Complex
6.05%, 01/01/07 .................................... 1,000,710
------------
NEW YORK - 6.37%
1,000,000 Battery Park City Authority, Senior,
Series A
5.50%, 11/01/10 .................................... 962,500
1,000,000 New York Municipal Water Finance Authority
Water and Sewer System, Series A
5.50%, 06/15/11 .................................... 951,250
250,000 New York State, GO
6.10%, 11/15/09 .................................... 259,063
1,000,000 New York State, GO
5.50%, 06/15/10 .................................... 981,250
1,000,000 New York State Dormitory Authority
University of Rochester
6.50%, 07/01/09 .................................... 1,038,750
125,000 New York State Local Government
Assistance Corp., Series A
7.00%, 04/01/12 .................................... 137,031
1,000,000 New York State Local Government
Assistance Corp., Series B
5.63%, 04/01/13 .................................... 975,000
2,000,000 New York State Local Government
Assistance Corp., Series C
5.38%, 04/01/12 .................................... 1,910,000
675,000 Triborough Bridge and Tunnel Authority
General Purpose, Series P
6.80%, 01/01/02 .................................... 725,625
------------
7,940,469
------------
NORTH CAROLINA - 2.04%
$ 1,500,000 Charlotte Certificates of Participation
Convention Facility Project
6.35%, 12/01/00
Insured: AMBAC ..................................... 1,603,125
940,000 North Carolina Housing Finance Agency
Single Family Revenue, Series Y
6.30%, 09/01/15 .................................... 952,925
------------
2,556,050
------------
OHIO - 2.32%
1,000,000 Cleveland Waterworks, First Mortgage,
Series F-92 A
6.25%, 01/01/15
Insured: AMBAC ..................................... 1,027,500
1,000,000 Ohio State Building Authority
State Facilities, Adult Correctional, Series A
6.00%, 04/01/06
Insured: AMBAC ..................................... 1,058,750
750,000 Ohio State Public Facilities Commission
Higher Educational Facilities, Series B
6.50%, 12/01/99
Insured: AMBAC ..................................... 801,563
------------
2,887,813
------------
PENNSYLVANIA - 4.00%
1,000,000 Luzerne County, GO, Series B
6.00%, 09/15/11
Insured: FGIC ...................................... 1,005,000
1,900,000 Pennsylvania HEFA
Health Services, University of Pennsylvania,
Series A
5.88%, 01/01/15 .................................... 1,876,250
1,000,000 Pennsylvania State, GO, Second Series A
6.50%, 11/01/04
Insured: MBIA ...................................... 1,083,750
955,000 Pennsylvania State Higher Education
Assistance Agency Student Loan Revenue,
Series A
6.80%, 12/01/00 .................................... 1,025,431
------------
4,990,431
------------
RHODE ISLAND - 8.20%
50,000 Barrington, GO
6.35%, 12/01/07 .................................... 53,375
135,000 Jamestown, GO
6.75%, 09/01/10 .................................... 143,775
200,000 Rhode Island Clean Water Protection
Finance Agency PCR, Revolving Fund,
Pooled Loan Issue, Series A
6.75%, 10/01/13
Insured: MBIA ...................................... 215,500
1,000,000 Rhode Island Housing and Mortgage
Finance Corp., Homeownership Opportunity,
Series 19-A
5.70%, 04/01/15 .................................... 968,750
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 15
THE GALAXY FUND
TAX-EXEMPT BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- --------- ------------
<S> <C> <C>
RHODE ISLAND (CONTINUED)
$ 700,000 Rhode Island Housing and Mortgage
Finance Corp., Homeownership Opportunity,
Series 13
6.70%, 10/01/15 .................................... $ 722,750
500,000 Rhode Island State,
Consolidated Capital Development Loan, GO
Series A
5.50%, 08/0/07 ..................................... 503,750
1,000,000 Rhode Island State,
Consolidated Capital Development Loan, GO
Series A
5.10%, 11/01/11 .................................... 940,000
250,000 Rhode Island State,
Consolidated Capital Development Loan, GO
Series B
6.25%, 05/15/07 .................................... 261,875
1,000,000 Rhode Island State Health and Educational
Building Corp., Higher Education, Auxiliary,
Series A
5.50%, 09/15/13
Insured: MBIA ...................................... 961,250
50,000 Rhode Island State Health and Educational
Building Corp., Higher Education,
Brown University
6.60%, 09/01/05 .................................... 53,313
1,500,000 Rhode Island State Health and Educational
Building Corp., Higher Education,
Johnson & Wales University
6.38%, 04/01/12
Insured: College Construction
Loan Association ................................... 1,560,000
1,500,000 Rhode Island State Health and Educational
Building Corp., Higher Education,
Johnson & Whales University, Series A
5.75%, 04/01/12
Insured: College Construction
Loan Association ................................... 1,475,625
500,000 Rhode Island State Health and Educational
Building Corp., Miriam Hospital, Series B
6.50%, 04/01/13 .................................... 498,750
50,000 Rhode Island State Public Buildings Authority
State Projects, Series A
5.25%, 08/01/06 .................................... 48,813
1,000,000 Rhode Island State Public Buildings Authority
State Projects, Series A
5.10%, 02/01/05
Insured: AMBAC ..................................... 992,500
355,000 Rhode Island State Public Buildings Authority
State Projects, Series A
6.00%, 02/01/11
Insured: AMBAC ..................................... 374,525
395,000 Rhode Island State Public Buildings Authority
State Projects, Unrefunded Balance, Series A
6.00%, 02/01/11
Insured: AMBAC ..................................... 399,938
50,000 Rhode Island State Student Loan Authority,
Series A
6.40%, 12/01/99 .................................... 51,813
------------
10,226,302
------------
SOUTH CAROLINA - 2.75%
2,100,000 Oconee County, PCR,
Duke Power Co. Project
5.80%, 04/01/14 .................................... 2,081,625
500,000 Piedmont Municipal Power Agency Revenue
6.10%, 01/01/06
Insured: MBIA ...................................... 531,250
750,000 Richland County Certificates of Participation
6.90%, 02/01/01
Insured: FGIC ...................................... 821,250
------------
3,434,125
------------
SOUTH DAKOTA - 1.43%
1,000,000 Rapid City, Sales Tax Revenue, Series B
6.20%, 06/01/12
Insured: FGIC ...................................... 1,026,250
750,000 South Dakota Housing Development Authority
Homeownership Mortgage, Series A
5.30%, 05/01/03 .................................... 754,688
------------
1,780,938
------------
TENNESSEE - 1.24%
500,000 Memphis Water Revenue, Series A
6.00%, 01/01/07 .................................... 521,875
1,000,000 Metropolitan Government,
Nashville and Davidson County
Health and Education Facilities,
Vanderbilt University, Series B
6.30%, 10/01/14 .................................... 1,025,000
------------
1,546,875
------------
TEXAS - 3.58%
215,000 Harris County, Toll Road, Prerefunded,
Series A
6.50%, 08/15/17
Insured: AMBAC ..................................... 237,844
35,000 Harris County, Toll Road, Unrefunded Balance,
Series A
6.50%, 08/15/17
Insured: AMBAC ..................................... 36,969
1,000,000 North Central Health Facilities
Development Corp., Hospital,
Presbyterian Healthcare
5.90%, 06/01/21 .................................... 955,000
950,000 North Texas Higher Education Authority
Student Loan Revenue, Series A
6.50%, 04/01/99
Insured: AMBAC ..................................... 974,938
2,000,000 San Antonio Airport System
7.13%, 07/01/05
Insured: AMBAC ..................................... 2,262,500
------------
4,467,251
------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 16
THE GALAXY FUND
TAX-EXEMPT BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- --------- ------------
<S> <C> <C>
UTAH - 2.42%
2,000,000 Intermountain Power Agency
Utah Power Supply, Series A
5.50%, 07/01/10 .................................... $ 1,970,000
1,000,000 Intermountain Power Agency
Utah Power Supply, Series F
6.75%, 07/01/98 .................................... 1,023,690
25,000 Intermountain Power Agency
Utah Power Supply, Series I
6.00%, 07/01/21 .................................... 25,000
------------
3,018,690
------------
VERMONT - 0.74%
1,000,000 Vermont State, GO, Series A
5.13%, 01/15/14 .................................... 930,000
------------
VIRGINIA - 2.11%
1,000,000 Norfolk Industrial Development Authority
Children's Hospital, Kings Group
6.50%, 06/01/21
Insured: AMBAC ..................................... 1,035,000
1,500,000 Virginia Beach,
Public Improvement, GO, Series A
6.88%, 05/01/05 .................................... 1,603,125
------------
2,638,125
------------
WASHINGTON - 6.05%
1,000,000 Lewis County Public Utilities District No. 1
Cowlitz Falls Hydroelectric
5.50%, 10/01/13 .................................... 948,750
1,000,000 Seattle Municipal Light and Power
5.38%, 11/01/18 .................................... 922,500
1,000,000 Seattle Municipality Metropolitan Sewer,
Series S
6.80%, 01/01/02 .................................... 1,051,250
500,000 Washington State, GO, Series 93A
5.75%, 10/01/17 .................................... 486,875
1,000,000 Washington State, GO, Series R-96B
5.00%, 07/01/09 .................................... 951,250
1,500,000 Washington State Public Power Supply System
Nuclear Project No. 1, Series A
7.25%, 07/01/99 .................................... 1,599,375
1,000,000 Washington State Public Power Supply System
Nuclear Project No. 2, Series C
7.30%, 07/01/00 .................................... 1,083,750
500,000 Washington State Public Power Supply System
Nuclear Project No. 3, Series B
6.90%, 07/01/96 .................................... 502,005
------------
7,545,755
------------
WEST VIRGINIA - 0.39%
500,000 West Virginia State Housing
Development Fund, Series A
5.50%, 11/01/14 .................................... 483,125
------------
WISCONSIN - 2.88%
600,000 Milwaukee Metropolitan Sewer District, GO,
Series A
6.50%, 10/01/98 .................................... 630,000
500,000 Mukwonago School District, GO
5.90%, 03/01/13
Insured: AMBAC ..................................... 488,750
500,000 Verona Area School District, GO, Series A
5.90%, 10/01/13
Insured: FGIC ...................................... 500,000
1,000,000 Wisconsin State, GO, Series A
5.00%, 05/01/13 .................................... 921,250
1,000,000 Wisconsin State Transportation, Prerefunded
Series B
5.75%, 07/01/12 .................................... 1,050,000
------------
3,590,000
------------
OTHER TERRITORIES - 1.26%
1,650,000 Puerto Rico Public Buildings Authority
Government Facilities, Series A
5.50%, 07/01/21 .................................... 1,575,750
------------
TOTAL INVESTMENTS - 97.59% ....................................... 121,742,758
------------
(Cost $121,230,011)
NET OTHER ASSETS AND LIABILITIES - 2.41% ......................... 3,000,301
------------
NET ASSETS - 100.00% ............................................. $124,743,059
============
- ---------------------------------------------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guarantee Insurance Corp.
FHA Federal Housing Authority
FSA Financial Security Assurance
GO General Obligation
HEFA Health and Educational Facilities Authority
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SP OB Special Obligation
</TABLE>
See Notes to Financial Statements.
13
<PAGE> 17
THE GALAXY FUND
NEW YORK MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- --------- ------------
<S> <C> <C>
MUNICIPAL SECURITIES - 96.24%
NEW YORK - 96.24%
$1,000,000 Albany County, GO
5.50%, 06/01/08
Insured: FGIC ...................................... $ 1,015,000
500,000 Albany County, GO
5.25%, 11/01/08
Insured: MBIA ...................................... 495,619
500,000 Albany County, GO
5.25%, 11/01/09
Insured: MBIA ...................................... 486,250
300,000 Battery Park City Authority, Revenue
7.60%, 05/01/99 .................................... 332,250
2,000,000 Battery Park City Authority, Senior Lien,
Series A
5.00%, 11/01/08 .................................... 1,870,000
100,000 Canandaigua City School District, GO
6.50%, 06/01/10
Insured: AMBAC ..................................... 108,750
150,000 Chenango, GO
6.00%, 07/15/06 .................................... 156,000
650,000 Farmingdale Union Free School District, GO
5.13%, 08/01/07
Insured: FGIC ...................................... 632,938
100,000 Grand Island, GO
6.10%, 05/15/04 .................................... 104,500
1,000,000 Hempstead Town, GO
5.00%, 08/01/06
Insured: AMBAC ..................................... 980,000
100,000 Huntington, GO, Series B
6.25%, 04/15/07
Insured: AMBAC ..................................... 105,875
500,000 Irvington Union Free School District, GO,
Series B
5.10%, 07/15/06
Insured: AMBAC ..................................... 494,375
750,000 Monroe County
Public Improvement, Prerefunded, GO
6.10%, 03/01/09
Insured: MBIA ...................................... 778,125
100,000 Monroe County,
Public Improvement, Prerefunded, GO
6.10%, 06/01/04
Insured: AMBAC ..................................... 109,250
900,000 Monroe County,
Public Improvement, Unrefunded Balance, GO
6.10%, 06/01/14
Insured: AMBAC ..................................... 927,000
1,000,000 Monroe County Water Authority, Series A
6.25%, 08/01/11 .................................... 1,031,250
100,000 Monroe County, Water Improvement GO
6.20%, 06/01/05
Insured: AMBAC ..................................... 106,250
450,000 Municipal Assistance Corp., Series 59
6.50%, 07/01/07 .................................... 460,125
1,000,000 Municipal Assistance Corp., Series 60
6.00%, 07/01/08 .................................... 1,017,500
750,000 Municipal Assistance Corp., Series 61
5.75%, 07/01/08 .................................... 760,313
225,000 Nassau County, GO
6.10%, 05/15/05
Insured: MBIA ...................................... 241,031
500,000 New Castle Public Improvement, GO
5.88%, 09/15/09 .................................... 513,125
200,000 New Paltz Central School District, GO
6.00%, 06/15/06
Insured: AMBAC ..................................... 211,000
750,000 New York City Municipal Water Finance
Authority, Water and Sewer System, Series A
5.90%, 06/15/04 .................................... 787,500
500,000 New York City Municipal Water Finance
Authority, Water and Sewer System, Series A
6.10%, 06/15/06 .................................... 526,250
1,675,000 New York City Municipal Water Finance
Authority, Water and Sewer System, Series A
5.50%, 06/15/11 .................................... 1,593,344
1,000,000 New York City Municipal Water Finance
Authority, Water and Sewer System, Series A
6.00%, 06/15/17 .................................... 988,750
1,000,000 New York City Municipal Water Finance
Authority, Water and Sewer System, Series A
5.75%, 06/15/18
Insured: AMBAC ..................................... 968,750
1,000,000 New York City Municipal Water Finance
Authority, Water and Sewer System, Series B
5.00%, 06/15/03 .................................... 995,000
2,000,000 New York City Municipal Water Finance
Authority, Water and Sewer System, Series B
5.13%, 06/15/04 .................................... 1,992,500
750,000 New York City Municipal Water Finance
Authority, Water and Sewer System, Series B
5.75%, 06/15/13
Insured: MBIA ...................................... 762,188
500,000 New York State, GO, Series A
5.50%, 03/15/05 .................................... 508,125
1,000,000 New York State, GO
5.25%, 06/15/05 .................................... 1,006,250
200,000 New York State, GO
6.70%, 03/01/07 .................................... 215,500
1,000,000 New York State, GO
6.25%, 09/15/07 .................................... 1,055,000
100,000 New York State, GO
6.90%, 02/01/08 .................................... 108,125
500,000 New York State, GO
6.25%, 06/15/08 .................................... 523,125
1,000,000 New York State, GO
5.50%, 06/15/10 .................................... 981,250
1,000,000 New York State, GO
6.13%, 11/15/10 .................................... 1,028,750
500,000 New York State, GO
6.00%, 11/15/11 .................................... 506,875
125,000 New York State Dormitory Authority
New York University
6.70%, 07/01/11
Insured: MBIA ...................................... 128,153
500,000 New York State Dormitory Authority
University of Rochester
6.50%, 07/01/09 .................................... 519,375
</TABLE>
See Notes to Financial Statements.
14
<PAGE> 18
THE GALAXY FUND
NEW YORK MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
- --------- --------
NEW YORK (CONTINUED)
<S> <C> <C>
$ 500,000 New York State Dormitory Authority Revenue,
New York University
6.25%, 07/01/09
Insured: FGIC .......................................... $ 524,375
1,000,000 New York State Dormitory Authority
University of Rochester,
Strong Memorial Hospital
5.40%, 07/01/06 ........................................ 1,010,000
1,000,000 New York State Environmental Facilities Corp.,
State Water, Revolving Fund, PCR
NYC Municipal Water
5.60%, 06/15/05 ........................................ 1,028,750
1,000,000 New York State Environmental Facilities Corp.,
State Water, Revolving Fund, PCR
Pooled Loan, Series A
5.35%, 09/15/06 ........................................ 1,026,250
1,000,000 New York State Environmental Facilities Corp.,
State Water, Revolving Fund, PCR
Pooled Loan, Series A
5.40%, 09/15/07 ........................................ 1,022,500
500,000 New York State Environmental Facilities Corp.,
PCR, State Water, Revolving Fund,
Pooled Loan, Series B
6.50%, 09/15/08 ........................................ 546,875
100,000 New York State Environmental Facilities Corp.,
PCR, State Water, Revolving Fund, Series A
6.40%, 09/15/06 ........................................ 109,875
100,000 New York State Environmental Facilities Corp.,
PCR, State Water, Revolving Fund, Series E
6.30%, 06/15/02 ........................................ 107,875
100,000 New York State Environmental Facilities Corp.,
PCR, State Water, Revolving Fund, Series E
6.88%, 06/15/10 ........................................ 109,625
500,000 New York State Housing Finance Agency
Multifamily Mortgage Housing, Series A
6.95%, 08/15/12 ........................................ 526,250
300,000 New York State Local Government
Assistance Corp., Series A
6.88%, 04/01/06 ........................................ 330,375
375,000 New York State Local Government
Assistance Corp., Series A
6.88%, 04/01/07 ........................................ 412,031
250,000 New York State Local Government
Assistance Corp., Series B
6.00%, 04/01/07 ........................................ 260,313
1,000,000 New York State Local Government
Assistance Corp., Series B
5.63%, 04/01/13 ........................................ 975,000
1,000,000 New York State Local Government
Assistance Corp., Series B
6.00%, 04/01/18 ........................................ 998,750
1,250,000 New York State Local Government
Assistance Corp., Series C
6.00%, 04/01/07 ........................................ 1,301,563
250,000 New York State Local Government
Assistance Corp., Series C
6.50%, 04/01/15 ........................................ 258,438
500,000 New York State Local Government
Assistance Corp., Series D
6.75%, 04/01/07 ........................................ 545,000
300,000 New York State Local Government
Assistance Corp., Series D
7.00%, 04/01/11 ........................................ 330,750
750,000 New York State Medical Care Facilities
Finance Agency
Hospital Mortgage, Series A
5.05%, 02/15/08 ........................................ 709,688
800,000 New York State Medical Care Facilities
Finance Agency, Second Mortgage Program,
Health Care Projects, Series B
6.35%, 11/01/14 ........................................ 812,000
500,000 New York State Mortgage Agency Revenue,
Homeowner Mortgage, Series 27
6.90%, 04/01/15 ........................................ 530,000
145,000 New York State Mortgage Agency Revenue,
Series A
6.88%, 04/01/17 ........................................ 147,175
500,000 New York State Power Authority Revenue,
Series Z
6.63%, 01/01/12 ........................................ 522,500
1,000,000 New York State Power Authority Revenue,
Series AA
6.38%, 01/01/12 ........................................ 1,036,250
500,000 New York State Power Authority Revenue,
Series BB
6.30%, 01/01/07 ........................................ 531,250
1,000,000 New York State Power Authority Revenue,
Series CC
5.00%, 01/01/08 ........................................ 966,250
1,250,000 New York State Power Authority Revenue,
Series CC
5.13%, 01/01/10 ........................................ 1,185,938
1,250,000 New York State Thruway Authority Revenue,
Series A
5.88%, 01/01/07 ........................................ 1,287,500
500,000 Onondaga County, GO
5.88%, 02/15/10 ........................................ 523,125
250,000 Orange County, GO
6.20%, 12/01/09 ........................................ 261,563
100,000 Orange County, GO
6.20%, 12/01/10 ........................................ 104,125
100,000 Orleans County, GO
6.50%, 09/15/08 ........................................ 110,125
450,000 Oyster Bay, GO, Series A
5.25%, 04/15/05
Insured: FGIC .......................................... 448,313
500,000 Oyster Bay, GO, Series A
5.30%, 04/15/08
Insured: FGIC .......................................... 489,375
200,000 Port Authority of New York and New Jersey
Consolidated Loan, Series 71
6.90%, 07/15/09 ........................................ 211,500
500,000 Port Authority of New York and New Jersey
Consolidated Loan, Series 78
6.50%, 04/15/11 ........................................ 518,125
</TABLE>
See Notes to Financial Statements.
15
<PAGE> 19
THE GALAXY FUND
NEW YORK MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
NEW YORK (CONTINUED)
<S> <C> <C>
$ 500,000 Port Authority of New York and New Jersey
Consolidated Loan, Series 82
5.70%, 08/01/07 ........................................ $ 516,875
1,000,000 Port Authority of New York and New Jersey
Consolidated Loan, Series 86
5.00%, 07/01/06 ........................................ 991,250
500,000 Port Authority of New York and New Jersey
Consolidated Loan, Series 100
5.75%, 12/15/13 ........................................ 491,250
500,000 Rochester, GO, Series A
5.00%, 08/15/07
Insured: AMBAC ......................................... 485,625
500,000 Syracuse, Prerefunded, GO
6.70%, 02/15/07 ........................................ 551,250
1,000,000 Syracuse, GO, Series A
5.10%, 02/15/08 ........................................ 972,500
500,000 Tompkins County, GO, Series B
5.63%, 09/15/12 ........................................ 495,000
1,000,000 Triborough Bridge and Tunnel Authority,
Revenue, General Purpose, Series A
5.00%, 01/01/07 ........................................ 988,750
500,000 Triborough Bridge and Tunnel Authority,
Revenue, General Purpose, Series X
6.00%, 01/01/06 ........................................ 526,875
500,000 Triborough Bridge and Tunnel Authority,
Revenue, General Purpose, Series X
6.00%, 01/01/07 ........................................ 524,375
750,000 Triborough Bridge and Tunnel Authority,
Revenue, General Purpose, Series X
6.00%, 01/01/08 ........................................ 782,813
300,000 Triborough Bridge and Tunnel Authority,
Revenue, General Purpose, Series X
6.63%, 01/01/12 ........................................ 330,750
750,000 Triborough Bridge and Tunnel Authority,
Revenue, General Purpose, Series Y
6.00%, 01/01/12 ........................................ 778,125
100,000 Triborough Bridge and Tunnel Authority,
Revenue, SP OB
6.10%, 01/01/05
Insured: FGIC .......................................... 105,625
250,000 Triborough Bridge and Tunnel Authority,
Revenue, SP OB
6.15%, 01/01/06
Insured: FGIC .......................................... 265,938
350,000 Triborough Bridge and Tunnel Authority,
Revenue, SP OB
6.20%, 01/01/07
Insured: FGIC .......................................... 371,000
500,000 United Nations Development Corp.,
Senior Lien,
Series A
6.00%, 07/01/06 ........................................ 521,875
2,000,000 United Nations Development Corp.
Senior Lien, Series A
6.00%, 07/01/12 ........................................ 2,000,000
500,000 United Nations Development Corp.
Subordinated Lien, Series B
6.20%, 07/01/11 ........................................ 511,875
1,000,000 White Plains, GO
4.80%, 01/15/07 ........................................ 956,250
-----------
TOTAL INVESTMENTS - 96.24% ........................................ 63,118,734
(Cost $62,393,371) -----------
NET OTHER ASSETS AND LIABILITIES - 3.76% .......................... 2,467,865
-----------
NET ASSETS - 100.00% .............................................. $65,586,599
===========
</TABLE>
- ------------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guarantee Insurance Corp.
GO General Obligation
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SP OB Special Obligation
See Notes to Financial Statements.
16
<PAGE> 20
THE GALAXY FUND
CONNECTICUT MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
MUNICIPAL SECURITIES - 93.89%
CONNECTICUT - 93.43%
<S> <C> <C>
$ 245,000 Bolton, GO
5.10%, 06/01/06 ........................................ $ 241,325
145,000 Bozrah, GO
4.90%, 04/15/03
Insured: MBIA .......................................... 146,259
355,000 Bristol, GO
5.15%, 06/15/07 ........................................ 350,563
175,000 Brookfield, GO
5.10%, 07/15/07 ........................................ 175,875
210,000 Brookfield, GO
5.20%, 07/15/09 ........................................ 205,538
250,000 Cheshire, GO
4.30%, 08/15/01 ........................................ 245,313
250,000 Cheshire, GO
5.10%, 08/15/07 ........................................ 246,875
400,000 Connecticut State Airport
Bradley International Airport
7.40%, 10/01/04
Insured: FGIC .......................................... 468,500
325,000 Connecticut State Clean Water Fund
5.50%, 10/01/04 ........................................ 338,000
200,000 Connecticut State Clean Water Fund
6.00%, 10/01/12 ........................................ 206,750
750,000 Connecticut State Development Authority,
Facility, Stamford Water Co. Project
5.30%, 09/01/28 ........................................ 671,250
150,000 Connecticut State, GO
7.20%, 07/01/99 ........................................ 153,876
200,000 Connecticut State, GO
6.70%, 12/01/98 ........................................ 211,250
275,000 Connecticut State, GO
Economic Recreation Notes, Series A
5.50%, 06/15/96 ........................................ 275,550
100,000 Connecticut State, GO, Series A
4.75%, 11/15/01 ........................................ 100,625
250,000 Connecticut State, GO, Series A
5.00%, 11/15/03 ........................................ 252,188
250,000 Connecticut State, GO, Series A
5.10%, 11/15/04 ........................................ 252,500
200,000 Connecticut State, GO, Series B
4.80%, 09/15/01 ........................................ 201,500
200,000 Connecticut State, GO, Series B
5.20%, 09/15/05 ........................................ 202,250
75,000 Connecticut State, GO, Series B
5.25%, 03/15/06 ........................................ 75,563
100,000 Connecticut State, GO, Series B
6.50%, 08/01/06 ........................................ 107,875
100,000 Connecticut State, GO, Series B
5.30%, 03/15/07 ........................................ 100,375
400,000 Connecticut State, GO, Series B
5.40%, 03/15/08 ........................................ 401,500
315,000 Connecticut State, GO, Series C
4.90%, 05/01/04 ........................................ 313,819
100,000 Connecticut State, GO, Series C
5.00%, 05/01/05 ........................................ 99,625
500,000 Connecticut State, GO, Series C
5.50%, 08/15/05 ........................................ 516,250
1,000,000 Connecticut State, GO, Series D
4.70%, 08/01/03 ........................................ 991,250
300,000 Connecticut State, GO, Series D
4.75%, 08/01/04 ........................................ 296,250
500,000 Connecticut State, GO, Series D
5.00%, 08/01/07 ........................................ 490,000
500,000 Connecticut State, GO, Series E
6.00%, 03/15/12 ........................................ 521,875
50,000 Connecticut State HEFA
Cherry Brook Nursing Center Project
5.88%, 11/01/12 ........................................ 49,938
250,000 Connecticut State HEFA
Connecticut State University System, Series A
5.13%, 11/01/09
Insured: MBIA .......................................... 241,250
500,000 Connecticut State HEFA
Connecticut State University System, Series A
5.13%, 11/01/10
Insured: MBIA .......................................... 476,875
750,000 Connecticut State HEFA
Greenwich Hospital Issue, Series A
5.30%, 07/01/08
Insured: MBIA .......................................... 741,563
375,000 Connecticut State HEFA
Newington Childrens Hospital, Series A
5.65%, 07/01/05
Insured: MBIA .......................................... 390,000
200,000 Connecticut State HEFA
St. Francis Hospital & Medical Center, Series C
4.80%, 07/01/07
Insured: FGIC .......................................... 191,000
300,000 Connecticut State HEFA
St. Francis Hospital & Medical Center, Series C
5.00%, 07/01/13
Insured: FGIC .......................................... 274,125
200,000 Connecticut State HEFA
Taft School Issue, Series B
5.25%, 07/01/13 ........................................ 185,250
200,000 Connecticut State HEFA
Taft School Issue, Series B
5.40%, 07/01/20 ........................................ 183,500
350,000 Connecticut State HEFA
Yale University, Series K
6.38%, 07/01/13 ........................................ 357,438
105,000 Connecticut State Housing Finance Authority,
Housing Mortgage Finance Program, Series A
5.60%, 05/15/05 ........................................ 107,625
200,000 Connecticut State Housing Finance Authority,
Housing Mortgage Finance Program, Series A
5.40%, 05/15/04 ........................................ 202,500
125,000 Connecticut State Housing Finance Authority,
Housing Mortgage Finance Program, Series A-1
5.85%, 11/15/16 ........................................ 122,656
400,000 Connecticut State Housing Finance Authority,
Housing Mortgage Finance Program, Series B
6.25%, 11/15/05 ........................................ 419,000
100,000 Connecticut State Housing Finance Authority,
Housing Mortgage Finance Program, Series B
6.20%, 05/15/12 ........................................ 101,125
</TABLE>
See Notes to Financial Statements.
17
<PAGE> 21
THE GALAXY FUND
CONNECTICUT MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
CONNECTICUT (CONTINUED)
<S> <C> <C>
$ 415,000 Connecticut State Housing Finance Authority,
Housing Mortgage Finance Program, Series F-1
5.60%, 05/15/14 ........................................ $ 398,400
300,000 Connecticut State Resource Recovery Authority,
Mid-Connecticut System, Series A
5.60%, 11/15/99 ........................................ 312,000
200,000 Connecticut State Special Assessment,
Unemployment Compensation, Series A
4.00%, 05/15/96 ........................................ 200,028
620,000 Connecticut State Special Assessment,
Unemployment Compensation, Series A
4.60%, 11/15/00
Insured: AMBAC ......................................... 620,775
400,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
6.80%, 06/01/99 ........................................ 426,000
200,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
4.75%, 09/01/01 ........................................ 199,250
100,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.00%, 09/01/03 ........................................ 99,875
150,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.10%, 09/01/04 ........................................ 149,813
950,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.13%, 09/01/05 ........................................ 942,875
500,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.25%, 09/01/06 ........................................ 498,125
700,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.40%, 04/01/07 ........................................ 698,250
1,250,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.25%, 09/01/07 ........................................ 1,245,313
925,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.38%, 09/01/08 ........................................ 923,844
400,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series B
6.13%, 09/01/12 ........................................ 415,000
750,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series B
4.40%, 10/01/04 ........................................ 714,375
170,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series C
4.50%, 10/01/04 ........................................ 162,350
200,000 Danbury, GO
5.63%, 02/01/13 ........................................ 197,000
175,000 East Haddam, GO
5.00%, 05/01/06
Insured: MBIA .......................................... 173,469
100,000 East Hampton, GO
4.95%, 06/15/04
Insured: MBIA .......................................... 100,625
250,000 East Hampton, GO
5.10%, 06/15/05
Insured: MBIA .......................................... 251,250
175,000 Groton City, GO
5.30%, 05/15/06 ........................................ 174,125
50,000 Groton City, GO
5.40%, 05/15/07 ........................................ 49,938
250,000 Groton Town, GO, Lot A
5.00%, 08/15/07 ........................................ 240,625
500,000 Guilford, GO
5.00%, 11/15/08 ........................................ 478,125
250,000 Hartford County, Metropolitan District, GO
6.70%, 10/01/09 ........................................ 282,188
500,000 Hartford County, Metropolitan District, GO
5.10%, 12/01/09 ........................................ 484,375
200,000 Madison, GO
5.00%, 05/01/06 ........................................ 196,500
300,000 Manchester, GO, Lot A
3.68%, 07/11/96 ........................................ 299,964
300,000 Meriden, GO
5.75%, 10/15/04
Insured: AMBAC ......................................... 319,500
250,000 Middletown, GO
4.00%, 04/15/97 ........................................ 250,905
100,000 Middletown, GO
6.50%, 04/15/98 ........................................ 104,500
100,000 Middletown, GO
4.75%, 04/15/01 ........................................ 101,375
400,000 Milford, GO
5.00%, 01/15/08 ........................................ 392,000
370,000 Montville, GO
5.30%, 12/01/09 ........................................ 366,300
370,000 Montville, GO
5.35%, 12/01/10 ........................................ 364,913
100,000 New Milford, GO
5.80%, 10/01/01 ........................................ 105,625
250,000 New Milford, GO
5.50%, 08/01/08 ........................................ 257,813
140,000 North Branford, GO
5.00%, 02/01/11 ........................................ 129,150
150,000 North Branford, GO
5.00%, 02/01/12 ........................................ 137,250
350,000 Norwalk, GO
5.00%, 01/15/05 ........................................ 352,625
200,000 Norwalk, GO
5.00%, 01/15/06 ........................................ 199,500
500,000 Norwich, GO
5.63%, 09/15/07 ........................................ 518,125
50,000 Regional School District No. 5, GO
4.90%, 05/15/02 ........................................ 50,500
330,000 Regional School District No. 5, GO
5.05%, 05/15/04 ........................................ 327,113
135,000 Regional School District No. 5, GO
5.15%, 05/15/05 ........................................ 135,675
225,000 South Central Regional Water Authority
Water System, Series 11
5.75%, 08/01/12
Insured: FGIC .......................................... 224,156
200,000 South Central Regional Water Authority
Water System, Series 12
4.90%, 08/01/04
Insured: FGIC .......................................... 198,000
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 22
THE GALAXY FUND
CONNECTICUT MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
CONNECTICUT (CONTINUED)
<S> <C> <C>
$ 100,000 South Central Regional Water Authority
Water System, Series 12
5.00%, 08/01/05
Insured: FGIC ........................................ $ 98,875
175,000 South Central Regional Water Authority
Water System, Series 12
5.13%, 08/01/07
Insured: FGIC ........................................ 171,719
250,000 South Central Regional Water Authority
Water System, Series 12
5.25%, 08/01/12
Insured: FGIC ........................................ 236,250
110,000 Stonington, GO
5.00%, 06/15/06 ...................................... 109,313
75,000 Torrington, GO
5.20%, 04/15/06
Insured: FGIC ........................................ 75,281
100,000 Trumbull, GO
6.00%, 05/15/04 ...................................... 107,750
55,000 Washington, GO
4.85%, 11/01/10 ...................................... 51,563
55,000 Washington, GO
4.90%, 11/01/11 ...................................... 51,425
100,000 West Hartford, GO
6.00%, 05/01/07 ...................................... 106,625
100,000 West Haven, GO, Series A
4.75%, 12/01/01 ...................................... 100,625
250,000 West Haven, GO, Series B
5.20%, 06/01/05 ...................................... 250,938
250,000 West Haven, GO, Series B
5.40%, 06/01/09 ...................................... 247,18
-----------
29,981,248
-----------
OTHER TERRITORIES - 0.46%
150,000 Puerto Rico Telephone Authority, Series M
4.80%, 01/01/01 ...................................... 149,438
-----------
TOTAL INVESTMENTS - 93.89% ...................................... 30,130,686
(Cost $30,369,603) -----------
NET OTHER ASSETS AND LIABILITIES - 6.11% ........................ 1,959,677
-----------
NET ASSETS - 100.00% ............................................ $32,090,363
===========
</TABLE>
- -------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Federal Guarantee Insurance Corp.
GO General Obligation
HEFA Health and Educational Facilities Authority
MBIA Municipal Bond Insurance Association
See Notes to Financial Statements.
19
<PAGE> 23
THE GALAXY FUND
MASSACHUSETTS MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
MUNICIPAL SECURITIES - 95.69%
MASSACHUSETTS - 95.69%
<S> <C> <C>
$ 250,000 Andover, GO
5.10%, 11/15/08 ..................................... 240,000
300,000 Attleboro, GO
5.20%, 07/01/02
Insured: AMBAC ...................................... 305,980
250,000 Attleboro, GO
5.50%, 12/01/13 ..................................... 240,625
375,000 Billerica, GO, Lot A
5.40%, 07/15/09
Insured: MBIA ....................................... 366,094
250,000 Boston, GO
5.25%, 10/01/05
Insured: MBIA ....................................... 251,875
200,000 Boston, GO, Series A
5.00%, 02/01/03
Insured: AMBAC ...................................... 200,750
250,000 Boston, GO, Series A
4.70%, 07/01/05
Insured: AMBAC ...................................... 241,875
70,000 Boston, GO, Series A
5.35%, 02/01/06
Insured: AMBAC ...................................... 70,525
360,000 Boston, GO, Series A
5.45%, 02/01/07
Insured: AMBAC ...................................... 362,700
225,000 Boston, GO, Series A
5.55%, 02/01/08
Insured: AMBAC ...................................... 226,688
200,000 Boston Metropolitan District, GO
5.35%, 12/01/12 ..................................... 192,000
290,000 Boston Metropolitan District, GO
5.35%, 12/01/14 ..................................... 274,413
230,000 Boston Water and Sewer Commission,
Senior Series A
7.00%, 11/01/01
Insured: FGIC ....................................... 259,613
200,000 Boston Water and Sewer Commission,
Senior Series A
5.50%, 11/01/01
Insured: FSA ........................................ 207,500
50,000 Boston Water and Sewer Commission,
Senior Series A
5.25%, 11/01/07 ..................................... 49,000
50,000 Boston Water and Sewer Commission,
Senior Series A
5.40%, 11/01/09 ..................................... 48,625
25,000 Boston Water and Sewer Commission,
Senior Series A
5.25%, 11/01/11 ..................................... 23,594
250,000 Brookline, GO
4.50%, 01/15/06 ..................................... 239,063
100,000 Brookline, GO
5.60%, 09/01/10 ..................................... 100,375
230,000 Burlington, GO
5.05%, 01/15/11 ..................................... 213,613
155,000 Chatham, GO
4.60%, 01/15/05 ..................................... 148,800
10,000 Dedham-Westwood Water District, GO
5.20%, 11/01/05
Insured: MBIA ....................................... 10,025
50,000 Dedham-Westwood Water District, GO
5.40%, 11/01/07
Insured: MBIA ....................................... 50,188
250,000 Deerfield, GO
5.60%, 06/15/02 ..................................... 261,563
25,000 Fairhaven, GO
7.10%, 02/01/04 ..................................... 27,094
250,000 Franklin, GO
5.50%, 11/15/02
Insured: MBIA ....................................... 259,688
250,000 Franklin, GO
5.25%, 11/15/11
Insured: MBIA ....................................... 238,125
100,000 Kingston, GO
5.70%, 08/01/07 ..................................... 102,375
105,000 Lawrence, GO
4.63%, 09/15/99 ..................................... 105,263
250,000 Lawrence, GO
5.13%, 09/15/03 ..................................... 247,813
570,000 Longmeadow, GO
5.25%, 11/15/13 ..................................... 535,088
250,000 Lowell, GO
6.05%, 04/01/11
Insured: CGIC ....................................... 255,625
200,000 Lowell, GO, Series A
5.10%, 01/15/04
Insured: FSA ........................................ 199,750
265,000 Lowell, GO, Series A
5.20%, 01/15/05
Insured: FSA ........................................ 264,669
25,000 Ludlow, GO
7.30%, 11/01/02
Insured: MBIA ....................................... 28,375
35,000 Lynn Water and Sewer Commission
5.50%, 06/01/99
Insured: FGIC ....................................... 36,050
100,000 Lynn Water and Sewer Commission
5.30%, 12/01/06
Insured: FGIC ....................................... 100,875
130,000 Massachusetts Bay Transportation Authority,
Series A
6.00%, 03/01/12 ..................................... 132,438
200,000 Massachusetts Bay Transportation Authority,
Series A
5.75%, 03/01/22 ..................................... 191,750
70,000 Massachusetts Bay Transportation Authority,
Series A
5.75%, 03/01/22
Insured: FGIC ....................................... 67,550
350,000 Massachusetts Bay Transportation Authority,
Series B
5.50%, 03/01/21 ..................................... 324,625
1,000,000 Massachusetts Bay Transportation Authority,
Series B
5.38%, 03/01/25
Insured: AMBAC ...................................... 912,500
</TABLE>
See Notes In Financial Statements.
20
<PAGE> 24
THE GALAXY FUND
MASSACHUSETTS MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
MASSACHUSETTS (CONTINUED)
<S> <C> <C>
$ 50,000 Massachusetts Bay Transportation
Authority, Series C
6.10%, 03/01/23 ..................................... $ 50,375
180,000 Massachusetts Municipal Wholesale Electric
Copower Supply System, Series A
5.80%, 07/01/96 ..................................... 180,540
200,000 Massachusetts Municipal Wholesale Electric
Copower Supply System, Series A
6.50%, 07/01/02
Insured: AMBAC ...................................... 216,750
200,000 Massachusetts Municipal Wholesale Electric
Copower Supply System, Series B
6.63%, 07/01/04 ..................................... 216,500
300,000 Massachusetts Municipal Wholesale Electric
Copower Supply System, Series B
4.80%, 07/01/07
Insured: MBIA ....................................... 284,250
100,000 Massachusetts Municipal Wholesale Electric
Copower Supply System, Series E
5.75%, 07/01/02
Insured: AMBAC ...................................... 104,250
200,000 Massachusetts State, GO, Series A
7.25%, 06/01/96 ..................................... 200,546
250,000 Massachusetts State, GO, Series A
6.25%, 07/01/02 ..................................... 267,188
250,000 Massachusetts State, GO, Series A
6.25%, 07/01/04 ..................................... 269,688
750,000 Massachusetts State, GO, Series A
5.25%, 02/01/08 ..................................... 733,125
100,000 Massachusetts State, GO, Series B
5.10%, 11/01/02 ..................................... 100,875
200,000 Massachusetts State, GO, Series B
5.30%, 11/01/05 ..................................... 202,500
100,000 Massachusetts State, GO, Series B
5.50%, 11/01/07 ..................................... 101,750
250,000 Massachusetts State, GO, Series C
4.80%, 08/01/03
Insured: AMBAC ...................................... 248,750
250,000 Massachusetts State, GO, Series C
4.80%, 08/01/03
Insured: MBIA ....................................... 248,750
200,000 Massachusetts State Consolidated Loan, GO,
Series A
7.00%, 06/01/98 ..................................... 211,000
50,000 Massachusetts State Consolidated Loan, GO,
Series A
5.10%, 11/01/03 ..................................... 50,500
250,000 Massachusetts State Consolidated Loan, GO,
Series A
5.75%, 02/01/15
Insured: MBIA ....................................... 246,563
250,000 Massachusetts State Consolidated Loan, GO,
Series B
5.10%, 07/01/03 ..................................... 251,563
100,000 Massachusetts State Consolidated Loan, GO,
Series D
5.75%, 05/01/12 ..................................... 100,250
100,000 Massachusetts State Convention Center
Authority, Boston Common Parking Garage,
Series A
5.35%, 09/01/06 ..................................... 100,875
100,000 Massachusetts State Convention Center
Authority, Boston Common Parking Garage,
Series A
5.40%, 09/01/07 ..................................... 100,125
350,000 Massachusetts State Convention Center
Authority, Boston Common Parking Garage,
Series A
5.38%, 09/01/13 ..................................... 326,813
200,000 Massachusetts State Convention Center
Authority, Hynes Convention Center, Lot A
6.00%, 09/01/99 ..................................... 209,000
370,000 Massachusetts State Federal
Assisted Housing, GO
6.00%, 02/01/08 ..................................... 387,575
200,000 Massachusetts State HEFA, Series G
4.50%, 07/01/02
Insured: MBIA ....................................... 196,000
400,000 Massachusetts State HEFA, Series G
4.60%, 07/01/03
Insured: MBIA ....................................... 391,000
200,000 Massachusetts State HEFA
Baystate Medical Center, Series D
4.80%, 07/01/04
Insured: FGIC ....................................... 195,000
150,000 Massachusetts State HEFA
Baystate Medical Center, Series D
4.90%, 07/01/05
Insured: FGIC ....................................... 146,438
400,000 Massachusetts State HEFA
Beth Israel Hospital, Series G
5.70%, 07/01/05
Insured: AMBAC ...................................... 417,000
350,000 Massachusetts State HEFA
Boston College, Series K
4.70%, 06/01/03 ..................................... 344,750
300,000 Massachusetts State HEFA
Boston College, Series K
4.90%, 06/01/05 ..................................... 294,375
250,000 Massachusetts State HEFA
Boston College, Series K
5.25%, 06/01/23
Insured: MBIA ....................................... 220,938
385,000 Massachusetts State HEFA
Brigham & Women's Hospital, Series E
4.50%, 07/01/01 ..................................... 379,225
130,000 Massachusetts State HEFA
Brigham & Women's Hospital, Series E
4.60%, 07/01/02 ..................................... 127,725
100,000 Massachusetts State HEFA
Brigham & Women's Hospital, Series E
4.80%, 07/01/04 ..................................... 97,750
350,000 Massachusetts State HEFA
Cape Cod Health System, Series A
5.25%, 11/15/21
Insured: College Construction
Loan Association .................................... 306,250
</TABLE>
See Notes to Financial Statements.
21
<PAGE> 25
THE GALAXY FUND
MASSACHUSETTS MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
MASSACHUSETTS (CONTINUED)
<S> <C> <C>
$ 65,000 Massachusetts State HEFA
Children's Hospital, Series E
5.40%, 10/01/01 ..................................... $ 66,300
50,000 Massachusetts State HEFA
Harvard University, Series M
5.50%, 12/01/15 ..................................... 48,250
100,000 Massachusetts State HEFA
Lahey Clinic Medical Center, Series B
5.63%, 07/01/15
Insured: MBIA ....................................... 96,250
500,000 Massachusetts State HEFA
Lahey Clinic Medical Center, Series B
5.38%, 07/01/23
Insured: MBIA ....................................... 454,375
40,000 Massachusetts State HEFA
Massachusetts General Hospital, Series F
6.00%, 07/01/05
Insured: AMBAC ...................................... 42,700
250,000 Massachusetts State HEFA
Massachusetts General Hospital, Series G
4.65%, 07/01/02
Insured: AMBAC ...................................... 246,875
100,000 Massachusetts State HEFA
Massachusetts General Hospital, Series G
4.75%, 07/01/03
Insured: AMBAC ...................................... 98,625
100,000 Massachusetts State HEFA
Massachusetts General Hospital, Series G
5.15%, 07/01/07
Insured: AMBAC ...................................... 98,250
550,000 Massachusetts State HEFA
Massachusetts Institute of Technology,
Series H
4.70%, 07/01/04 ..................................... 541,750
1,000,000 Massachusetts State HEFA
Massachusetts Institute of Technology,
Series H
5.00%, 07/01/10 ..................................... 951,250
100,000 Massachusetts State HEFA
McLean Hospital, Series C
6.63%, 07/01/15
Insured: FGIC ....................................... 105,500
250,000 Massachusetts State HEFA
Medical Center of Central Massachusetts,
Series B
6.00%, 07/01/02
Insured: AMBAC ...................................... 265,000
250,000 Massachusetts State HEFA
Newton-Wellesley Hospital, Series E
5.00%, 07/01/03
Insured: MBIA ....................................... 250,000
100,000 Massachusetts State HEFA
South Shore Hospital, Series E
5.40%, 07/01/07
Insured: MBIA ....................................... 100,625
325,000 Massachusetts State HEFA
South Shore Hospital, Series E
5.50%, 07/01/13
Insured: MBIA ....................................... 310,375
10,000 Massachusetts State HEFA
Tufts University, Series F
5.65%, 08/15/07
Insured: FGIC ....................................... 10,200
75,000 Massachusetts State HEFA
University of Massachusetts Medical School
Research, Project A
6.00%, 07/01/12
Insured: College Construction
Loan Association .................................... 75,469
10,000 Massachusetts State HEFA
University of Massachusetts Medical School
Research, Project A
6.00%, 07/01/23
Insured: College Construction
Loan Association .................................... 9,688
250,000 Massachusetts State HEFA
Wheaton College, Series C
5.25%, 07/01/19 ..................................... 227,813
500,000 Massachusetts State HEFA
Williams College, Series D
5.40%, 07/01/05 ..................................... 504,375
250,000 Massachusetts State HEFA
Williams College, Series D
5.50%, 07/01/17 ..................................... 239,063
150,000 Massachusetts State HEFA
Youville Hospital, Series B
5.00%, 02/15/99 ..................................... 151,500
150,000 Massachusetts State Housing Finance Agency
Single Family, Series 41
5.25%, 06/01/01 ..................................... 151,500
400,000 Massachusetts State IFA
Brooks School
5.95%, 07/01/23 ..................................... 394,000
300,000 Massachusetts State IFA
Holy Cross College, Series II
5.90%, 11/01/01 ..................................... 316,500
50,000 Massachusetts State IFA
Holy Cross College
5.75%, 01/01/02 ..................................... 52,250
250,000 Massachusetts State IFA
Lesley College Project, Series A
6.00%, 07/01/10
Insured: College Construction
Loan Association .................................... 253,438
300,000 Massachusetts State IFA
Milton Academy, Series B
5.30%, 09/01/08
Insured: MBIA ....................................... 297,375
240,000 Massachusetts State IFA
Milton Academy, Series B
5.25%, 09/01/19
Insured: MBIA ....................................... 218,400
635,000 Massachusetts State Port Authority
5.63%, 07/01/12 ..................................... 627,856
40,000 Massachusetts State Port Authority, Series A
5.50%, 07/01/07
Insured: FGIC ....................................... 40,450
</TABLE>
See Notes to Financial Statements.
22
<PAGE> 26
THE GALAXY FUND
MASSACHUSETTS MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
MASSACHUSETTS (CONTINUED)
<S> <C> <C>
$ 250,000 Massachusetts State Port Authority, Series B
5.30%, 07/01/01 ..................................... $ 257,188
350,000 Massachusetts State, SP OB and Revenue,
Series A
5.80%, 06/01/00
Insured: AMBAC ...................................... 364,875
300,000 Massachusetts State, SP OB and Revenue,
Series A
7.00%, 06/01/02 ..................................... 332,250
200,000 Massachusetts State, SP OB and Revenue,
Series A
6.00%, 06/01/13
Insured: AMBAC ...................................... 201,500
250,000 Massachusetts State, SP OB and Revenue,
Series A
5.80%, 06/01/14 ..................................... 245,625
500,000 Massachusetts State Turnpike Authority,
Series A
5.00%, 06/01/99 ..................................... 508,115
450,000 Massachusetts State Turnpike Authority,
Series A
4.63%, 01/01/02 ..................................... 445,500
45,000 Massachusetts State Turnpike Authority,
Series A
5.10%, 01/01/08 ..................................... 43,369
400,000 Massachusetts State Turnpike Authority,
Series A
5.13%, 01/01/23
Insured: FGIC ....................................... 351,500
50,000 Massachusetts State Water Pollution
Abatement Trust
MWRA Loan Program, Series A
4.85%, 02/01/03 ..................................... 49,750
100,000 Massachusetts State Water Pollution
Abatement Trust
MWRA Loan Program, Series A
4.85%, 08/01/03 ..................................... 99,500
50,000 Massachusetts State Water Pollution
Abatement Trust
MWRA Loan Program, Series A
5.20%, 02/01/06 ..................................... 49,750
25,000 Massachusetts State Water Pollution
Abatement Trust
MWRA Loan Program, Series A
5.30%, 02/01/07 ..................................... 24,781
50,000 Massachusetts State Water Pollution
Abatement Trust
MWRA Loan Program, Series A
5.30%, 08/01/07 ..................................... 49,563
250,000 Massachusetts State Water Pollution
Abatement Trust
MWRA Loan Program, Series A
5.40%, 08/01/11 ..................................... 240,313
200,000 Massachusetts State Water Pollution
Abatement Trust
MWRA Loan Program, Series B
4.85%, 08/01/05 ..................................... 195,500
250,000 Massachusetts State Water Pollution
Abatement Trust
Pooled Loan Program, Series 1
5.00%, 02/01/02 ..................................... 251,563
300,000 Massachusetts State
Water Resource Authority, Series A
6.30%, 12/01/01 ..................................... 320,625
100,000 Massachusetts State
Water Resource Authority, Series A
6.00%, 04/01/20 ..................................... 98,500
190,000 Massachusetts State
Water Resource Authority, Series A
6.50%, 07/15/21 ..................................... 210,425
40,000 Massachusetts State
Water Resource Authority, Series A
5.75%, 12/01/21 ..................................... 37,850
300,000 Massachusetts State Water
Resource Authority, Series B
5.88%, 11/01/04 ..................................... 313,875
50,000 Massachusetts State Water
Resource Authority, Series B
6.00%, 11/01/06 ..................................... 51,875
50,000 Massachusetts State Water
Resource Authority, Series B
6.25%, 11/01/10 ..................................... 51,750
100,000 Massachusetts State Water
Resource Authority, Series B
5.50%, 11/01/15 ..................................... 93,000
250,000 Massachusetts State Water
Resource Authority, Series B
5.00%, 12/01/16
Insured: MBIA ....................................... 222,500
200,000 Massachusetts State
Water Resource Authority, Series C
5.00%, 12/01/03 ..................................... 199,000
100,000 Methuen, GO
7.15%, 05/15/97 ..................................... 103,304
250,000 Milford, GO
5.10%, 12/15/10
Insured: AMBAC ...................................... 237,188
230,000 Milton, GO
5.25%, 06/15/97 ..................................... 233,163
220,000 Nantucket Islands Land Bank,
GO and Revenue, Series E
7.25%, 07/01/19 ..................................... 239,800
400,000 New England Educational Loan Marketing Corp.
Massachusetts Student Loan Revenue, Issue A
5.80%, 03/01/02 ..................................... 415,500
65,000 Norfolk, GO
5.60%, 01/15/05
Insured: AMBAC ...................................... 66,138
50,000 North Adams, GO
5.40%, 03/01/07
Insured: AMBAC ...................................... 49,750
50,000 North Adams, GO
5.50%, 03/01/08
Insured: AMBAC ...................................... 49,938
150,000 North Middlesex Regional School District,
GO, Lot B
4.50%, 08/15/02
Insured: AMBAC ...................................... 145,500
175,000 Northampton, GO
5.30%, 03/01/09
Insured: AMBAC ...................................... 169,313
</TABLE>
See Notes to Financial Statements.
23
<PAGE> 27
THE GALAXY FUND
MASSACHUSETTS MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
MASSACHUSETTS (CONTINUED)
<S> <C> <C>
$ 200,000 Northampton, GO
5.30%, 09/01/10
Insured: AMBAC ...................................... $ 192,000
150,000 Pittsfield, GO
5.40%, 07/15/13
Insured: MBIA ....................................... 144,188
25,000 Plainville, GO
7.00%, 09/01/03 ..................................... 26,906
20,000 Plymouth-Carver Regional School District, GO
6.05%, 10/01/02
Insured: AMBAC ...................................... 21,125
25,000 Plymouth-Carver Regional School District, GO
6.15%, 10/01/03
Insured: AMBAC ...................................... 26,563
25,000 Quaboag Regional School District, GO
5.10%, 06/15/06
Insured: MBIA ....................................... 24,563
25,000 Quaboag Regional School District, GO
5.40%, 06/15/09
Insured: MBIA ....................................... 24,500
250,000 Salem, GO
4.50%, 07/15/03
Insured: MBIA ....................................... 240,313
150,000 Salem, GO
5.80%, 07/15/06
Insured: AMBAC ...................................... 154,313
100,000 Salem, GO
5.90%, 07/15/07
Insured: AMBAC ...................................... 102,875
200,000 Sandwich, GO
5.40%, 11/01/07
Insured: AMBAC ...................................... 201,000
75,000 Sandwich Water District, GO and Revenue
5.40%, 05/15/07 ..................................... 75,375
25,000 Sandwich Water District, GO and Revenue
5.50%, 05/15/08 ..................................... 25,094
25,000 Sandwich Water District, GO and Revenue
5.60%, 05/15/12 ..................................... 24,281
125,000 Sandwich Water District, GO and Revenue
5.60%, 05/15/13 ..................................... 120,625
200,000 Sharon, GO
4.65%, 07/15/06 ..................................... 190,250
115,000 South Essex Sewer District, GO
5.30%, 11/01/01
Insured: AMBAC ...................................... 118,019
500,000 South Essex Sewer District, GO, Series A
4.90%, 06/15/07
Insured: MBIA ....................................... 479,375
245,000 South Shore Regional School District, GO
5.10%, 02/01/12
Insured: AMBAC ...................................... 226,013
240,000 South Shore Regional School District, GO
5.10%, 02/01/13
Insured: AMBAC ...................................... 219,600
110,000 Southbridge, GO
5.80%, 01/01/03
Insured: AMBAC ...................................... 113,850
200,000 Southern Berkshire Regional School District, GO
5.38%, 04/15/10
Insured: MBIA ....................................... 193,750
400,000 Taunton, GO
8.00%, 02/01/01 ..................................... 450,000
250,000 University of Lowell Building Authority,
Fifth Series A
6.75%, 11/01/03
Insured: AMBAC ...................................... 278,125
200,000 University of Massachusetts Building Authority,
Series A
5.50%, 05/01/03
Insured: MBIA ....................................... 205,750
50,000 Westfield, GO
6.70%, 12/15/00
Insured: AMBAC ...................................... 53,875
100,000 Woods Hole, Martha's Vineyard and Nantucket
Steamship Bonds, Series B
6.00%, 03/01/02 ..................................... 106,375
50,000 Yarmouth, GO
5.10%, 03/01/08 ..................................... 49,000
----------
TOTAL INVESTMENTS - 95.69% ...................................... 35,495,030
(Cost $36,120,086) ----------
NET OTHER ASSETS AND LIABILITIES - 4.31% ........................ 1,597,297
-----------
NET ASSETS - 100.00% ............................................ $37,092,327
===========
</TABLE>
- ----------------------------
AMBAC American Municipal Bond Assurance Corp.
CGIC Capital Guarantee Insurance Corp.
FGIC Financial Guarantee Insurance Corp.
FSA Financial Security Assurance
GO General Obligation
HEFA Health and Educational Facilities Authority
IFA Industrial Finance Agency
MBIA Municipal Bond Insurance Association
MWRA Massachusetts Water Resource Authority
SP OB Special Obligation
See Notes to Financial Statements.
24
<PAGE> 28
THE GALAXY FUND
RHODE ISLAND MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
MUNICIPAL SECURITIES - 94.96%
RHODE ISLAND - 87.60
<S> <C> <C>
$ 200,000 Burrillville, GO
5.85%, 05/01/14
Insured: FGIC ........................................ $ 198,498
150,000 Burrillville, GO
5.75%, 10/15/17
Insured: MBIA ........................................ 145,313
500,000 Convention Center Authority, Series A
6.70%, 05/15/20
Insured: MBIA ........................................ 552,500
500,000 Convention Center Authority, Series A
6.38%, 05/15/23
Insured: MBIA ........................................ 545,000
500,000 Lincoln, GO
5.50%, 08/15/10
Insured: MBIA ........................................ 500,000
400,000 Pawtucket, GO
5.75%, 04/15/11
Insured: FGIC ........................................ 399,000
225,000 Providence, GO
6.75%, 01/15/10
Insured: MBIA ........................................ 240,750
150,000 Rhode Island Clean Water Protection Finance
Agency, Revenue, Safe Drinking Water,
Providence, Series A
6.20%, 01/01/06
Insured: AMBAC ....................................... 160,688
100,000 Rhode Island Clean Water Protection Finance
Agency, Revenue, Safe Drinking Water,
Providence, Series A
6.70%, 01/01/15
Insured: AMBAC ....................................... 106,750
500,000 Rhode Island Depositors Economic Protection
Corp., SP OB, Series B
5.25%, 02/01/11
Insured: MBIA ........................................ 477,500
300,000 Rhode Island Housing and Mortgage Finance
Corp., Revenue, Homeownership Opportunity,
Series 17-A
6.25%, 04/01/17 ...................................... 300,375
500,000 Rhode Island Housing and Mortgage Finance
Corp., Revenue, Homeownership Opportunity,
Series 19-A
5.70%, 04/01/15 ...................................... 484,375
425,000 Rhode Island Housing and Mortgage Finance
Corp., Revenue, Multifamily Housing, Series A
6.15%, 07/01/17
Insured: AMBAC ....................................... 425,531
250,000 Rhode Island Housing and Mortgage Finance
Corp., Revenue, Rental Housing Program,
Series A
5.65%, 10/01/07 ...................................... 246,875
500,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility, Brown University
6.00%, 09/01/20 ...................................... 504,375
100,000 Rhode Island State, GO and Revenue
6.60%, 06/15/06 ...................................... 102,865
200,000 Rhode Island State, GO, Series A
6.10%, 06/15/03
Insured: FGIC ........................................ 212,250
300,000 Rhode Island State, GO, Series A
6.25%, 06/15/07
Insured: FGIC ........................................ 318,000
500,000 Rhode Island State,
Consolidated Capital Development Loan, GO
Series A
5.30%, 07/15/06
Insured: FGIC ........................................ 497,500
360,000 Rhode Island State,
Consolidated Capital Development Loan, GO
Series A
5.50%, 08/01/10 ...................................... 353,250
225,000 Rhode Island State,
Consolidated Capital Development Loan, GO
Series A
5.70%, 08/01/14
Insured: FGIC ........................................ 221,344
100,000 Rhode Island State,
Consolidated Capital Development Loan, GO
Series B
6.00%, 05/15/98 ...................................... 103,250
500,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility,
Series B
5.25%, 09/15/23
Insured: MBIA ........................................ 448,125
</TABLE>
See Notes to Financial Statements.
25
<PAGE> 29
THE GALAXY FUND
RHODE ISLAND MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
RHODE ISLAND (CONTINUED)
<S> <C> <C>
$ 130,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility, Brown University
6.75%, 09/01/16 ...................................... $ 133,900
500,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility, Brown University
6.00%, 09/01/20 ...................................... 504,375
275,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility,Bryant College, SP OB
6.50%, 06/01/05
Insured: MBIA ........................................ 296,656
100,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility,
Johnson & Wales University
5.88%, 04/01/05
Insured: College Construction
Loan Association ..................................... 104,000
475,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility,
New England Institute
6.00%, 03/01/15
Insured: College Construction
Loan Association ..................................... 469,063
300,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility, Providence College
5.60%, 11/01/09
Insured: MBIA ........................................ 299,250
150,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility, Roger Williams
6.50%, 11/15/24
Insured: College Construction
Loan Association ..................................... 156,563
160,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility, Roger Williams
7.25%, 11/15/24
Insured: College Construction
Loan Association ..................................... 173,600
260,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility, Salve Regina
6.25%, 03/15/13
Insured: College Construction
Loan Association ..................................... 264,225
50,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Higher Education Facility, Salve Regina
6.30%, 03/15/20
Insured: College Construction
Loan Association ..................................... 50,438
500,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Miriam Hospital Issue, Series B
6.60%, 04/01/19 ...................................... 501,250
300,000 Rhode Island State Health and
Educational Building Corp., Revenue,
Saint Antoine
6.75%, 11/15/18
LOC: Allied Irish Banks NY ........................... 314,250
500,000 Rhode Island State Industrial Facilities Corp.,
Revenue, Marine Terminal, Mobil Oil Refining
6.00%, 11/01/14 ...................................... 500,625
185,000 Rhode Island State Public Buildings Authority,
Revenue, State Projects, Series A
6.70%, 02/01/03
Insured: AMBAC ....................................... 203,500
250,000 Rhode Island State Public Buildings Authority,
Revenue, State Projects, Series A
5.25%, 02/01/07
Insured: AMBAC ....................................... 246,875
100,000 Warwick, GO
7.00%, 11/15/02
Insured: FGIC ........................................ 109,250
215,000 West Warwick, GO
6.88%, 03/01/07
Insured: MBIA ........................................ 238,919
140,000 Westerly, GO
6.00%, 09/15/14
Insured: AMBAC ....................................... 143,325
-----------
11,749,803
===========
</TABLE>
See Notes to Financial Statements.
26
<PAGE> 30
THE GALAXY FUND
RHODE ISLAND MUNICIPAL BOND FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
OTHER TERRITORIES - 7.36%
<S> <C> <C>
$ 400,000 Puerto Rico Municipal Finance Agency,
Series A
6.00%, 07/01/14 ...................................... $ 404,000
500,000 Puerto Rico Public Buildings Authority, -----------
Government Facilities, Series A
5.50%, 07/01/21 ...................................... 477,500
100,000 Puerto Rico Public Buildings Authority,
Public Education and Health Facilities,
Series H
7.40%, 07/01/99
Insured: FGIC ........................................ 106,125
-----------
987,625
-----------
TOTAL INVESTMENTS - 94.96% ...................................... 12,737,428
(Cost $12,769,848) -----------
NET OTHER ASSETS AND LIABILITIES - 5.04% ........................ 675,508
-----------
NET ASSETS - 100.00% ............................................ $13,412,936
===========
</TABLE>
- -------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Financial Guarantee Insurance Corp.
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
SP OB Special Obligation
See Notes to Financial Statements.
27
<PAGE> 31
THE GALAXY FUND
STATEMENTS OF ASSETS AND LIABILITIES
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NEW YORK CONNECTICUT MASSACHUSETTS RHODE ISLAND
TAX-EXEMPT MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
----------- ---------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost ......................... $ 121,230,011 $ 62,393,371 $ 30,369,603 $ 36,120,086 $ 12,769,848
Net unrealized appreciation (depreciation) .. 512,747 725,363 (238,917) (625,056) (32,420)
------------- ------------- ------------- ------------- -------------
Total investments at value .................... 121,742,758 63,118,734 30,130,686 35,495,030 12,737,428
Cash .......................................... 1,311,326 1,450,486 1,368,351 995,503 468,680
Receivable for shares sold .................... 79,783 91,949 270,348 133,571 __
Interest and dividend receivables ............. 2,113,095 1,056,190 440,144 621,402 208,797
Receivable from investment adviser (Note 4) ... 44,958 53,814 159 429 50,337
Deferred organizational expense (Note 2) ...... 1,579 2,347 3,935 3,891 12,003
------------- ------------- ------------- ------------- -------------
Total Assets ................................ 125,293,499 65,773,520 32,213,623 37,249,826 13,477,245
------------- ------------- ------------- ------------- -------------
LIABILITIES:
Dividends payable ............................. 411,791 117,097 44,985 61,835 27,799
Payable for shares repurchased ................ 12,586 10,167 6,298 22,399 __
Advisory fee payable (Note 3) ................. 56,271 29,791 6,532 7,765 2,706
Payable to Fleet and affiliates (Note 3) ...... 4,097 5,543 4,170 3,979 __
Payable to FDISG (Note 3) ..................... 24,707 4,262 14,521 16,115 4,652
Trustees' fees and expenses payable (Note 3) .. 2,706 663 1,494 2,361 2,949
Accrued expenses and other payables ........... 38,282 19,398 45,260 43,045 26,203
------------- ------------- ------------- ------------- -------------
Total Liabilities ........................... 550,440 186,921 123,260 157,499 64,309
------------- ------------- ------------- ------------- -------------
NET ASSETS ...................................... $ 124,743,059 $ 65,586,599 $ 32,090,363 $ 37,092,327 $ 13,412,936
============= ============= ============= ============= =============
NET ASSETS CONSIST OF:
Par value (Note 5) ............................ $ 11,773 $ 6,177 $ 3,208 $ 3,795 $ 1,284
Paid-in capital in excess of par value ........ 124,010,707 66,733,385 33,050,593 38,415,624 13,390,226
Undistributed (overdistributed)
net investment income ....................... (19) __ __ __ 1,300
Accumulated net realized gain (loss) on
investments sold ............................ 207,851 (1,878,326) (724,521) (702,036) 52,546
Net unrealized appreciation (depreciation)
of investments .............................. 512,747 725,363 (238,917) (625,056) (32,420)
------------- ------------- ------------- ------------- -------------
TOTAL NET ASSETS ................................. $ 124,743,059 $ 65,586,599 $ 32,090,363 $ 37,092,327 $ 13,412,936
============= ============= ============= ============= =============
Retail A Shares:
Net Assets .................................... $ 29,860,945 $ 42,547,180 $ 25,537,061 $ 26,663,112 $ 13,412,936
Shares of beneficial interest outstanding ..... 2,818,044 4,007,094 2,553,075 2,728,248 1,283,653
NET ASSET VALUE and redemption
price per share ............................. $ 10.60 $ 10.62 $ 10.00 $ 9.77 $ 10.45
Sales charge - 3.75% of offering price ........ 0.41 0.41 0.39 0.38 0.41
------------- ------------- ------------- ------------- -------------
Maximum offering price per share .............. $ 11.01 $ 11.03 $ 10.39 $ 10.15 $ 10.86
============= ============= ============= ============= =============
Retail B Shares:
Net Assets .................................... $ 71,733 $ __ $ __ $ __ $ __
Shares of beneficial interest outstanding ..... 6,770 __ __ __ __
NET ASSET VALUE and offering
price per share* ............................ $ 10.60 $ __ $ __ $ __ $ __
============= ============= ============= ============= =============
Trust Shares:
Net Assets .................................... $ 94,810,381 $ 23,039,419 $ 6,553,302 $ 10,429,215 $ __
Shares of beneficial interest outstanding ..... 8,947,739 2,169,909 655,107 1,067,149 __
NET ASSET VALUE, offering and redemption
price per share ............................ $ 10.60 $ 10.62 $ 10.00 $ 9.77 $ __
============= ============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
28
<PAGE> 32
THE GALAXY FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
NEW YORK CONNECTICUT MASSACHUSETTS RHODE ISLAND
TAX-EXEMPT MUNICIPAL MUNICIPAL MUNICIPAL MUNICIPAL
BOND FUND BOND FUND BOND FUND BOND FUND BOND FUND
----------- ----------- ----------- ------------ ------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C> <C>
Interest (Note 2) ......................... $ 3,461,337 $ 1,776,127 $ 719,780 $ 882,833 $ 343,500
Dividends (Note 2) ........................ -- -- 2,013 2,467 --
----------- ----------- ----------- ----------- -----------
Total Investment Income ................. 3,461,337 1,776,127 721,793 885,300 343,500
----------- ----------- ----------- ----------- -----------
EXPENSES:
Investment advisory fee (Note 3) .......... 465,538 248,256 114,722 132,288 46,284
Administration fee (Note 3) ............... 53,009 28,269 13,185 15,190 5,268
Custodian fee ............................. 5,908 4,002 3,615 5,576 3,612
Fund accounting fee (Note 3) .............. 27,543 31,277 19,947 21,187 15,051
Legal fee (Note 3) ........................ 2,912 2,810 544 540 428
Audit fee ................................. 8,557 8,911 12,995 13,584 5,922
Transfer agent fee (Note 3) ............... 12,165 18,945 8,613 8,694 1,066
12b-1 fee (Note 3) ........................ 26 -- -- -- --
Shareholder servicing fee (Note 3) ........ 20,534 30,732 18,589 19,291 --
Trustees' fees and expenses (Note 3) ...... 1,702 928 327 315 45
Amortization of organization costs (Note 2) 1,815 2,331 997 997 1,696
Reports to shareholders ................... 1,756 12,625 4,128 1,264 332
Registration fees ......................... 25,937 4,684 11,033 12,182 6,259
Insurance ................................. 627 1,274 419 790 186
Miscellaneous ............................. 1,610 2,647 571 963 478
----------- ----------- ----------- ----------- -----------
Total Expenses before
reimbursement/waiver ................ 629,639 397,691 209,685 232,861 86,627
Less: Reimbursement/waiver (Note 4) ..... (158,132) (112,062) (112,781) (126,150) (43,809)
----------- ----------- ----------- ----------- -----------
Total Expenses net of
reimbursement/waiver ................ 471,507 285,629 96,904 106,711 42,818
----------- ----------- ----------- ----------- -----------
NET INVESTMENT INCOME ........................ 2,989,830 1,490,498 624,889 778,589 300,682
----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Net realized gain (loss) on
investments sold ........................ 309,710 3,100 888 15,398 53,807
Net change in unrealized appreciation
(depreciation) of investments ........... (2,511,177) (1,020,311) (362,270) (805,455) (300,027)
----------- ----------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS ................ (2,201,467) (1,017,211) (361,382) (790,057) (246,220)
----------- ----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS .......... $ 788,363 $ 473,287 $ 263,507 $ (11,468) $ 54,462
=========== =========== =========== =========== ===========
</TABLE>
See Notes to FinanciaL Statements.
29
<PAGE> 33
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TAX-EXEMPT BOND FUND NEW YORK MUNICIPAL BOND FUND
----------------------------------- ----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
----------- ---- ----------- ----
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD ................ $ 123,348,800 $ 127,557,885 $ 65,946,713 $ 66,660,390
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income ......................... 2,989,830 6,134,079 1,490,498 3,041,722
Net realized gain (loss) on investments sold .. 309,710 (100,337) 3,100 (676,456)
Net change in unrealized appreciation
(depreciation) of investments .............. (2,511,177) 8,951,806 (1,020,311) 5,939,391
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations ............................ 788,363 14,985,548 473,287 8,304,657
------------- ------------- ------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Retail A Shares:
Net investment income ...................... (711,316) (1,567,694) (948,275) (1,910,077)
Dividends in excess of net investment income -- -- (19) --
Net realized gain on investments ................ -- -- -- --
------------- ------------- ------------- -------------
Total Dividends ......................... (711,316) (1,567,713) (948,275) (1,910,077)
------------- ------------- ------------- -------------
Retail B Shares:
Net investment income ...................... (175) -- -- --
------------- ------------- ------------- -------------
Total Dividends ......................... (175) -- -- --
------------- ------------- ------------- -------------
Trust Shares:
Net investment income ...................... (2,278,339) (4,566,366) (542,223) (1,131,645)
------------- ------------- ------------- -------------
Total Dividends ......................... (2,278,339) (4,566,366) (542,223) (1,131,645)
------------- ------------- ------------- -------------
Total Dividends to shareholders .... (2,989,830) (6,134,079) (1,490,498) (3,041,722)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS(2) 3,595,726 (13,060,554) 657,097 (5,976,612)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets ......... 1,394,259 (4,209,085) (360,114) (713,677)
------------- ------------- ------------- -------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A) ... $ 124,743,059 $ 123,348,800 $ 65,586,599 $ 65,946,713
============= ============= ============= =============
(A) Accumulated undistributed (overdistributed)
net investment income ...................... $ (19) $ (19) $ -- $ --
============= ============= ============= =============
</TABLE>
- -------------------------------------------------
(1) The Rhode Island Municipal Bond Fund commenced operations on December 20,
1994.
(2) For detail on share transactions by series, see Statements of Changes in
Net Assets - Capital Stock Activity on pages 32 and 33.
See Notes to Financial Statements.
30
<PAGE> 34
<TABLE>
<CAPTION>
CONNECTICUT MUNICIPAL MASSACHUSETTS MUNICIPAL
BOND FUND BOND FUND
------------------------------- ----------------------------------
SIX MONTHS ENDED YEAR ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD ................ $ 22,148,469 $ 22,647,317 $ 23,720,447 $ 21,583,932
------------ ------------ ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income ......................... 624,889 955,026 778,589 991,702
Net realized gain (loss) on investments sold .. 888 (685,391) 15,398 (487,619)
Net change in unrealized appreciation
(depreciation) of investments .............. (362,270) 2,577,697 (805,455) 2,378,642
------------ ------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations ............................ 263,507 2,847,332 (11,468) 2,882,725
------------ ------------ ------------ ------------
DIVIDENDS TO SHAREHOLDERS FROM:
Retail A Shares:
Net investment income ...................... (501,092) (766,186) (560,053) (675,007)
Dividends in excess of net investment income -- -- -- --
Net realized gain on investments ................ -- -- -- --
------------ ------------ ------------ ------------
Total Dividends ......................... (501,092) (766,186) (560,053) (675,007)
------------ ------------ ------------ ------------
Retail B Shares:
Net investment income ...................... -- -- -- --
------------ ------------ ------------ ------------
Total Dividends ......................... -- -- -- --
------------ ------------ ------------ ------------
Trust Shares:
Net investment income ...................... (123,797) (188,840) (218,536) (316,695)
------------ ------------ ------------ ------------
Total Dividends ......................... (123,797) (188,840) (218,536) (316,695)
------------ ------------ ------------ ------------
Total Dividends to shareholders .... (624,889) (955,026) (778,589) (991,702)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS(2) 10,303,276 (2,391,154) 14,161,937 245,492
------------ ------------ ------------ ------------
Net increase (decrease) in net assets ......... 9,941,894 (498,848) 13,371,880 2,136,515
------------ ------------ ------------ ------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A) ... $ 32,090,363 $ 22,148,469 $ 37,092,327 $ 23,720,447
============ ============ ============ ============
(A) Accumulated undistributed (overdistributed)
net investment income ...................... $ -- $ -- $ -- $ --
============ ============ ============ ============
<CAPTION>
RHODE ISLAND
MUNICIPAL
BOND FUND
---------------------------------
SIX MONTHS ENDED PERIOD ENDED
APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995(1)
------------ -------------
<S> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD ................ $ 10,849,844 $ --
------------ -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS:
Net investment income ......................... 300,682 287,771
Net realized gain (loss) on investments sold .. 53,807 59,256
Net change in unrealized appreciation
(depreciation) of investments .............. (300,027) 267,607
------------ -------------
Net increase (decrease) in net assets resulting
from operations ............................ 54,462 614,634
------------ -------------
DIVIDENDS TO SHAREHOLDERS FROM:
Retail A Shares:
Net investment income ...................... (300,682) (287,771)
Dividends in excess of net investment income -- --
Net realized gain on investments ................ (59,217) --
------------ -------------
Total Dividends ......................... (359,899) (287,771)
------------ -------------
Retail B Shares:
Net investment income ...................... -- --
------------ -------------
Total Dividends ......................... -- --
------------ -------------
Trust Shares:
Net investment income ...................... -- --
------------ -------------
Total Dividends ......................... -- --
------------ -------------
Total Dividends to shareholders .... (359,899) (287,771)
------------ -------------
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS(2) 2,868,529 10,522,981
------------ -------------
Net increase (decrease) in net assets ......... 2,563,092 10,849,844
------------ -------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A) ... $ 13,412,936 $ 10,849,844
============ =============
(A) Accumulated undistributed (overdistributed)
net investment income ...................... $ 1,300 $ 1,300
============ =============
</TABLE>
See Notes to Financial Statements.
31
<PAGE> 35
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS -
CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
Tax-Exempt Bond Fund New York Municipal Bond Fund Connecticut Municipal Bond Fund
------------------------------- ------------------------------ -------------------------------
Six months Six months Six months
ended Year ended Year ended Year
April 30, 1996 ended April 30, 1996 ended April 30, 1996 ended
(unaudited) October 31, 1995 (unaudited) October 31, 1995 (unaudited) October 31, 1995
------------ ---------------- ---------- ----------------- ----------- ----------------
DOLLAR AMOUNTS
<S> <C> <C> <C> <C> <C> <C>
Retail A Shares:
Sold ....................... $ 2,259,603 $ 3,393,523 $ 4,972,301 $ 8,557,413 $ 9,888,299 $ 2,461,093
Issued to shareholders in
reinvestment of dividends 503,546 1,127,507 697,058 1,383,629 354,610 505,845
Repurchased ............... (3,998,912) (11,114,588) (5,331,352) (12,892,384) (2,481,592) (4,667,739)
----------- ------------ ----------- ------------ ----------- -----------
Net increase (decrease) in
shares outstanding ...... $(1,235,763) $ (6,593,558) $ 338,007 $ (2,951,342) $ 7,761,317 $(1,700,801)
=========== ============ =========== ============ =========== ===========
Retail B Shares:
Sold ...................... $ 71,545 $ -- N/A N/A N/A N/A
Issued to shareholders in
reinvestment of dividends 175 -- N/A N/A N/A N/A
Repurchased ............... -- -- N/A N/A N/A N/A
----------- ------------ ----------- ------------ ----------- -----------
Net increase (decrease) in
shares outstanding ...... $ 71,720 $ -- N/A N/A N/A N/A
=========== ============ =========== ============ =========== ===========
Trust Shares:
Sold ...................... $ 7,772,036 $ 11,981,067 $ 2,323,048 $ 5,456,617 $ 2,902,181 $ 1,132,087
Issued to shareholders in
reinvestment of dividends 29,165 69,312 70,970 148,397 8,294 23,783
Repurchased ............... (3,041,432) (18,517,375) (2,074,928) (8,630,284) (368,516) (1,846,223)
----------- ------------ ----------- ------------ ----------- -----------
Net increase (decrease) in
shares outstanding ...... $ 4,759,769 $ (6,466,996) $ 319,090 $ (3,025,270) $ 2,541,959 $ (690,353)
=========== ============ =========== ============ =========== ===========
SHARE ACTIVITY
Retail A Shares:
Sold ...................... 209,255 324,422 458,973 819,060 978,879 249,241
Issued to shareholders in
reinvestment of dividends 46,437 108,329 64,313 133,768 34,743 52,285
Repurchased ............... (369,984) (1,093,280) (493,629) (1,266,830) (244,286) (495,791)
----------- ------------ ----------- ------------ ----------- -----------
Net increase (decrease) in
shares outstanding ...... (114,292) (660,529) 29,657 (314,002) 769,336 (194,265)
=========== ============ =========== ============ =========== ===========
Retail B Shares:
Sold ...................... 6,754 -- N/A N/A N/A N/A
Issued to shareholders in
reinvestment of dividends 16 -- N/A N/A N/A N/A
Repurchased ............... -- -- N/A N/A N/A N/A
----------- ------------ ----------- ------------ ----------- -----------
Net increase (decrease) in
shares outstanding ...... 6,770 -- N/A N/A N/A N/A
=========== ============ =========== ============ =========== ===========
Trust Shares:
Sold ...................... 715,780 1,143,572 214,712 534,383 287,286 116,490
Issued to shareholders in
reinvestment of dividends 2,694 6,696 6,548 14,344 811 2,465
Repurchased ............... (281,719) (1,808,645) (192,257) (855,234) (36,116) (195,278)
----------- ------------ ----------- ------------ ----------- -----------
Net increase (decrease) in
shares outstanding ...... 436,755 (658,377) 29,003 (306,507) 251,981 (76,323)
=========== ============ =========== ============ =========== ===========
</TABLE>
See Notes to Financial Statements.
32
<PAGE> 36
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS -
CAPITAL STOCK ACTIVITY (CONTINUE
<TABLE>
<CAPTION>
Massachusetts Municipal Bond Fund Rhode Island Municipal Bond Fund(1)
--------------------------------- -----------------------------------
Six months Six months
ended Year ended Period
April 30, 1996 ended April 30, 1996 ended
(unaudited) October 31, 1995 (unaudited) October 31, 1995
-------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold ...................... $ 15,814,494 $ 3,953,342 $ 3,610,674 $ 10,940,054
Issued to shareholders in
reinvestment of dividends 409,105 406,422 164,945 115,793
Repurchased ............... (5,097,733) (5,497,814) (907,090) (532,866)
------------ ----------- ------------- ------------
Net increase (decrease) in
shares outstanding ...... $ 11,125,866 $(1,138,050) $ 2,868,529 $ 10,522,981
============ =========== ============= ============
Retail B Shares:
Sold ...................... N/A N/A N/A N/A
Issued to shareholders in
reinvestment of dividends N/A N/A N/A N/A
Repurchased ............... N/A N/A N/A N/A
------------ ----------- ------------- ------------
Net increase (decrease) in
shares outstanding ...... N/A N/A N/A N/A
============ =========== ============= ============
Trust Shares:
Sold ...................... $ 3,450,401 $ 2,920,242 $ -- $ --
Issued to shareholders in
reinvestment of dividends 121 681 -- --
Repurchased ............... (414,451) (1,537,381) -- --
------------ ----------- ------------- ------------
Net increase (decrease) in
shares outstanding ...... $ 3,036,071 $ 1,383,542 $ -- $ --
============ =========== ============= ============
SHARE ACTIVITY
Retail A Shares:
Sold ...................... 1,583,053 410,284 336,430 1,056,796
Issued to shareholders in
reinvestment of dividends 40,896 42,549 15,413 11,026
Repurchased ............... (510,398) (589,053) (84,970) (51,042)
------------ ----------- ------------- ------------
Net increase (decrease) in
shares outstanding ...... 1,113,551 (136,220) 266,873 1,016,780
============ =========== ============= ============
Retail B Shares:
Sold ...................... N/A N/A N/A N/A
Issued to shareholders in
reinvestment of dividends N/A N/A N/A N/A
Repurchased ............... N/A N/A N/A N/A
------------ ----------- ------------- ------------
Net increase (decrease) in
shares outstanding ...... N/A N/A N/A N/A
============ =========== ============= ============
Trust Shares:
Sold ...................... 346,158 307,893 -- --
Issued to shareholders in
reinvestment of dividends 12 71 -- --
Repurchased ............... (41,421) (161,596) -- --
------------ ----------- ------------- ------------
Net increase (decrease) in
shares outstanding ...... 304,749 146,368 -- --
============ =========== ============= ============
</TABLE>
- ----------------------------------------------------
(1) As of April 30, 1996, the Rhode Island Municipal Bond Fund had not issued
Trust Shares.
See Notes to Financial Statements.
33
<PAGE> 37
THE GALAXY FUND
TAX-EXEMPT BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
RETAIL A SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1996 YEARS ENDED OCTOBER 31,
------------------------------------------------------
(UNAUDITED) 1995 1994 1993(2) 1992(1)(2)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period .................... $10.78 $ 9.99 $ 11.12 $ 10.11 $ 10.00
------ -------- ---------- ------- --------
Net investment income (A) ............................ 0.25 0.52 0.53 0.54 0.34
Net realized and unrealized gain (loss) on
investments ........................................ (0.18) 0.79 (1.04) 1.01 0.11
------ -------- ---------- ------- --------
Total from Investment Operations: ................. 0.07 1.31 (0.51) 1.55 0.45
------ -------- ---------- ------- --------
Less Dividends:
Dividends from net investment income ................. (0.25) (0.52) (0.53) (0.54) (0.34)
Dividends from net realized capital gains ............ -- -- -- -- --
Dividends in excess of net realized capital gains .... -- -- (0.09) -- --
------ -------- ---------- ------- --------
Total Dividends: .................................. (0.25) (0.52) (0.62) (0.54) (0.34)
------ -------- ---------- ------- --------
Net increase (decrease) in net asset value .............. (0.18) 0.79 (1.13) 1.01 0.11
------ -------- ---------- ------- --------
Net Asset Value, End of period .......................... $10.60 $ 10.78 $ 9.99 $11.12 $10.11
====== ======== ========== ======= ========
Total Return(4) ......................................... 0.62%** 13.40% (4.75)% 15.63% 4.55%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....................... $29,861 $ 31,609 $ 35,911 $144,048 $ 15,891
Ratios to average net assets:
Net investment income including reimbursement/waiver . 4.62%* 4.99% 5.01% 5.00% 5.03%*
Operating expenses including reimbursement/waiver .... 0.95%* 0.91% 0.80% 0.64% 0.42%*
Operating expenses excluding reimbursement/waiver .... 1.17%* 1.24% 1.03% 1.08% 2.15%*
Portfolio Turnover Rate ................................. 10%** 11% 17% 38% 11%**
</TABLE>
____________________
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 30, 1991.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail A and Trust
Shares.
(3) The Fund began offering Retail B shares on March 4, 1996.
(4) Calculation does not include sales charge for Retail A Shares and Retail B
Shares .
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
SIX MONTHS ENDED ------------------------------------------------
APRIL 30, 1996 1995 1994 1993(2) 1992(2)
---------------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Retail A Shares $ 0.24 $ 0.48 $ 0.50 $ 0.49 $ 0.23
Trust Shares 0.25 0.51 0.50 0.49 0.23
Retail B Shares 0.05 -- -- -- --
</TABLE>
See Notes to Financial Statements.
34
<PAGE> 38
<TABLE>
<CAPTION>
TRUST SHARES
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1996 -----------------------------------------
(UNAUDITED) 1995 1994 1993(2)
---------------- -------- -------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period ................... $ 10.78 $ 9.99 $ 11.12 $ 10.11
----------- ------------ ----------- -------
Net investment income (A) ............................ 0.26 0.54 0.53 0.54
Net realized and unrealized gain (loss) on (0.18) 0.79 (1.04) 1.01
investments ........................................ ----------- ------------ ----------- -----------
Total from Investment Operations: ................. 0.08 1.33 (0.51) 1.55
----------- ------------ ----------- -----------
Less Dividends:
Dividends from net investment income ................. (0.26) (0.54) (0.53) (0.54)
Dividends from net realized capital gains ............ -- -- -- --
Dividends in excess of net realized capital gains .... -- -- (0.09) --
----------- ------------ ----------- -----------
Total Dividends: .................................. (0.26) (0.54) (0.62) (0.54)
----------- ------------ ----------- -----------
Net increase (decrease) in net asset value .............. (0.18) 0.79 (1.13) 1.01
----------- ------------ ----------- -----------
Net Asset Value, End of period .......................... $ 10.60 $ 10.78 $ 9.99 $ 11.12
=========== ============ =========== ===========
Total Return(4) ......................................... 0.74%** 13.62% (4.75)% 15.63%
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....................... $ 94,810 $ 91,740 $ 91,647 $ 144,048
Ratios to average net assets:
Net investment income including reimbursement/waiver . 4.88%* 5.18% 5.01% 5.00%
Operating expenses including reimbursement/waiver .... 0.70%* 0.72% 0.78% 0.64%
Operating expenses excluding reimbursement/waiver .... 0.96%* 0.97% 1.00% 1.08%
Portfolio Turnover Rate ................................. 10% 11% 17% 38%
</TABLE>
<TABLE>
RETAIL B SHARES
YEARS ENDED PERIOD ENDED
OCTOBER 31, APRIL 30, 1996(3)
1992(1)(2) (UNAUDITED)
---------- ----------------
<S> <C> <C>
Net Asset Value, Beginning of period .................... $ 10.00 $ 10.94
---------- -----------
Net investment income (A) ............................ 0.34 0.05
Net realized and unrealized gain (loss) on 0.11 (0.34)
investments ........................................ ---------- -----------
Total from Investment Operations: ................. 0.45 (0.29)
---------- -----------
Less Dividends:
Dividends from net investment income ................. (0.34) (0.05)
Dividends from net realized capital gains ............ -- --
Dividends in excess of net realized capital gains .... -- --
---------- -----------
Total Dividends: .................................. (0.34) (0.05)
---------- -----------
Net increase (decrease) in net asset value .............. 0.11 (0.34)
---------- -----------
Net Asset Value, End of period .......................... $ 10.11 $ 10.60
========== ===========
Total Return(4) .........................................
4.55%** (2.64)%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....................... $ 15,891 $ 72
Ratios to average net assets:
Net investment income including reimbursement/waiver . 5.03%* 4.44%*
Operating expenses including reimbursement/waiver .... 0.42%* 1.60%*
Operating expenses excluding reimbursement/waiver .... 2.15%* 1.83%*
Portfolio Turnover Rate ................................. 11%** 10%**
</TABLE>
35
<PAGE> 39
THE GALAXY FUND
NEW YORK MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
RETAIL A SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1996 ------------------------------------------------------
(UNAUDITED) 1995 1994 1993(2) 1992(1)(2)
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period .................... $ 10.78 $ 9.89 $11.04 $10.00 $10.00
----------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ............................ 0.24 0.49 0.49 0.50 0.38
Net realized and unrealized gain (loss)
on investments ..................................... (0.16) 0.89 (1.15) 1.04 --
----------- ---------- ---------- ---------- ----------
Total from Investment Operations: ................. 0.08 1.38 (0.66) 1.54 0.38
----------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income ................. (0.24) (0.49) (0.49) (0.50) (0.38)
Dividends from net realized capital gains ............ -- -- -- -- --
----------- ---------- ---------- ---------- ----------
Total Dividends: .................................. (0.24) (0.49) (0.49) (0.50) (0.38)
----------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value .............. (0.16) 0.89 (1.15) 1.04 --
----------- ---------- ---------- ---------- ----------
Net Asset Value, End of period .......................... $ 10.62 $10.78 $9.89 $11.04 $10.00
======= ====== ===== ====== ======
Total Return(3) ......................................... 0.70%** 14.03% (6.14)% 15.66% 3.83%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....................... $ 42,547 $42,870 $42,451 $70,242 $20,144
Ratios to average net assets:
Net investment income including reimbursement/waiver . 4.42%* 4.73% 4.64% 4.54% 5.22%*
Operating expenses including reimbursement/waiver .... 0.95%* 0.92% 0.87% 0.87% 0.65%*
Operating expenses excluding reimbursement/waiver .... 1.28%* 1.31% 1.10% 1.19% 1.70%*
Portfolio Turnover Rate ................................. 0%** 5% 18% 3% 19%**
</TABLE>
- ------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 31, 1991.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail A and Trust
Shares.
(3) Calculation does not include sales charge for Retail A Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
SIX MONTHS ENDED ------------------------------------------------
APRIL 30, 1996 1995 1994 1993(2) 1992(2)
------------------ -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Retail A Shares $ 0.22 $ 0.44 $ 0.46 $ 0.47 $ 0.30
Trust Shares 0.23 0.48 0.47 0.47 0.30
</TABLE>
See Notes to Financial Statements.
36
<PAGE> 40
TRUST SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1996 ---------------------------------------------------------
(UNAUDITED) 1995 1994 1993(2) 1992(1)(2)
--------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period .................... $ 10.78 $ 9.89 $ 11.04 $ 10.00 $ 10.00
---------- ---------- ---------- ---------- ---------
Income from Investment Operations:
Net investment income (A) ............................ 0.25 0.51 0.49 0.50 0.38
Net realized and unrealized gain (loss)
on investments....................................... (0.16) 0.89 (1.15) 1.04 --
---------- ---------- ---------- ---------- ---------
Total from Investment Operations: ................. 0.09 1.40 (0.66) 1.54 0.38
---------- ---------- ---------- ---------- ---------
Less Dividends:
Dividends from net investment income ................. (0.25) (0.51) (0.49) (0.50) (0.38)
Dividends from net realized capital gains ............ -- -- -- -- --
---------- ---------- ---------- ---------- ---------
Total Dividends: .................................. (0.25) (0.51) (0.49) (0.50) (0.38)
---------- ---------- ---------- ---------- ---------
Net increase (decrease) in net asset value .............. (0.16) 0.89 (1.15) 1.04 --
---------- ---------- ---------- ---------- ---------
Net Asset Value, End of period .......................... $ 10.62 $ 10.78 $ 9.89 $ 11.04 $ 10.00
========= ========== ========== ========== ==========
Total Return(3) ......................................... 0.82%** 14.23% (6.14)% 15.66% 3.83%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....................... $ 23,039 $ 23,077 $ 24,209 $ 70,242 $ 20,144
Ratios to average net assets:
Net investment income including reimbursement/waiver . 4.67%* 4.91% 4.64% 4.54% 5.22%*
Operating expenses including reimbursement/waiver .... 0.70%* 0.74% 0.87% 0.87% 0.65%*
Operating expenses excluding reimbursement/waiver .... 1.05%* 1.07% 1.08% 1.19% 1.70%*
Portfolio Turnover Rate ................................. 0%** 5% 18% 3% 19%**
</TABLE>
37
<PAGE> 41
THE GALAXY FUND
CONNECTICUT MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
RETAIL A SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1996 ------------------------------------------
(UNAUDITED) 1995 1994 1993(1)(2)
----------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period .................... $ 10.13 $ 9.22 $ 10.32 $ 10.00
---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ............................ 0.21 0.44 0.46 0.25
Net realized and unrealized gain (loss) on
investments ........................................ (0.13) 0.91 (1.10) 0.32
---------- ---------- ---------- ----------
Total from Investment Operations: ................. 0.08 1.35 (0.64) 0.57
---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income ................. (0.21) (0.44) (0.46) (0.25)
Dividends from net realized capital gains ............ -- -- -- --
---------- ---------- ---------- ----------
Total Dividends: .................................. (0.21) (0.44) (0.46) (0.25)
---------- ---------- ---------- ----------
Net increase (decrease) in net asset value .............. (0.13) 0.91 (1.10) 0.32
---------- ---------- ---------- ----------
Net Asset Value, End of period .......................... $ 10.00 $ 10.13 $ 9.22 $ 10.32
========== ========== ========== ==========
Total Return(3) ......................................... 0.73%** 14.94% (6.39)% 5.80%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....................... $ 25,537 $ 18,066 $ 18,229 $ 18,771
Ratios to average net assets:
Net investment income including reimbursement/waiver . 4.04%* 4.53% 4.66% 4.30%*
Operating expenses including reimbursement/waiver .... 0.67%* 0.68% 0.25% 0.00%*
Operating expenses excluding reimbursement/waiver .... 1.41%* 1.48% 1.42% 1.73%*
Portfolio Turnover Rate ................................. 0%** 7% 4% 7%**
</TABLE>
- ---------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on March 16, 1993.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail A and Trust
Shares.
(3) Calculation does not include sales charge for Retail A Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
SIX MONTHS ENDED ----------------------------------------
APRIL 30, 1996 1995 1994 1993(2)
------------------ --------- --------- ---------
<S> <C> <C> <C> <C>
Retail A Shares $ 0.18 $ 0.37 $ 0.34 $ 0.15
Trust Shares 0.18 0.38 0.35 0.15
</TABLE>
See Notes to Financial Statements.
38
<PAGE> 42
TRUST SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1996 -----------------------------------------
(UNAUDITED) 1995 1994 1993(1)(2)
----------- --------- --------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period .................... $ 10.13 $ 9.22 $ 10.32 $ 10.00
---------- --------- --------- ----------
Income from Investment Operations:
Net investment income (A) ............................ 0.22 0.46 0.46 0.25
Net realized and unrealized gain (loss) on
investments ........................................ (0.13) 0.91 (1.10) 0.32
---------- --------- --------- ----------
Total from Investment Operations: ................. 0.09 1.37 (0.64) 0.57
---------- --------- --------- ----------
Less Dividends:
Dividends from net investment income ................. (0.22) (0.46) (0.46) (0.25)
Dividends from net realized capital gains ............ -- -- -- --
---------- --------- --------- ----------
Total Dividends: .................................. (0.22) (0.46) (0.46) (0.25)
---------- --------- --------- ----------
Net increase (decrease) in net asset value .............. (0.13) 0.91 (1.10) 0.32
---------- --------- --------- ----------
Net Asset Value, End of period .......................... $ 10.00 $ 10.13 $ 9.22 $ 10.32
========= ========= ========= ==========
Total Return(3) ......................................... 0.83%** 15.21% (6.37)% 5.80%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....................... $ 6,553 $ 4,083 $ 4,419 $ 18,771
Ratios to average net assets:
Net investment income including reimbursement/waiver . 0.46%* 0.45% 0.23% 0.00%*
Operating expenses including reimbursement/waiver .... 4.26%* 4.76% 4.66% 4.30%*
Operating expenses excluding reimbursement/waiver .... 1.20%* 1.24% 1.41% 1.73%*
Portfolio Turnover Rate ................................. 0%** 7% 4% 7%**
</TABLE>
39
<PAGE> 43
THE GALAXY FUND
MASSACHUSETTS MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
RETAIL A SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1996 ------------------------------------------
(UNAUDITED) 1995 1994 1993(1)(2)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period ......................... $ 9.98 $ 9.12 $ 10.24 $ 10.00
---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ................................. 0.22 0.44 0.47 0.29
Net realized and unrealized gain (loss) on investments .... (0.21) 0.86 (1.12) 0.24
---------- ---------- ---------- ----------
Total from Investment Operations: ...................... 0.01 1.30 (0.65) 0.53
---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income ...................... (0.22) (0.44) (0.47) (0.29)
Dividends from net realized capital gains ................. -- -- -- --
---------- ---------- ---------- ----------
Total Dividends: ....................................... (0.22) (0.44) (0.47) (0.29)
---------- ---------- ---------- ----------
Net increase (decrease) in net asset value ................... (0.21) 0.86 (1.12) 0.24
---------- ---------- ---------- ----------
Net Asset Value, End of period ............................... $ 9.77 $ 9.98 $ 9.12 $ 10.24
========== ========== ========== ==========
Total Return(3) .............................................. 0.04%** 14.52% (6.46)% 5.42%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ............................ $ 26,663 $ 16,113 $ 15,966 $ 20,121
Ratios to average net assets:
Net investment income including reimbursement/waiver ...... 4.35%* 4.56% 4.89% 4.87%*
Operating expenses including reimbursement/waiver ......... 0.66%* 0.70% 0.33% 0.05%*
Operating expenses excluding reimbursement/waiver ......... 1.38%* 1.58% 1.43% 1.82%*
Portfolio Turnover Rate ...................................... 3%** 19% 11% 0%**
</TABLE>
- -----------
* Annualized
** Not Annualized
(1) The Fund commenced operations on March 12, 1993.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail A and Trust
Shares.
(3) Calculation does not include sales charge for Retail A Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
SIX MONTHS ENDED ----------------------------------------
APRIL 30, 1996 1995 1994 1993(2)
----------------- --------- --------- ---------
<S> <C> <C> <C> <C>
Retail A Shares $ 0.18 $ 0.36 $ 0.37 $ 0.18
Trust Shares 0.19 0.38 0.38 0.18
</TABLE>
See Notes to Financial Statements.
40
<PAGE> 44
TRUST SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1996 ----------------------------------------
(UNAUDITED) 1995 1994 1993(1)(2)
---------------- --------- --------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of period ....................... $ 9.98 $ 9.12 $ 10.24 $ 10.00
---------- --------- --------- ----------
Income from Investment Operations:
Net investment income (A) ............................... 0.23 0.45 0.48 0.29
Net realized and unrealized gain (loss) on investments .. (0.21) 0.86 (1.12) 0.24
---------- --------- --------- ----------
Total from Investment Operations: .................... 0.02 1.31 (0.64) 0.53
---------- --------- --------- ----------
Less Dividends:
Dividends from net investment income .................... (0.23) (0.45) (0.48) (0.29)
Dividends from net realized capital gains ............... -- -- -- --
---------- --------- --------- ----------
Total Dividends: ..................................... (0.23) (0.45) (0.48) (0.29)
---------- --------- --------- ----------
Net increase (decrease) in net asset value ................. (0.21) 0.86 (1.12) 0.24
---------- --------- --------- ----------
Net Asset Value, End of period ............................. $ 9.77 $ 9.98 $ 9.12 $ 10.24
========== ========= ========= ==========
Total Return(3) ............................................
0.14%** 14.72% (6.46)% 5.42%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) .......................... $ 10,429 $ 7,607 $ 5,617 $ 20,121
Ratios to average net assets:
Net investment income including reimbursement/waiver .... 4.57%* 4.73% 4.89% 4.87%*
Operating expenses including reimbursement/waiver ....... 0.45%* 0.52% 0.33% 0.05%*
Operating expenses excluding reimbursement/waiver ....... 1.17%* 1.31% 1.41% 1.82%*
Portfolio Turnover Rate .................................... 3%** 19% 11% 0%**
</TABLE>
41
<PAGE> 45
THE GALAXY FUND
RHODE ISLAND MUNICIPAL BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD.
RETAIL A SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD
APRIL 30, 1996 ENDED
(UNAUDITED) OCTOBER 31, 1995(1)
--------------- -----------------
<S> <C> <C>
Net Asset Value, Beginning of period .................... $ 10.67 $ 10.00
---------- ----------
Income from Investment Operations:
Net investment income (A) ............................ 0.26 0.44
Net realized and unrealized gain (loss)
on investments....................................... (0.17) 0.67
---------- ----------
Total from Investment Operations: ................. 0.09 1.11
---------- ----------
Less Dividends:
Dividends from net investment income ................. (0.26) (0.44)
Dividends from net realized capital gains ............ (0.05) --
---------- ----------
Total Dividends: ................................. (0.31) (0.44)
---------- ----------
Net increase (decrease) in net asset value .............. (0.22) 0.67
---------- ----------
Net Asset Value, End of period .......................... $ 10.45 $ 10.67
========== ==========
Total Return(2) ......................................... 0.83%** 11.29%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....................... $ 13,413 $ 10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver . 4.87%* 5.13%*
Operating expenses including reimbursement/waiver .... 0.69%* 0.40%*
Operating expenses excluding reimbursement/waiver .... 1.40%* 2.25%*
Portfolio Turnover Rate ................................. 8%** 34%**
</TABLE>
- -----------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 20, 1994.
(2) Calculation does not include sales charge for Retail A Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or administrator for the six months ended April 30,
1996 and for the period ended October 31, 1995 were $0.23 and $0.28,
respectively.
See Notes to Financial Statements.
42
<PAGE> 46
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. ORGANIZATION
The Galaxy Fund, a Massachusetts business trust (the "Trust"), is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. As of the date of this report, the Trust offered twenty-four
managed investment portfolios. The accompanying financial statements and
financial highlights are those of the Tax-Exempt Bond, New York Municipal Bond,
Connecticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds (individually, a "Fund," collectively, the "Funds") only.
Each Fund is authorized to issue two series of shares (Trust Shares and
Retail A Shares), except for the Tax-Exempt Bond Fund which is authorized to
issue three series of shares (Trust Shares, Retail A Shares, and Retail B
Shares). As of April 30, 1996, the Rhode Island Municipal Bond Fund has offered
only Retail A Shares. Trust Shares, Retail A Shares and Retail B Shares are
substantially the same except that (i) Retail A Shares are subject to a maximum
3.75% front-end sales charge, (ii) Retail B Shares are subject to a maximum
5.00% contingent deferred sales charge, and (iii) each series of shares bear the
following series specific expenses: distribution and/or shareholder servicing
fees and transfer agency charges.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. The
following is a summary of significant accounting policies in conformity with
generally accepted accounting principles consistently followed by the Funds in
the preparation of their financial statements.
PORTFOLIO VALUATION: Investment securities are valued by an independent
pricing service approved by the Trust's Board of Trustees. When, in the
judgment of the service, quoted bid prices are readily available and are
representative of the bid side of the market, investments are valued at the
mean between quoted bid prices and asked prices. 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. Short-term obligations that mature in 60 days or less are valued at
amortized cost, which constitutes fair value as determined by the Board of
Trustees of the Trust. All other securities and other assets are appraised at
their fair value as determined in good faith under consistently applied
procedures established by and under the general supervision of the Board of
Trustees.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
accounted for on the trade date basis. Net realized gains or losses on sales of
securities are determined by the identified cost method. Interest income is
recorded on the accrual basis. Investment income and realized and unrealized
gains and losses are allocated to the separate series of a Fund based upon the
relative net assets of each series.
DIVIDENDS TO SHAREHOLDERS: Dividends from net investment income are
determined separately for each series of a Fund and are declared daily and paid
monthly. Net realized capital gains, if any, are distributed at least annually.
Income dividends and capital gain dividends are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles.
FEDERAL INCOME TAXES: The Trust treats each Fund as a separate entity for
Federal income tax purposes. Each Fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. By so qualifying, each Fund will not be subject to Federal
income taxes to the extent that it distributes substantially all of its taxable
or tax-exempt income, if any, for its tax year ending October 31. In addition,
by distributing in each calendar year substantially all of its net investment
income, capital gains, and certain other amounts, if any, each Fund will not be
subject to a Federal excise tax. Therefore, no Federal income tax provision is
required.
EXPENSES: The Trust accounts separately for the assets, liabilities and
operations of each Fund. Expenses directly attributed to a Fund are charged to
the Fund, while expenses which are attributable to more than one Fund of the
Trust are allocated among the respective Funds.
In addition, expenses of a Fund not directly attributable to the operations
of a particular series of shares of the Fund are allocated to the separate
series based upon the relative
43
<PAGE> 47
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
net assets of each series. Operating expenses directly attributable to a series
of shares of a Fund are charged to the operations of that series.
ORGANIZATION COSTS: Each Fund bears all costs in connection with its
organization, including the fees and expenses of registering and qualifying its
initial shares for distribution under Federal and state securities laws. All
such costs are amortized using the straight-line method over a period of five
years beginning with commencement of each Fund's operations. In the event that
any of the initial shares purchased by the Fund's sponsor are redeemed during
such period by any holder thereof, the Fund involved will be reimbursed by such
holder for any unamortized organization costs in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
outstanding at the time of redemption.
WHEN-ISSUED SECURITIES: Each Fund may purchase and sell securities, such as
municipal obligations, on a "when-issued" basis. Delivery of the security and
payment take place after the date of the commitment to purchase and such
securities are subject to market fluctuations during this period. The current
market value of these securities is determined in the same manner as other
municipal obligations. The Trust's custodian will set aside cash or liquid
portfolio securities equal to the amount of the when-issued commitment in a
separate account.
3. INVESTMENT ADVISORY, ADMINISTRATION,
SHAREHOLDER SERVICES, DISTRIBUTION AND OTHER FEES
The Trust and Fleet Investment Advisors Inc. (the "Investment Adviser"), an
indirect wholly-owned subsidiary of Fleet Financial Group Inc., are parties to
an investment advisory agreement under which the Investment Adviser provides
services for a fee, computed daily and paid monthly, at the annual rate of 0.75%
of the average daily net assets of the Funds.
The Trust and First Data Investor Services Group, Inc. ("FDISG") (formerly
known as The Shareholders Services Group, Inc. doing business as 440 Financial),
a wholly-owned subsidiary of First Data Corporation, are parties to an
administration agreement under which FDISG provides services for a fee that is
computed daily and paid monthly, at the annual rate of 0.09% of the first $2.5
billion of the combined average daily net assets of the Funds and the other
funds offered by the Trust, 0.085% of the next $2.5 billion of combined average
daily net assets and 0.08% of combined average daily net assets over $5 billion.
In addition, FDISG also provides certain fund accounting, custody administration
and transfer agency services pursuant to certain fee arrangements. Pursuant to
such fee arrangements, FDISG compensates the Trust's custodian bank for its
services. Prior to March 31, 1995, the administration, fund accounting, custody
administration and transfer agency services described above were provided by 440
Financial Group of Worcester, Inc., a wholly-owned subsidiary of State Mutual
Life Assurance Company of America ("State Mutual"), for the same annual fees. On
that date, FDISG acquired substantially all of the assets of 440 Financial Group
of Worcester, Inc.
Prior to March 1, 1994, 440 Financial Group of Worcester, Inc. was entitled
to receive administration fees, computed daily and paid monthly, at an annual
rate of 0.078% of the first $2.5 billion of the combined average daily net
assets of the Funds and the other funds offered by the Trust plus 0.073% of
combined average daily net assets in excess of $2.5 billion.
Effective October 1, 1994, the Trust implemented a shareholder services plan
("Services Plan") with respect to Retail A Shares of the Funds. Currently, the
Services Plan has not been implemented with respect to the Funds' Trust Shares.
The Services Plan provides compensation to institutions (including and currently
limited to Fleet Bank and its affiliates), which provide administrative and
support services to their customers who beneficially own Retail A Shares, at an
annual rate not to exceed 0.30% of the average daily net asset value of the
outstanding Retail A Shares of each Fund beneficially owned by such customers.
The Trust, under the direction of the Board of Trustees, is currently limiting
fees payable under the Services Plan with respect to each Fund to an annual rate
not to exceed 0.15% of the average daily net asset value of the outstanding
Retail A Shares beneficially owned by such customers. No fees were charged under
the Services Plan with respect to the Rhode Island Municipal Bond Fund for the
six months ended April 30, 1996.
The Trust has adopted a distribution and shareholder services plan (the
"12b-1 Plan") with respect to Retail B Shares of the Tax-Exempt Bond Fund. Under
the 12b-1 Plan, the Trust may pay (i) the Distributor or another person for
expenses and activities intended to result in the sale of Retail B Shares, (ii)
institutions for shareholder liaison services and (iii) institutions for
administrative support services. Payments for distribution expenses may not
exceed an annual rate of 0.65% of the average daily assets attributable to the
Fund's outstanding Retail B Shares. The fees for shareholder liaison services
and/or administrative support services may not exceed the annual rates of 0.15%
and 0.15%, respectively, of the average daily net assets attributable to the
Fund's outstanding Retail B Shares. The Trust
44
<PAGE> 48
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
intends to limit the Fund's payments for shareholder liaison and administrative
support services under the 12b-1 Plan to an aggregate fee of not more than 0.30%
of the average daily net asset value of Retail B Shares owned of record or
beneficially by the institution's customers. For the period ended April 30,
1996, the Funds paid distribution and/or shareholder servicing fees under the
Services Plan and 12b-1 Plan as follows:
<TABLE>
<CAPTION>
SHAREHOLDER SERVICES
--------------------- DISTRIBUTION
FUND RETAIL A RETAIL B RETAIL B
---- -------- -------- --------
<S> <C> <C> <C>
Tax-Exempt Bond ....................... $ 20,528 $ 6 $ 26
New York Municipal Bond ............... 30,732 N/A N/A
Connecticut Municipal Bond ............ 18,589 N/A N/A
Massachusetts Municipal Bond .......... 19,291 N/A N/A
Rhode Island Municipal Bond ........... -- N/A N/A
</TABLE>
Effective October 1, 1994 with respect to Retail A Shares and Trust Shares,
and March 4, 1996, with respect to Retail B Shares, the Funds bear series
specific transfer agent charges based upon the number of shareholder accounts
for each series. For the six months ended April 30, 1996, transfer agent charges
for each series were as follows:
<TABLE>
<CAPTION>
FUND RETAIL A RETAIL B TRUST
---- -------- -------- -----
<S> <C> <C> <C>
Tax-Exempt Bond ....................... $ 12,114 $ 14 $ 37
New York Municipal Bond ............... 18,914 N/A 31
Connecticut Municipal Bond ............ 8,582 N/A 31
Massachusetts Municipal Bond .......... 8,659 N/A 35
Rhode Island Municipal Bond ........... 1,066 N/A --
</TABLE>
440 Financial Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of FDISG and an indirect wholly-owned subsidiary of First Data
Corporation, acts as the exclusive distributor of the Trust's shares. Prior to
March 31, 1995, the Distributor was a wholly-owned subsidiary of 440 Financial
Group of Worcester, Inc., and an indirect wholly-owned subsidiary of State
Mutual. Prior to March 1, 1994, Allmerica Investments, Inc., a wholly-owned
subsidiary of State Mutual, served as the Trust's distributor.
Certain officers of the Trust may be officers of the Administrator and/or
Distributor. Such officers receive no compensation from the Trust for serving in
their respective roles. No officer, director or employee of the Investment
Adviser serves as an officer, Trustee or employee of the Trust. Each Trustee is
entitled to receive for services as a Trustee of the Trust and The Galaxy VIP
Fund ("VIP") an aggregate fee of $18,000 per annum plus certain other fees for
attending or participating in meetings. The Chairman of the Boards of Trustees
of the Trust and VIP is entitled to an additional annual fee of $4,000 and the
President and Treasurer of the Trust and VIP is entitled to an additional annual
fee of $2,500 for their services in these capacities. These fees are allocated
among the funds of the Trust and VIP based on their relative net assets. In
addition, effective March 1, 1996, each Trustee became eligible to participate
in the Trust's Deferred Compensation Plan (the "Plan"), an unfunded,
nonqualified deferred compensation plan. The Plan allows each Trustee to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
Expenses for the six months ended April 30, 1996 include legal fees paid to
Drinker Biddle & Reath. A partner of that firm is Secretary to the Trust.
4. WAIVER OF FEES AND REIMBURSEMENT OF EXPENSES
The Investment Adviser and Administrator voluntarily agreed to waive a
portion of their fees and/or to reimburse the Funds for certain expenses so that
total expenses would not exceed certain expense limitations established for each
series. The Investment Adviser and Administrator, at their discretion, may
revise or discontinue the voluntary fee waivers and expense reimbursements. For
the six months ended April 30, 1996, the Investment Adviser and Administrator
waived fees and/or reimbursed expenses with respect to the Funds in the
following amounts:
<TABLE>
<CAPTION>
FEES WAIVED BY
-----------------------------
INVESTMENT
FUND ADVISER ADMINISTRATOR
- ---- ---------- -------------
<S> <C> <C>
Tax-Exempt Bond.............. $124,144 $ --
New York Municipal Bond...... 66,202 --
Connecticut Municipal Bond... 86,389 26,392
Massachusetts Municipal Bond. 99,545 26,605
Rhode Island Municipal Bond.. 24,905 --
</TABLE>
<TABLE>
<CAPTION>
REIMBURSEMENT BY
FUND INVESTMENT ADVISER
- ----- ------------------
<S> <C>
Tax-Exempt Bond................ $ 33,988
New York Municipal Bond........ 45,860
Connecticut Municipal Bond..... --
Massachusetts Municipal Bond... --
Rhode Island Municipal Bond.... 18,904
</TABLE>
5. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest, each with a par value of
$0.001. Shares of the Trust are currently classified into twenty-four classes
of shares consisting of one or more series including: Class M - Series 1 shares
(Trust Shares), Class M - Series 2 shares (Retail A Shares) and Class M -
Series 3 shares (Retail B Shares) - Tax-Exempt Bond Fund; Class O - Series 1
shares (Trust Shares) and Class O Series 2 shares (Retail A Shares) - New York
Municipal Bond Fund; Class P - Series 1 shares (Trust Shares) and Class P -
Series 2 shares (Retail A Shares) - Connecticut Municipal Bond Fund; Class Q -
Series 1 shares (Trust Shares) and Class Q - Series 2 shares
45
<PAGE> 49
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(Retail A Shares) - Massachusetts Municipal Bond Fund; and Class R - Series 1
shares (Trust Shares) and Class R - Series 2 shares (Retail A Shares) - Rhode
Island Municipal Bond Fund. Each share represents an equal proportionate
interest in the respective Fund, bears the same fees and expenses (except that
October 1, 1994, Retail A Shares bear the expense of payments under the
Services Plan and Trust Shares and Retail A Shares bear series specific
transfer agent charges, and effective March 4, 1996, Retail B Shares bear the
expense of payments under the 12b-1 Plan and series specific transfer agent
charges) and are entitled to such dividends and distributions of income earned
as are declared at the discretion of the Trust's Board of Trustees.
Shareholders are entitled to one vote for each full 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.
6. PURCHASES AND SALES OF SECURITIES
The cost of purchases and proceeds from sales of securities, excluding
short-term investments, for the six months ended April 30, 1996 were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ---- --------- -----
<S> <C> <C>
Tax-Exempt Bond.............. $17,762,957 $11,764,993
New York Municipal Bond...... -- 152,500
Connecticut Municipal Bond... 8,720,247 --
Massachusetts Municipal Bond. 14,121,865 1,097,658
Rhode Island Municipal Bond.. 3,513,967 955,550
</TABLE>
The aggregate gross unrealized appreciation, aggregate gross unrealized
depreciation, net unrealized appreciation (depreciation), and cost of all
securities as computed on a Federal income tax basis, at April 30, 1996 for each
Fund is as follows:
<TABLE>
<CAPTION>
FUND APPRECIATION (DEPRECIATION)
- ---- ------------ --------------
<S> <C> <C>
Tax-Exempt Bond ............. $ 2,518,303 $ (2,005,556)
New York Municipal Bond ..... 1,363,989 (638,626)
Connecticut Municipal Bond .. 200,853 (439,770)
Massachusetts Municipal Bond 163,229 (788,285)
Rhode Island Municipal Bond . 118,316 (150,736)
</TABLE>
<TABLE>
<CAPTION>
FUND NET COST
- ---- --- ----
<S> <C> <C>
Tax-Exempt Bond .............. $ 512,747 $ 121,230,011
New York Municipal Bond ...... 725,363 62,393,371
Connecticut Municipal Bond ... (238,917) 30,369,603
Massachusetts Municipal Bond . (625,056) 36,120,086
Rhode Island Municipal Bond .. (32,420) 12,769,848
</TABLE>
At October 31, 1995, the following Funds had capital loss carryforwards:
<TABLE>
<CAPTION>
FUND AMOUNT EXPIRATION
- ---- ------ ----------
<S> <C> <C>
Tax-Exempt Bond ..............$ 1,522 2002
100,337 2003
New York Municipal Bond ...... 9,630 2000
1,195,340 2002
676,456 2003
Connecticut Municipal Bond ... 3,795 2001
36,223 2002
685,391 2003
Massachusetts Municipal Bond . 229,478 2002
487,619 2003
</TABLE>
7. CONCENTRATION OF CREDIT
The New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond, and Rhode Island Municipal Bond Funds invest primarily in debt
obligations issued by the State of New York, the State of Connecticut, the
Commonwealth of Massachusetts and the State of Rhode Island, respectively, and
their respective political subdivisions, agencies and public authorities, which
obtain funds for various public purposes. The Funds are more susceptible to
economic and political factors adversely affecting issuers of each respective
state's specific municipal securities than are municipal bond funds that are
not concentrated in these issuers to the same extent.
8. ACQUISITION OF THE SHAWMUT FUNDS
At a meeting held on June 12, 1995, the Board of Trustees of the Trust
approved an Agreement and Plan of Reorganization (the "Agreement") for the
acquisition of The Shawmut Funds ("Shawmut") by the Trust. Pursuant to the
Agreement, all of the assets and liabilities of the Shawmut Connecticut
Intermediate Municipal Income Fund and Massachusetts Intermediate Municipal
Income Fund were transferred to the Galaxy Connecticut Municipal Bond Fund and
the Galaxy Massachusetts Municipal Bond Fund, respectively, in exchange for
shares of the Galaxy Connecticut Municipal Bond Fund and the Galaxy
Massachusetts Municipal Bond Fund, respectively. Accordingly, the net assets of
the Shawmut Connecticut Intermediate Municipal Income Fund were exchanged for
765,050 Retail A Shares and 185,222 Trust Shares of the Galaxy Connecticut
Municipal Bond Fund and the net assets of the Shawmut Massachusetts Intermediate
Municipal Income Fund were exchanged for 1,090,523 Retail A Shares and 179,482
Trust Shares of the Galaxy Massachusetts Municipal Bond Fund. In related
transactions, the assets and liabilities of the other Shawmut portfolios were
transferred to corresponding Galaxy portfolios in
46
<PAGE> 50
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
exchange for shares in such Galaxy portfolios. The reorganization, which
qualified as a tax-free reorganization for Federal income tax purposes, was
completed on December 4, 1995 following the approval of the reorganization by
The Shawmut Fund shareholders. Certain share registration fees incurred in
connection with the reorganization were borne by the Trust. The following is a
summary of the Net Assets, Shares Outstanding, Net Asset Value per share and
Unrealized Appreciation associated with the transaction:
<TABLE>
<CAPTION>
Before Acquisition After Acquisition
------------------------------------- ---------------------
Galaxy Shawmut Galaxy
Connecticut Connecticut Connecticut
Municipal Intermediate Municipal
Bond Municipal Income Bond
----------- ---------------- -------------
<S> <C> <C> <C>
Net Assets ................................... $22,703,295 $9,758,479 $32,461,774
Shares outstanding ........................... 2,210,642 963,404 3,160,914
Retail and Trust Net Asset Value, per share... $ 10.27 $ 10.13 $ 10.27
Unrealized Appreciation ...................... $ 435,707 $ 182,610
</TABLE>
<TABLE>
<CAPTION>
Before Acquisition After Acquisition
------------------------------------- ---------------------
Galaxy Shawmut Galaxy
Massachusetts Massachusetts Massachusetts
Municipal Intermediate Municipal
Bond Municipal Income Bond
------------ ---------------- -------------
<S> <C> <C> <C>
Net Assets.................................... $24,534,165 $ 12,840,124 $ 37,374,289
Shares outstanding............................ 2,426,213 1,270,005 3,696,218
Retail and Trust Net Asset Value, per share... $ 10.11 $ 10.11 $ 10.11
Unrealized Appreciation....................... $ 501,126 $ 199,433
</TABLE>
9. IMPOSITION OF FRONT-END SALES LOAD
Effective December 1, 1995, the public offering price for Retail A Shares of
the Funds is the sum of the net asset value of the Retail A Shares purchased
plus, if applicable, a maximum 3.75% front-end sales charge. Reduced sales
charges are available. No sales charge is assessed on certain transactions
and/or investors, including purchases by persons who were beneficial owners of
shares of Galaxy or any other funds advised by Fleet Investment Advisors Inc. or
its affiliates before December 1, 1995.
47
<PAGE> 51
SHAREHOLDER'S
SERVICES
AUTOMATIC INVESTMENT PROGRAM
The Golden Rule of investing is "pay yourself first." That is easy to do with
Galaxy's Automatic Investment Program. For as little as $50 per month deducted
directly from your checking, savings, or bank money market account, you can
consistently and conveniently add to your Galaxy investment. When you establish
an Automatic Investment Program, the $2,500 initial investment requirement for
Galaxy is waived. Of course, such a program does not assure a profit and does
not protect against loss in a declining market.
DIVERSIFICATION
A fundamental investment practice is "diversification." A well-balanced asset
allocation plan may help to control your risk while pursuing your goals. Many
mutual funds offer a low-cost way to diversify your investments while you
benefit from professional management. Galaxy's comprehensive array of investment
choices can be used in combination to match the needs of nearly everyone.
EXCHANGE PRIVILEGES
As your investment needs change, you can conveniently exchange your shares in
one fund for shares in another fund.
QUARTERLY MAGAZINE
Service also means giving you the practical information you need, in language
you can understand, to make smart investment decisions. The quarterly magazine,
Galaxy Observer, brings news, strategies and simple, straight-forward
explanations of investment basics and terminology.
CONSOLIDATED STATEMENTS
Timely, comprehensive mutual fund account statements offer detailed information
on your individual account. If you have a Fleet One or a Fleet Private Banking
Account, your Galaxy Fund information can be added to these statements.
INVESTMENT SPECIALISTS
In many Fleet branch offices or in the convenience of your home or office, you
can visit one-on-one with an Investment Specialist* who can help you select the
investments that match your individual needs. This service is at no cost to you.
24-HOUR ACCESS TO REGISTERED
REPRESENTATIVES
24 hours a day, seven days a week, 365 days a year, we are ready and available
to help. Our toll-free telephone lines offer round-the-clock access to Fund
information and service. Call 1-800-628-0414 for information on initial
purchases and current performance.
CUSTOMER SERVICE
Quality customer service is only a phone call away. Call 1-800-628-0414 between
9 a.m. and 5 p.m. to arrange bank wires, or to make telephone exchanges and
redemptions.
In addition, Galaxy's state-of-the-art InvestConnect automated voice response
system is available to serve you 24 hours a day, seven days a week by calling
1-800-FOR-GLXY (367-4599).
______________________________
Certain shareholder services may not be available for Trust Share investors.
Please consult your Fund Prospectus.
* Shares of the Funds are distributed through 440 Financial Distributors, Inc.,
member NASD and SIPC. Investment Specialists are registered representatives of
FIS Securities, Inc., member NASD, or MDS Securities Inc., member NASD and SIPC.
"A well-balanced asset allocation plan may help to control your risk while
pursuing your goals."
<PAGE> 52
[GALAXY FUNDS ENVELOPE] BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 54201
BOSTON, MA
