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[LOGO]
[PHOTOGRAPH]
TAXABLE BOND FUNDS REPORT
Short-Term Bond Fund - Intermediate Government Income Fund (formerly
Intermediate Bond Fund) - Corporate Bond Fund - High Quality Bond Fund
SEMI-ANNUAL
REPORT
FOR THE SIX MONTHS
ENDED APRIL 30, 1996
<PAGE> 2
TRUSTEES
AND OFFICERS
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis De Thomasis,
P.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 01581-5108
ADMINISTRATOR
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.
[Recycle Logo]
This report was printed on recycled paper.
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CHAIRMAN'S
MESSAGE
Dear Shareholder:
Enclosed is the semi-annual report for the Galaxy Taxable 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 months to come.
While Fleet Investment Advisors tries to take advantage of current market
opportunities, it also manages the Galaxy Taxable 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 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 Taxable Bond Funds from an 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
MARKET OVERVIEW
BOND MARKET OVERVIEW
By Fleet Investment Advisors Inc.
Signs of stronger economic growth and fears of inflation drove interest rates
higher and bond prices lower in the six months ended April 30, 1996. As this
happened, shorter-term issues held up better than bonds with longer maturities.
Galaxy Taxable Bond Funds focused greater attention to shorter-term issues while
prices fell, and larger investments in higher-yielding securities.
AN IMPROVING ECONOMY
When the period began, the economy was growing slowly. After improving at an
annualized rate of 3.6% in the third quarter of 1995, the gross domestic product
("GDP"), a measure of goods and services, advanced by just 0.5% in the fourth
quarter. As investors looked for the Federal Reserve Board (the "Fed") to
prevent a recession by cutting interest rates, bond prices continued the rally
they'd enjoyed for most of the year.
On December 19, the Fed met investors' expectations, cutting its Fed Funds
rate from 5.75% to 5.5%. Looking for additional rate cuts, and believing that
Congress might balance the federal budget, investors drove bond prices higher
through the end of the year. With the further rally in prices, the yield for
30-year Treasury bonds fell to 5.94% -- down from 6.33% at the end of October.
The bond rally stalled in the beginning of 1996 as Congress became embroiled
in a battle over the budget, and the economy showed signs of improving. Although
inflation remained moderate, encouraging the Fed to cut short-term rates to
5.25% on January 31, bond investors grew increasingly nervous. When the Labor
Department reported
PERFORMANCE AT-A-GLANCE
Average Annual Returns* as of April 30, 1996
Trust Shares
SHORT-TERM BOND FUND
Inception Date 12/30/91
[GRAPH]
1.50%
6.98%
4.38%
5.15%
INTERMEDIATE GOVERNMENT INCOME FUND
Inception Date 9/1/88
[GRAPH]
- -0.02%
7.08%
3.13%
6.51%
7.43%
CORPORATE BOND FUND
Inception Date 12/12/94
[GRAPH]
0.42%
7.79%
10.16%
HIGH QUALITY BOND FUND
Inception Date 12/14/90
[GRAPH]
- -0.40%
9.71%
5.10%
8.09%
8.09%
Six Months*
1 Year
3 Years
5 Years
Life of Fund
*Six months returns are total returns.
"The bond rally stalled in the beginning of 1996 as Congress became embroiled in
a battle over the budget, and the economy showed signs of improving."
<PAGE> 5
MARKET OVERVIEW
unexpectedly strong employment, and there were other signs of stronger growth,
investors lost hope for future cuts in interest rates.
Although inflation remained moderate, commodity prices were rising. As a
result, bond prices fell sharply for two months before stabilizing in April.
When the period ended, the yield for long-term Treasury bonds stood at 6.9%.
MAKING THE MOST OF MARKET CONDITIONS
Early in the period, while interest rates fell, we maintained positions in
longer-term bonds -- whose prices tend to benefit most in a market rally. We
focused largely on Treasury securities, whose yields had become almost as strong
as yields for corporate bonds.
Because many companies had been more interested in cutting costs during 1995
than in issuing new debt, there were reduced supplies of corporate issues.
Meanwhile, lower interest rates had increased corporate demand. The stronger
demand combined with a weaker supply put downward pressure on corporate yields
- -- at the same time that increased supplies of Treasuries put upward pressure on
the yields of those securities.
When it looked like interest rates might be bottoming, we gave greater
attention to shorter-term issues -- which typically hold up best in a market
decline. To enhance income, we added investments in corporate bonds and the
issues of U.S. government agencies, as the spreads between their yields and the
yields for Treasury bonds improved. We also added investments in mortgage-backed
securities, as higher interest rates reduced the pace at which homeowners prepay
their loans.
PERFORMANCE AT-A-GLANCE**
Average Annual Returns* as of April 30, 1996
Retail A Shares
SHORT-TERM BOND FUND
Inception Date 12/30/91
[GRAPH]
- -2.45%
2.67%
2.92%
4.13%
INTERMEDIATE GOVERNMENT INCOME FUND
Inception Date 9/1/88
[GRAPH]
- -3.91%
2.75%
1.67%
6.42%
7.37%
HIGH QUALITY BOND FUND
Inception Date 12/14/90
[GRAPH]
- -4.24%
5.39%
3.67%
7.20%
7.26%
Six Months*
1 Year
3 Years
5 Years
Life of Fund
*Six months 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 on December 1, 1995.
"Because many companies had been more interested in cutting costs during 1995
than in issuing new debt, there were reduced supplies of corporate issues."
2
<PAGE> 6
MARKET OVERVIEW
Throughout the period we emphasized bonds that could not be called in by
their issuers -- which further enhanced income for the Funds.
LOOKING AHEAD
While there are have been signs of stronger economic growth, Fleet Investment
Advisors Inc. believes these signs may represent the rebound from a particularly
harsh winter and will likely be short-lived. If growth moderates in coming
months, as we expect, the GDP should improve by 2% to 2.5% in 1996, and
inflation should remain below 3%.
If investors see that the economy and inflation are under control, bond
prices should stabilize further and may even decline. For this reason, we expect
long-term bond yields to remain between 6.25% and 7% -- although they may spike
outside this range from time to time.
While waiting for greater price stability, we expect to keep sizable
investments in shorter-term issues. Once it looks like interest rates have
peaked, we will likely add longer-term securities once again. Because corporate
bonds should continue to benefit from an improving economy, we will probably
increase investments in these issues. We will also maintain our emphasis on
non-callable issues where we can.
PERFORMANCE AT-A-GLANCE
Total Returns as of April 30, 1996
Retail B Shares*
SHORT-TERM BOND FUND
Inception Date 3/4/96
[GRAPH]
- -0.77%
- -5.70%
HIGH QUALITY BOND FUND
Inception Date 3/4/96
[GRAPH]
- -3.24%
- -8.04%
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 redemptions 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.
"While there are have been signs of stronger economic growth, Fleet Investment
Advisors, Inc., believes these may represent the rebound from a particularly
harsh winter and will likely be short-lived."
3
<PAGE> 7
PORTFOLIO REVIEWS
GALAXY SHORT-TERM BOND FUND
By Perry Vieth
Portfolio Manager
[PHOTO of Perry Vieth]
In the last six months we emphasized longer-term investments in the Galaxy
Short-Term Bond Fund as interest rates were falling and shorter-term investments
as rates were rising. This, plus an increase in higher-yielding instruments,
helped the Fund earn strong returns for the six months ended April 30, 1996.
During that time, the Fund's Trust Shares had a total return of 1.50% and its
Retail A Shares had a total return of 1.35% before the deduction of the maximum
3.75% front-end sales charge. These returns compare to a return of 1.22% for the
average short-term bond fund tracked by Lipper Analytical Services. Over the
same period, the Lehman Brothers One-to-Three Year Government Bond Index
returned 2.13%. Retail B Shares had a total return of -0.77% 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.
GALAXY SHORT-TERM BOND FUND
Distribution of Total Net Assets
as of April 30, 1996
[GRAPH]
Foreign Bonds 4%
Cash Equivalents & Net Other Assets & Liabilities 17%
Asset-Backed Securities 10%
Corporate Notes and Bonds 38%
U.S. Gov't & Agency Obligations 31%
RESPONDING TO INTEREST RATE CHANGES
As the economy weakened in the final months of 1995, and interest rates
continued to fall, we remained invested in zero-coupon Treasury securities and
shorter-maturity issues. This helped the Fund make the most of rising bond
prices while maintaining a buffer against a price reversal. By emphasizing
securities that would not be called in by their issuers, we were also able to
enhance the Fund's income.
As it looked like rates might be bottoming in the first months of 1996, we
traded positions in zero-coupon securities and issues maturing in five years for
issues with two-year maturities. This helped protect the value of Fund shares as
bond prices started to fall.
As the spreads between government and corporate issues widened during this
time, we increased the Fund's position in high-quality corporates. We also
raised the Fund's investments in asset-backed securities, which offered both
excellent credit quality and attractive yields. The inclusion of these
higher-yielding securities gave the Fund enhanced yields without much additional
risk. At the end of the period the Fund's Trust Shares had a 30-day SEC yield of
5.21% and Retail A and its Retail B Shares had 30-day SEC yields of 4.75% and
4.47%, respectively.
FUTURE OPPORTUNITIES
If economic growth and inflation remain moderate, as we expect, interest rates
and bond prices should stabilize in the months to come. If it looks like bond
prices may improve, as investors see that inflation is steady, we may add
longer-term issues to the Fund's portfolio once again. This would also let us
lock in the higher yields that have become available.
Now that demand for corporates has eased and supplies are more plentiful, we
expect the yields for this sector to remain attractive relative to yields for
Treasury issues. As a result, we will probably continue to emphasize corporates
in the Fund's portfolio, as well as asset-backed securities, to boost the Fund's
yield.
TAXABLE BOND REPORT
Perry Vieth became manager of the Galaxy Short-Term Bond Fund in March of 1996.
He has managed fixed-income investments since 1986.
GALAXY SHORT-TERM BOND FUND
Growth of $10,000 investment*
[GRAPH]
<TABLE>
<CAPTION>
1991 4/30/96
------- -------
<S> <C> <C>
* Lehman Brothers One to Three Year Government Bond Index $10,000 $12,537
* Galaxy Short-Term Bond Fund - Retail A Shares $ 9,625 $11,917
* Galaxy Short-Term Bond Fund - Trust Shares $10,000 $12,432
<FN>
* 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 One to Three
Year Government 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.
</TABLE>
GALAXY INTERMEDIATE
GOVERNMENT INCOME FUND
By Jim Evans
Portfolio Manager
When falling interest rates raise the prices of bonds, prices of longer-term
issues often improve more than prices of shorter-term
4
<PAGE> 8
PORTFOLIO REVIEWS
[PHOTO of Jim Evans]
Jim Evans
issues. When interest rates are rising, prices of shorter-term issues often
suffer less than prices of longer-term issues. Structuring investments in the
Galaxy Intermediate Government Income Fund to make the most of these trends, and
looking for opportunities to enhance its yield, benefited the Fund's competitive
returns for the six months ended April 30, 1996.
During the period, the Fund's Trust Shares returned -0.02% and its Retail A
Shares had a total return of -0.17% before the deduction of the maximum 3.75%
front-end sales charge. That compares with a return of 0.31% for the average
intermediate bond fund tracked by Lipper Analytical Services, and a return of
0.97% for the Lehman Brothers Intermediate Government/Corporate Bond Index.
BOOSTING SHARE VALUE AND YIELD
Early in the period, when bond prices were rising, we emphasized longer-term
securities for added price appreciation and higher yields. During this time we
increased the Fund's investments in bonds issued by the U.S. Treasury, which
could not be called in as interest rates fell. In addition, we looked for
corporate bonds and bonds issued by U.S. government agencies whose yields were
especially attractive.
GALAXY INTERMEDIATE GOVERNMENT
INCOME FUND
Distribution of Total Net Assets
as of April 30, 1996
[GRAPH]
Corporate Bonds & Notes 22%
Asset-Backed Securities 8%
U.S. Gov't & Agency Obligations 64%
Cash Equivalents & Net Other Assets & Liabilities 6%
As interest rates rose in the first months of 1996, the high level of income
the Fund earned proved a good buffer against the decline in bond prices. We
further enhanced the Fund's income by increasing investments in mortgage-backed
securities -- which had become especially attractive as rising interest rates
reduced the rate of mortgage prepayments. We also added other asset-backed
securities to enhance the Fund's yield, as well as high-quality corporate bonds
with particularly strong yields. At the same time, we sold agencies that could
be called in by their issuers.
At the end of the period the Fund's Trust Shares had a 30-day SEC yield of
5.83% and its Retail A Shares had a 30-day SEC yield of 5.33%.
GREATER FOCUS ON YIELD
Believing that economic growth will remain moderate and inflation will stay
under control, we expect interest rates and bond prices to become more stable in
coming months. In this environment, the yield of the Galaxy Intermediate
Government Income Fund should constitute the greater part of its return.
Going forward, we will try to enhance the Fund's yield by continuing to
reduce its investments in callable agency issues and increase positions in
high-quality corporate bonds -- as we find investments that offer good value. If
further fears of inflation cause bond prices to decline, we believe an improving
economy could help corporates outperform issues in other sectors.
Jim Evans became portfolio manager of the Galaxy Intermediate Government
Income Fund in March of 1996. He has managed fixed-income investments since
1983.
GALAXY INTERMEDIATE
GOVERNMENT INCOME FUND
Growth of $10,000 investment*
[GRAPH]
<TABLE>
<CAPTION>
1988 4/30/96
------- -------
<S> <C> <C>
- - Lehman Brothers Intermediate Government/Corporate Bond Index $10,000 $18,776
- - Galaxy Intermediate Government Income Fund - Retail A Shares $ 9,625 $17,245
- - Galaxy Intermediate Government Income Fund - Trust Shares $10,000 $17,325
<FN>
* Since inception on 9/1/88. 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 Intermediate
Government/Corporate 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.
</TABLE>
GALAXY CORPORATE BOND FUND
By David Lindsay
Portfolio Manager
As bond prices and interest rates reversed course in recent months, the
structure of maturities in the Galaxy Corporate Bond Fund proved helpful in
making it more defensive. This, combined with greater attention to corporate
bonds, allowed the Fund to deliver a return for the six months ended
5
<PAGE> 9
PORTFOLIO REVIEWS
[PHOTO of David Lindsay]
David Lindsay
April 30, 1996, that was competitive with other funds in its class.
During that time, the Fund's Trust Shares returned 0.42%. That compares to
returns of 0.31% for the average intermediate investment-grade corporate bond
fund tracked by Lipper Analytical Services and 0.97% for the Lehman Brothers
Intermediate Corporate Bond Index.
MATURITY MIX
Because shorter-term issues generally lose less in price when rates are rising
than longer-term issues do, we had held shorter-term issues in the Fund at the
end of 1995 when it seemed that rates might be bottoming. To maintain a good
yield for the Fund, we balanced the shorter-term securities with longer-maturity
bonds. This "barbelled" maturity structure helped protect the value of Fund
shares as bond prices fell at the start of 1996.
We further enhanced the Fund's return during the period by emphasizing issues
with strong yields. As the new year unfolded, we added intermediate-term
corporate bonds to the Fund's portfolio. These came largely from the financial
sector, weakened by large supplies of new issues; the telecommunications sector,
where investor concerns about new business ventures had become overblown; and
the retail sector, which was depressed by slow consumer sales. In addition, we
bought bonds in the defense sector, where prices were attractive due to
unwarranted fears about the impact of cutbacks in Federal defense spending. More
recently, we added corporates issued by electric utilities and banks that had
more attractive yields.
GALAXY CORPORATE
BOND FUND
Distribution of Total Net Assets
as of April 30, 1996
Automotive 6%
Other Corporate Notes & Bonds 22%
Utilities 12%
Transportation 5%
U.S. Gov't & Agency Obligations 19%
Financial 17%
Consumer Staples 7%
Cash Equivalents & Net Other Assets & Liabilities 2%
Foreign Bonds 5%
Asset-Backed Securities 5%
The increased attention to corporate bonds also helped the Fund weather
reversals in bond prices later in the period. Although corporate prices moved
lower with the rest of the market, the decline for corporates was softened by an
improving outlook for the economy -- which raised the credit quality of
corporate issuers. We continued to increase the Fund's weighting in corporates
in the first few months of 1996. The bonds we added came from a wide range of
industry sectors, with stronger concentrations in sectors where prices had grown
most attractive -- such as electric and telephone utilities and banks.
INCREASED ATTENTION TO YIELD
Should economic growth remain moderate, helping bond prices to stabilize, we
would expect yield to play a stronger role in bond returns. For this reason, we
will probably continue to sell lower-yielding Treasury bonds and add more
corporate issues to the Fund's portfolio -- as we find attractive opportunities
to do so.
David Lindsay has managed the Galaxy Corporate Bond Fund since its inception in
December of 1994. He has managed the Galaxy Massachusetts Municipal Bond Fund
since 1993 and managed fixed-income portfolios for Fleet Investment Advisors
since 1986.
GALAXY CORPORATE BOND FUND
Growth of $10,000 investment*
[GRAPH]
1994 4/30/96
- Lehman Brothers Intermediate Corporate Bond Index $10,000 $11,073
- Galaxy Corporate Bond Fund - Trust Shares 10,000 11,433
* Since inception on 12/12/94. The Lehman Brothers Intermediate Corporate 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 HIGH QUALITY BOND FUND
By Marie Schofield
Portfolio Manager
In the last six months we adjusted the maturity structure and investment mix of
the Galaxy High Quality Bond Fund to make the most of changes in interest rates.
By reducing the average maturity of the Fund's investments and enhancing yield
where we could, the Fund weathered the recent uptick in interest rates
relatively well.
For the six months ended April 30, 1996, the Fund's Trust Shares produced a
total return of -0.40% and its Retail A Shares had a total return of -0.51%
before the deduction of the maximum 3.75% front-end sales charge. Over the same
period, the average A-rated bond fund tracked by Lipper Analytical Services had
a total return of 0.31%, and the
6
<PAGE> 10
PORTFOLIO REVIEWS
[PHOTO of Marie Schofield]
Marie Schofield
Lehman Brothers Government/ Corporate Long-Term Bond Index had a return
of -2.79%. Retail B Shares had a total return of -3.24% 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.
SHORTENING MATURITIES,
ENHANCING YIELDS
Because longer-term instruments tend to benefit most when interest rates are
falling, we emphasized these investments in the final months of 1995. To
maintain attractive income for shareholders, we also emphasized zero-coupon
bonds and bonds that could not be called in by their issuers. Since supplies of
corporate bonds were tight and supplies of Treasury bonds were growing, the
spread in yields between these two sectors was relatively narrow. This being the
case, we limited the Fund's investments in corporates to 20% of its portfolio.
When interest rates rose in the first months of 1996, reflecting growing
fears of inflation, we sold longer-maturity issues, including many zero-coupon
bonds, to protect the Fund against falling bond prices. In March and April, we
arranged the Fund's investments in a "barbelled" maturity structure. To do this,
we traded intermediate-term investments for issues maturing in one and a half to
three years and issues maturing in 20 years or more. With extra emphasis on
shorter maturities, the Fund's average maturity fell from about 10.25 years at
the end of 1995 to 7.8 years in April of 1996. Besides giving further protection
against rising interest rates, this structure helped the Fund take better
advantage of the higher yields that were available.
GALAXY HIGH QUALITY BOND FUND
Distribution of Total Net Assets
as of April 30, 1996
[GRAPH]
Cash Equivalents & Net Other Assets & Liabilities 2%
Asset-Backed Securities 8%
Foreign Bonds 2%
Corporate Bonds & Notes 33%
U.S. Gov't & Agency Obligations 55%
Most of the shorter-term issues we bought were asset-backed corporate
securities with top credit ratings -- whose yields were especially attractive
compared to Treasuries and other corproate debt. We also introduced pass-through
mortgage-backed securities issued by U.S. government agencies. As interest rates
rose, and loan prepayments slowed, mortgage-backed securities grew increasingly
attractive to investors. At the end of April, mortgage-backed securities
represented about 8% of the Fund's portfolio. Asset-backed securities and other
corporate bonds accounted for 43%, up from about 20% six months earlier.
GALAXY HIGH QUALITY BOND FUND
Growth of $10,000 investment*
<TABLE>
[GRAPH]
<CAPTION>
1990 4/30/96
---- -------
<S> <C> <C>
- Lehman Brothers Long-Term Government/Corporate Bond Index
- Galaxy High Quality Bond Fund - Retail A Shares $10,000 $16,625
- Galaxy High Quality Bond Fund - Trust Shares $ 9,625 $14,584
$10,000 $15,197
<FN>
* Since inception on 12/14/90. 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 Long-Term
Government/Corporate 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.
</TABLE>
MANAGING UNCERTAINTY
Although we expect inflation to remain stable, a strenghtening economy may
continue to cause uncertainty among investors. We believe the Galaxy High
Quality Bond Fund is well positioned for any such uncertainty. If the economy
strengthens enough to cause the Fed to raise short-term interest rates, we
expect issues with shorter and longer maturities to fare better than those with
intermediate maturities. Shorter-term instruments are generally less sensitive
to changes in rates, while longer-term issues seem to reflect a higher
inflationary bias already. With greater focus on bonds of shorter and longer
maturities, the Fund should perform comparatively well in this environment.
Marie Schofield has managed the Galaxy High Quality Bond Fund since March of
1996. She has managed fixed income investments since 1975.
- --------------------------------------------------------------------------------
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.
7
<PAGE> 11
SHAREHOLDER
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
FISSecurities, 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."
8
<PAGE> 12
THE GALAXY FUND
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
--------- ---------
<S> <C> <C>
CORPORATE NOTES AND BONDS - 38.48%
FINANCIAL - 17.00%
$ 1,000,000 American General Finance Corp.
7.70%, 11/15/97 ....................... $ 1,020,419
5,000,000 Associates Corp. of North America
5.25%, 03/30/00 ....................... 4,750,000
5,000,000 CIT Group Holdings, Inc., MTN
6.20%, 04/15/98 ....................... 4,993,750
2,500,000 Household Finance Corp.
6.45%, 03/15/00 ....................... 2,471,875
3,000,000 Norwest Corp., MTN
6.25%, 04/15/99 ....................... 2,981,250
1,000,000 Travelers Group, Inc.
6.70%, 08/01/99 ....................... 1,001,250
-----------
17,218,544
-----------
AUTOMOTIVE - 9.99%
5,000,000 Ford Motor Credit Co.
6.38%, 10/06/00 ....................... 4,918,750
5,000,000 General Motors Acceptance Corp.
8.00%, 10/01/99 ....................... 5,200,000
-----------
10,118,750
-----------
CONSUMER PRODUCTS - 9.06%
2,000,000 American Home Products
7.70%, 02/15/00 ....................... 2,065,000
1,000,000 Coca Cola Enterprises, Inc.
7.00%, 11/15/99 ....................... 1,011,250
1,000,000 Procter & Gamble Co.
6.85%, 06/01/97 ....................... 1,006,250
5,000,000 Sears Roebuck & Co., MTN
7.40%, 03/16/98 ....................... 5,092,200
-----------
9,174,700
-----------
BANKING - 2.43%
2,500,000 Bank One Milwaukee, MTN
6.35%, 03/19/01 ....................... 2,459,375
-----------
TOTAL CORPORATE NOTES AND BONDS ....... 38,971,369
-----------
(Cost $39,248,054)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 30.51%
U.S. TREASURY NOTES - 27.52%
6,000,000 7.38%, 05/15/96 ....................... 6,006,114
3,000,000 6.00%, 06/30/96 ....................... 3,005,126
5,500,000 7.00%, 09/30/96 ....................... 5,536,680
9,000,000 6.13%, 12/31/96 ....................... 9,037,800
3,000,000 6.25%, 01/31/97 ....................... 3,016,647
1,250,000 7.38%, 11/15/97 ....................... 1,275,587
-----------
27,877,954
-----------
STUDENT LOAN MARKETING ASSOCIATION - 2.00%
$ 2,000,000 7.62%, 04/18/00 ....................... $ 2,021,998
-----------
FEDERAL HOME LOAN BANK - 0.40%
400,000 6.85%, 02/25/97 ....................... 403,828
-----------
FEDERAL HOME LOAN MORTGAGE - 0.39%
409,213 7.00%, 05/01/19, Pool #D29158 ......... 395,402
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 0.20%
200,000 6.05%, 01/12/98 ....................... 199,692
-----------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS .................. 30,898,874
-----------
(Cost $30,965,627)
COMMERCIAL PAPER (A) - 14.79%
3,000,000 Bellsouth Telecommunications, Inc.
5.61%, 05/08/96 ....................... 2,996,955
3,000,000 General Re Corp.
5.33%, 05/16/96 ....................... 2,993,584
3,000,000 Metlife Funding, Inc.
4.42%, 05/26/96 ....................... 2,990,983
3,000,000 Monsanto Co.
5.61%, 05/07/96 ....................... 2,997,392
3,000,000 Norwest Financial, Inc.
5.59%, 05/01/96 ....................... 3,000,000
-----------
TOTAL COMMERCIAL PAPER ................ 14,978,914
-----------
(Cost $14,978,914)
ASSET-BACKED SECURITIES - 9.70%
3,000,000 Advanta Credit Card Master Trust II
Series 1995-F Asset Backed Certificate,
Class A 6.05%, 08/01/03 ............... 2,918,364
5,000,000 Premier Auto Trust
1996-1 Asset Backed Note, Class A-3
6.00%, 10/06/99 ....................... 4,959,750
2,000,000 Standard Credit Card Master Trust II
1993-3 Participation Certificate, Class A
5.50%, 01/07/99 ....................... 1,950,124
----------
TOTAL ASSET-BACKED SECURITIES 9,828,238
----------
(Cost $9,959,240)
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 13
THE GALAXY FUND
SHORT-TERM BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
--------- ---------
<S> <C> <C>
FOREIGN BONDS - 4.17%
$ 900,000 Export-Import Bank of Japan
Yankee Debenture
8.35%, 12/01/99 .......................$ 950,625
3,000,000 Manitoba Province Canada
Yankee Dollar
9.00%, 12/15/00 ....................... 3,273,750
-------------
TOTAL FOREIGN BONDS ................... 4,224,375
-------------
(Cost $4,265,460)
REPURCHASE AGREEMENT - 1.47%
1,486,526 Chase Securities, Inc.
5.20%, 05/01/96, Dated 04/30/96
Repurchase Price $1,486,740
(Collateralized by U.S. Treasury Bond 7.25%
Due 05/15/2016; Total Par $1,435,000;
Total Market Value $1,517,513) ........ 1,486,526
-------------
TOTAL REPURCHASE AGREEMENT ............ 1,486,526
-------------
(Cost $1,486,526)
TOTAL INVESTMENTS - 99.12% .......................... 100,388,296
-------------
(Cost $100,903,821)
NET OTHER ASSETS AND LIABILITIES - 0.88% ............ 889,724
-------------
NET ASSETS - 100.00% ................................$ 101,278,020
=============
</TABLE>
- --------------------------------------------------------------------------------
(A) Annualized yield at time of purchase.
MTN Medium Term Note
See Notes to Financial Statements.
10
<PAGE> 14
THE GALAXY FUND
INTERMEDIATE GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
--------- ---------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 63.54%
U.S. TREASURY NOTES - 25.96%
$10,000,000 5.25%, 12/31/97 ..................... $ 9,887,990
10,000,000 6.13%, 05/15/98 ..................... 10,013,790
12,500,000 6.88%, 03/31/00 ..................... 12,719,113
10,000,000 6.25%, 05/31/00 ..................... 9,956,690
17,500,000 5.50%, 12/31/00 ..................... 16,864,558
10,000,000 6.38%, 08/15/02 ..................... 9,919,800
10,000,000 5.88%, 02/15/04 ..................... 9,533,490
-------------
78,895,431
-------------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 18.53%
15,093,000 7.95%, 07/15/06 ..................... 15,394,830
6,383,825 7.50%, 10/01/09, Pool #E62691 ....... 6,433,695
14,900,001 7.00%, 12/01/10, Pool #E00407 ....... 14,751,001
20,322,441 6.50%, 03/01/11, Pool #E00420 ....... 19,731,810
-------------
56,311,336
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 15.45%
13,953,990 5.50%, 03/01/03, Pool #25021 ........ 13,247,569
12,000,000 8.42%, 10/20/04, MTN ................ 12,221,880
4,000,000 7.50%, 10/25/04, REMIC .............. 4,061,592
10,000,000 8.00%, 04/13/05 ..................... 10,227,890
7,615,392 6.00%, 10/01/09, Pool #303344 ....... 7,215,584
-------------
46,974,515
-------------
U.S. GOVERNMENT BACKED BONDS - 3.60%
1,000,000 Guaranteed Trade Trust, CMO
1993-A, Trade Certificates, Class A
4.86%, 04/01/98 ..................... 989,314
10,000,000 Small Business Administration
Participation Certificates,
Series SBIC-PS 1995-10 B
7.25%, 05/10/05 ..................... 9,962,499
-------------
10,951,813
-------------
TOTAL U.S. GOVERNMENT AND
AGENCY OBLIGATIONS .................. 193,133,095
-------------
(Cost $195,029,319)
CORPORATE NOTES AND BONDS - 22.32%
FINANCIAL - 14.68%
$ 7,500,000 Associates Corp. N.A.
6.00%, 03/15/99 ..................... $ 7,406,250
5,650,000 CIT Group Holdings, Inc., MTN
6.20%, 04/15/98 ..................... 5,642,938
5,000,000 Ford Motor Credit Co.
6.25%, 11/08/00 ..................... 4,893,750
5,000,000 Ford Motor Credit Co.
5.75%, 01/25/01 ..................... 4,781,250
6,000,000 General Motors Acceptance Corp.
7.13%, 06/01/99 ..................... 6,090,000
6,000,000 Household Finance Corp.
6.38%, 06/30/00 ..................... 5,895,000
5,000,000 IBM Credit Corp., MTN
5.86%, 07/28/98 ..................... 4,943,750
5,000,000 Norwest Corp., MTN
6.25%, 04/15/99 ..................... 4,968,750
-------------
44,621,688
-------------
BANKING - 7.39%
7,500,000 Bank One Milwaukee,
National Association, MTN
6.35%, 03/19/01 ..................... 7,378,125
7,550,000 Branch Banking & Trust Co.
5.70%, 02/01/01 ..................... 7,219,688
8,000,000 NationsBank Texas, National
Association, MTN
6.35%, 03/15/01 ..................... 7,870,000
-------------
22,467,813
-------------
CONSUMER STAPLES - 0.25%
750,000 Sears Roebuck & Co., MTN
8.98%, 07/11/96 ..................... 753,750
-------------
TOTAL CORPORATE NOTES AND BONDS ..... 67,843,251
-------------
(Cost $68,045,365)
</TABLE>
See Notes to Financial Statements.
11
<PAGE> 15
THE GALAXY FUND
INTERMEDIATE GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
--------- ---------
<S> <C> <C>
ASSET-BACKED SECURITIES - 8.09%
$ 5,000,000 First Deposit Master Trust
Series 1995-2, Class A
6.05%, 08/15/02 ......................... $ 4,980,250
5,000,000 Premier Auto Trust
Series 1996-1, Class A-3
6.00%, 10/06/99 ......................... 4,959,750
5,000,000 Signet Credit Card Master Trust
1993-1 Credit Card Participation
Certificate,
Class A
5.20%, 02/15/02 ......................... 4,859,370
5,000,000 Standard Credit Card Master Trust I
Series 1993-3 Participation Certificate,
Class A
5.50%, 01/07/99 ......................... 4,875,310
5,000,000 Standard Credit Card Master Trust I
Series 1995-10 Participation Certificate,
Class A
5.90%, 02/07/01 ......................... 4,927,575
-------------
TOTAL ASSET-BACKED SECURITIES ........... 24,602,255
(Cost $24,711,896)
REPURCHASE AGREEMENT - 5.37%
16,324,360 Chase Securities, Inc.
5.20%, 05/01/96, Dated 04/30/96
Repurchase Price $16,326,718
(Collateralized by U.S. Treasury Bond 7.25%
Due 05/15/2016; Total Par Value $15,755,000;
Total Market Value $16,660,913) ......... 16,324,360
-------------
TOTAL REPURCHASE AGREEMENT .............. 16,324,360
(Cost $16,324,360)
TOTAL INVESTMENTS - 99.32% ........................... 301,902,961
(Cost $304,110,940)
NET OTHER ASSETS AND LIABILITIES - 0.68% ............. 2,053,673
-------------
NET ASSETS - 100.00% ................................. $ 303,956,634
=============
</TABLE>
- --------------------------------------------------------------------------------
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
See Notes to Financial Statements.
12
<PAGE> 16
THE GALAXY FUND
CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
----------- ---------
<S> <C> <C>
CORPORATE NOTES AND BONDS - 69.19%
FINANCIAL - 17.03%
$ 750,000 American Express Co.
8.50%, 08/15/01 .......................... $ 806,250
1,000,000 American Express Credit Corp.
6.13%, 11/15/01 .......................... 973,750
300,000 American General Financial Corp.
5.80%, 04/01/97 .......................... 300,453
600,000 Ameritech Capital Funding
7.50%, 04/01/05 .......................... 614,250
100,000 Aristar, Inc.
6.30%, 07/15/00 .......................... 98,125
300,000 Associates Corp. of North America
8.38%, 06/01/96 .......................... 300,621
750,000 Associates Corp. of North America
8.38%, 01/15/98 .......................... 775,313
300,000 Chase Manhattan Corp.
7.88%, 01/15/97 .......................... 303,000
1,000,000 Chase Manhattan Corp.
6.63%, 01/15/98 .......................... 1,005,000
300,000 Chrysler Building New York, Inc.
9.13%, 05/01/99 .......................... 321,000
1,000,000 CIT Group Holdings, Inc., MTN
6.20%, 04/15/98 .......................... 998,750
300,000 Commercial Credit Group, Inc.
8.70%, 06/15/09 .......................... 334,125
1,000,000 Commercial Credit Group, Inc., Debenture
9.60%, 05/15/99 .......................... 1,081,250
500,000 Dean Witter Discover & Co.
6.75%, 08/15/00 .......................... 500,000
600,000 Dow Capital BV, Debenture
9.00%, 05/15/10 .......................... 669,000
600,000 Fletcher Challenge Financial USA, Inc.
9.80%, 06/15/98 .......................... 639,750
350,000 Great Western Financial Corp.
6.13%, 06/15/98 .......................... 348,250
525,000 Great Western Financial Corp.
6.38%, 07/01/00 .......................... 516,469
300,000 Household Finance Corp.
7.50%, 03/15/97 .......................... 304,752
1,000,000 Household Finance Corp.
8.95%, 09/15/99 .......................... 1,070,000
1,000,000 International Lease Finance Corp.
6.13%, 11/01/99 .......................... 983,750
1,000,000 Norwest Financial, Inc.
6.88%, 06/15/00 .......................... 1,005,000
600,000 NZI Capital Corp.
8.25%, 03/15/97 .......................... 604,217
300,000 Paccar Financial Corp., MTN
5.12%, 03/10/97 .......................... 297,261
300,000 Security Pacific Corp.
7.75%, 12/01/96 .......................... 302,250
600,000 Standard Credit Card Trust
9.50%, 07/10/98 .......................... 623,041
250,000 Textron Financial Corp. MTN
9.45%, 04/10/01 .......................... 275,000
750,000 Travelers Group, Inc.
6.70%, 08/01/99 .......................... 750,938
300,000 Travelers Group, Inc.
6.13%, 06/15/00 .......................... 291,000
FINANCIAL (CONTINUED)
$ 250,000 Travelers Group, Inc.
6.63%, 09/15/05 .......................... $ 239,688
1,000,000 Travelers Group, Inc.
6.88%, 06/01/25 .......................... 976,250
620,000 United States Leasing International, Inc.
8.75%, 12/01/01 .......................... 673,475
180,000 USL Capital Corp.
8.13%, 02/15/00 .......................... 187,650
600,000 US West Financial Services, Inc., MTN
9.45%, 09/30/97 .......................... 630,563
-----------
19,800,191
-----------
UTILITIES - 12.30%
500,000 Alabama Power Co.
6.38%, 08/01/99 .......................... 496,250
300,000 Baltimore Gas & Electric Co.
8.40%, 10/15/99 .......................... 315,750
1,000,000 Baltimore Gas & Electric Co.
8.38%, 08/15/01 .......................... 1,070,000
1,000,000 Cincinnati Gas & Electric Co.
5.80%, 02/15/99 .......................... 980,000
300,000 Consumers Power Co.
8.75%, 02/15/98 .......................... 311,250
1,080,000 Cox Communications, Inc.
6.38%, 06/15/00 .......................... 1,063,800
1,000,000 Florida Power & Light Co.
5.50%, 07/01/99 .......................... 971,250
455,000 GTE California, Inc.
6.75%, 03/15/04 .......................... 445,900
350,000 GTE Corp.
9.38%, 12/01/00 .......................... 382,375
500,000 GTE Florida, Inc.
6.25%, 11/15/05 .......................... 467,500
400,000 GTE South, Inc., Series B, Debenture
7.25%, 08/01/02 .......................... 408,000
1,500,000 GTE Southwest, Inc.
6.00%, 01/15/06 .......................... 1,385,625
600,000 Hydro-Quebec
11.75%, 02/01/12 ......................... 813,000
150,000 Kansas Gas & Electric Co.
6.50%, 08/01/05 .......................... 142,688
300,000 Northern Indiana Public Service Co.
7.50%, 04/01/02 .......................... 303,750
100,000 Orange & Rockland Utilities, Inc.
9.38%, 03/15/00 .......................... 108,375
300,000 Orange & Rockland Utilities, Inc., Debenture
6.50%, 10/15/97 .......................... 301,125
1,000,000 Pacific Bell
6.25%, 03/01/05 .......................... 947,500
180,000 Peco Energy Corp.
9.25%, 10/01/99 .......................... 193,950
250,000 Potomac Electric Power Co., MTN
6.72%, 05/28/97 .......................... 251,250
200,000 Public Service Electric & Gas Co., Series II
7.63%, 02/01/00 .......................... 205,000
365,000 Public Service Electric & Gas Co., Series KK
6.88%, 06/01/97 .......................... 367,281
300,000 Sprint Corp.
9.75%, 04/01/00 .......................... 328,125
</TABLE>
See Notes to Financial Statements
13
<PAGE> 17
THE GALAXY FUND
CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS(CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
----------- ---------
<S> <C> <C>
UTILITIES (CONTINUED)
$ 250,000 Unicom Corp.
9.38%, 02/15/00 .......................... $ 268,125
1,000,000 US West Communications, Inc.
6.63%, 09/15/05 .......................... 968,750
500,000 Virginia Electric & Power Co.
6.25%, 08/01/98 .......................... 499,375
300,000 Virginia Electric & Power Co., Series 1992 D
7.63%, 07/01/07 .......................... 309,750
-----------
14,305,744
-----------
AUTOMOTIVE - 6.09%
150,000 Chrysler Financial Corp., MTN
4.99%, 02/03/97 .......................... 149,150
1,000,000 Ford Motor Credit Corp.
8.88%, 06/15/99 .......................... 1,062,500
500,000 Ford Motor Credit Corp.
6.85%, 08/15/00 .......................... 501,250
500,000 Ford Motor Credit Corp.
6.25%, 11/08/00 .......................... 489,375
500,000 General Motors Acceptance Corp.
7.75%, 04/15/97 .......................... 509,460
150,000 General Motors Acceptance Corp.
5.63%, 02/01/99 .......................... 146,438
160,000 General Motors Acceptance Corp.
9.38%, 04/01/00 .......................... 173,200
200,000 General Motors Acceptance Corp.
9.63%, 05/15/00 .......................... 218,750
200,000 General Motors Acceptance Corp.
9.63%, 12/15/01 .......................... 225,500
1,300,000 General Motors Acceptance Corp.
8.88%, 06/01/10 .......................... 1,457,625
300,000 General Motors Acceptance Corp., MTN
7.75%, 12/10/96 .......................... 303,387
1,800,000 General Motors Acceptance Corp., MTN
7.50%, 06/01/99 .......................... 1,842,750
-----------
7,079,385
-----------
CONSUMER STAPLES - 6.99%
250,000 American Home Products Corp.
7.90%, 02/15/05 .......................... 262,813
300,000 Baxter International, Inc.
9.25%, 09/15/96 .......................... 303,375
150,000 Becton Dickinson & Co.
8.80%, 03/01/01 .......................... 163,313
400,000 Champion International Corp.
7.10%, 09/01/05 .......................... 392,000
1,000,000 Dillard Department Stores, Inc.
7.38%, 06/15/99 .......................... 1,020,000
2,000,000 Glaxo Wellcome, Plc
6.13%, 01/25/06 .......................... 1,858,750
1,000,000 Lilly (Eli) & Co.
7.13%, 06/01/25 .......................... 958,750
300,000 Limited, Inc.
9.13%, 02/01/01 .......................... 316,125
250,000 Penney (J.C.) & Co., Inc.
9.05%, 03/01/01 .......................... 271,875
CONSUMER STAPLES (CONTINUED)
$1,000,000 Penney (J.C.) & Co., Inc., MTN
6.38%, 09/15/00 .......................... $ 981,250
300,000 Seagram Ltd., Debenture
6.50%, 04/01/03 .......................... 290,250
1,000,000 Sears Roebuck & Co., MTN
5.21%, 02/18/97 .......................... 992,500
300,000 Sears Roebuck & Co., Series V, MTN
9.31%, 07/24/98 .......................... 318,375
-----------
8,129,376
-----------
TRANSPORTATION - 4.85%
250,000 Atchison, Topeka & Santa Fe
Railway Co., Series X
6.00%, 07/01/00 .......................... 243,125
800,000 Carnival Corp.
5.75%, 03/15/98 .......................... 790,000
500,000 Carnival Corp.
6.15%, 10/01/03 .......................... 468,125
300,000 CSX Corp.
8.40%, 08/01/96 .......................... 301,875
300,000 CSX Corp.
9.50%, 08/01/00 .......................... 330,750
200,000 Federal Express Corp.
10.00%, 04/15/99 ......................... 217,250
150,000 Hertz Corp.
6.00%, 02/01/01 .......................... 144,750
1,100,000 Lockheed Corp.
5.88%, 03/15/98 .......................... 1,087,625
500,000 Southwest Airlines Co.
9.40%, 07/01/01 .......................... 548,125
300,000 Southwest Airlines Co.
8.00%, 03/01/05 .......................... 309,750
250,000 Union Pacific Corp.
7.60%, 05/01/05 .......................... 257,188
1,000,000 Union Pacific Corp.
6.40%, 02/01/06 .......................... 936,250
-----------
5,634,813
-----------
MANUFACTURING - 3.86%
500,000 Crown Cork & Seal, Inc.
8.38%, 01/15/05 .......................... 530,000
1,000,000 International Paper Co.
7.63%, 08/01/04 .......................... 1,026,250
500,000 Loral Corp.
7.63%, 06/15/04 .......................... 508,125
1,500,000 Raytheon Co.
6.50%, 07/15/05 .......................... 1,445,625
1,000,000 Snap-On, Inc.
6.63%, 10/01/05 .......................... 973,750
-----------
4,483,750
-----------
BANKING - 3.73%
305,000 Bank of New York, Inc.
7.88%, 11/15/02 .......................... 319,106
1,000,000 Bank One Milwaukee
6.35%, 03/19/01 .......................... 983,750
</TABLE>
See Notes to Financial Statements
14
<PAGE> 18
THE GALAXY FUND
CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS(CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
----------- ---------
<S> <C> <C>
BANKING (CONTINUED)
$1,000,000 Branch Banking & Trust Co.
5.70%, 02/01/01 ..................... $ 956,250
150,000 Citicorp, MTN
8.70%, 09/24/96 ..................... 151,313
500,000 Export-Import Bank of Japan
10.13%, 10/28/97 .................... 528,125
1,000,000 National City Bank of Kentucky
6.30%, 02/15/11 ..................... 889,070
500,000 Wachovia Corp.
7.00%, 12/15/99 ..................... 506,875
-----------
4,334,489
-----------
INSURANCE - 3.02%
210,000 American General Corp.
9.63%, 07/15/00 ..................... 231,000
341,000 Chubb Corp.
8.75%, 11/15/99 ..................... 362,313
300,000 Cigna Corp.
8.00%, 09/01/96 ..................... 302,001
1,000,000 ITT Hartford Group, Inc.
6.38%, 11/01/02 ..................... 962,500
750,000 Progressive Corp., Ohio
10.00%, 12/15/00 .................... 840,938
150,000 Progressive Corp., Ohio
6.60%, 01/15/04 ..................... 144,000
300,000 Torchmark Corp.
9.63%, 05/01/98 ..................... 316,875
340,000 Transamerica Corp.
9.88%, 01/01/98 ..................... 358,700
-----------
3,518,327
-----------
OIL, GAS, AND PETROLEUM - 2.74%
300,000 Anadarko Petroleum Corp., Debenture
6.75%, 03/15/03 ..................... 292,500
500,000 Atlantic Richfield Co., Debenture
10.88%, 07/15/05 .................... 627,500
1,000,000 Burlington Resources, Inc., Debenture
6.88%, 02/15/26 ..................... 896,250
300,000 Enron Corp.
10.00%, 06/01/98 .................... 318,375
100,000 Occidental Petroleum Corp.
10.13%, 11/15/01 .................... 114,375
300,000 Phillips Petroleum Co.
9.00%, 06/01/01 ..................... 326,625
300,000 Sun Co., Inc.
7.13%, 03/15/04 ..................... 296,250
150,000 Texaco Capital, Inc.
8.65%, 01/30/98 ..................... 156,000
150,000 Unocal, Series A, MTN
9.25%, 08/02/99 ..................... 161,063
-----------
3,188,938
-----------
CONSUMER CYCLICALS - 2.33%
600,000 Armstrong World Industries, Inc.
9.75%, 04/15/08 ..................... 703,500
100,000 Comdisco, Inc.
9.75%, 01/15/97 ..................... 102,620
100,000 Comdisco, Inc.
6.50%, 06/15/00 ..................... 98,500
400,000 Eaton Corp.
7.00%, 04/01/11 ..................... 380,000
1,000,000 New York Times Co.
7.63%, 03/15/05 ..................... 1,038,750
150,000 Times Mirror Co., Debenture
7.50%, 07/01/23 ..................... 148,313
100,000 Whitman Corp.
7.50%, 08/15/01 ..................... 101,875
150,000 Whitman Corp.
6.50%, 02/01/06 ..................... 139,688
-----------
2,713,246
-----------
PROCESSED FOODS - 2.14%
1,600,000 CPC International, Inc.
6.15%, 01/15/06 ..................... 1,498,000
1,000,000 Sysco Corp.
7.00%, 05/01/06 ..................... 996,250
-----------
2,494,250
-----------
BASIC MATERIALS - 1.86%
560,000 Alcan Aluminum, Ltd.
5.88%, 04/01/00 ..................... 541,800
360,000 Reynolds Metals Co., Debenture
9.38%, 06/15/99 ..................... 386,550
1,000,000 Weyerhaeuser Co.
8.38%, 02/15/07 ..................... 1,092,500
150,000 Weyerhaeuser Co., Debenture
7.13%, 07/15/23 ..................... 143,063
-----------
2,163,913
-----------
TECHNOLOGY - 1.54%
1,500,000 International Business Machines Corp.
6.38%, 06/15/00 ..................... 1,486,875
300,000 Xerox Corp.
8.38%, 09/25/96 ..................... 302,813
-----------
1,789,688
-----------
INDUSTRIAL - 0.61%
726,000 Fischbach Corp.
4.75%, 04/01/97 ..................... 704,220
-----------
</TABLE>
See Notes to Financial Statements
15
<PAGE> 19
THE GALAXY FUND
CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS(CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
----------- ---------
<S> <C> <C>
CAPITAL GOODS - 0.10%
$ 104,000 Alco Standard Corp.
8.88%, 04/15/01 ..................... $ 111,280
-----------
TOTAL CORPORATE NOTES AND BONDS ..... 80,451,610
(Cost $81,566,853)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 18.55%
U.S. TREASURY NOTES - 7.09%
1,300,000 5.50%, 07/31/97 ..................... 1,295,697
1,800,000 6.00%, 12/31/97 ..................... 1,800,934
2,000,000 4.75%, 09/30/98 ..................... 1,939,698
1,086,000 8.88%, 11/15/98 ..................... 1,154,276
2,000,000 7.13%, 02/29/00 ..................... 2,050,998
-----------
8,241,603
-----------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 6.34%
25,903 8.00%, 01/01/99, Pool #145891 ....... 26,527
2,000,000 7.40%, 07/01/04 ..................... 2,057,580
230,002 7.50%, 11/07/07, Pool #188629 ....... 231,511
193,583 5.00%, 08/01/10, Pool #006893 ....... 176,403
2,164 12.50%, 12/01/13 , Pool #2443 ....... 2,459
317,627 8.95%, 07/25/17, REMIC .............. 317,977
4,030,648 6.00%, 11/01/23, Pool #50940 ........ 3,674,186
945,891 6.50%, 12/01/23, Pool #50946 ........ 887,955
-----------
7,374,598
-----------
U.S. TREASURY BONDS - 2.18%
2,000,000 11.63%, 11/15/02 .................... 2,532,758
-----------
FEDERAL HOME LOAN MORTGAGE
CORPORATION - 1.66%
68,167 8.75%, 08/01/01, Pool #220011 ....... 69,999
138,056 7.00%, 06/01/04, Pool #189683 ....... 133,440
137,658 7.50%, 08/01/08, Pool #181313 ....... 136,282
56,413 7.00%, 05/01/16, Pool #272046 ....... 54,527
240,581 7.00%, 02/01/17, Pool #289284 ....... 232,537
237,511 8.90%, 05/15/19, REMIC .............. 241,145
177,044 8.00%, 07/01/21, Pool #C00068 ....... 179,146
89,241 8.00%, 10/01/21, Pool #D11045 ....... 90,301
276,315 7.00%, 10/01/22, Pool #C00184 ....... 266,989
282,025 7.00%, 02/01/23, Pool #C00213 ....... 272,507
285,910 6.00%, 09/01/23, Pool #D41208 ....... 261,161
-----------
1,938,034
-----------
U.S. GOVERNMENT BACKED BONDS - 0.85%
1,000,000 Guaranteed Trade Trust CMO
1993-A, Class A
4.86%, 04/01/98 ..................... 989,300
-----------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION - 0.43%
163,220 9.00%, 09/15/04, Pool #003669 ....... 171,584
80,761 9.00%, 12/15/08, Pool #27562 ........ 84,900
237,077 8.00%, 05/15/22, Pool #319062 ....... 240,263
-----------
496,747
-----------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS ......................... 21,573,040
(Cost $21,828,855)
FOREIGN BONDS - 5.16%
1,000,000 Korea Development Bank
6.25%, 05/01/00 ..................... 978,750
300,000 Manitoba Province of Canada, Series
BM, Debenture
9.13%, 01/15/18 ..................... 353,625
300,000 Manitoba Province of Canada,
Debenture
8.80%, 01/15/20 ..................... 343,500
1,000,000 Province of Newfoundland
7.32%, 10/13/23 ..................... 932,500
3,300,000 Republic of Indonesia
7.80%, 10/15/22 ..................... 3,394,875
-----------
TOTAL FOREIGN BONDS ................. 6,003,250
(Cost $6,383,834)
ASSET-BACKED SECURITIES - 4.76%
1,000,000 Chemical Master Credit Card Trust I,
Series 1996-1, Class A
5.55%, 09/15/03 ..................... 951,288
1,800,000 Dayton Hudson Credit Card Master Trust
Series 1995-1, Class A
6.10%, 02/25/02 ..................... 1,789,380
1,000,000 Ford Credit Auto Loan Master Trust
Series 1995-1, Class A
6.50%, 08/15/02 ..................... 988,243
269,052 Ford Credit Grantor Trust
Series 1994-B, Class A
7.30%, 10/15/99 ..................... 272,274
1,574,468 Guaranteed Export Trust Certificates
Series 1993-D, Class A
5.23%, 05/15/05 ..................... 1,481,384
59,221 Rochester Community Savings Bank
Grantor Trust
5.70%, 12/15/97 ..................... 59,014
-----------
TOTAL ASSET-BACKED SECURITIES 5,541,583
(Cost $5,650,512)
</TABLE>
See Notes to Financial Statements.
16
<PAGE> 20
THE GALAXY FUND
CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS(CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
----------- ---------
<S> <C> <C>
REPURCHASE AGREEMENT - 2.40%
$2,786,304 Chase Securities, Inc.
5.20%, 05/01/96, Dated 04/30/96
Repurchase Price $2,786,706
(Collateralized by U.S. Treasury Bond 7.25%
Due 05/15/2016; Total Par Value $2,690,000;
Total Market Value $2,844,675) ........... $ 2,786,304
-------------
TOTAL REPURCHASE AGREEMENT ............... 2,786,304
(Cost $2,786,304)
TOTAL INVESTMENTS - 100.06% ............................ 116,355,787
(Cost $118,216,358)
NET OTHER ASSETS AND LIABILITIES - (0.06)% ............. (67,364)
-------------
NET ASSETS - 100.00% ................................... $ 116,288,423
=============
</TABLE>
- -----------------
MTN Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
See Notes to Financial Statements.
17
<PAGE> 21
THE GALAXY FUND
HIGH QUALITY BOND FUND
PORTFOLIO OF INVESTMENTS
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
----------- ---------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 54.84%
U.S. TREASURY BONDS - 22.53%
$5,000,000 8.38%, 08/15/08 ...................... $ 5,487,995
8,000,000 9.38%, 02/15/06 ...................... 9,523,271
1,000,000 9.25%, 02/15/16 ...................... 1,230,179
13,000,000 7.25%, 05/15/16 ...................... 13,248,027
2,000,000 9.00%, 11/15/18 ...................... 2,424,018
6,000,000 7.25%, 08/15/22 ...................... 6,112,740
-------------
38,026,230
-------------
U.S. TREASURY NOTES - 18.46%
2,000,000 5.88%, 08/15/98 ...................... 1,989,878
3,000,000 6.38%, 01/15/99 ...................... 3,014,010
3,000,000 6.38%, 07/15/99 ...................... 3,009,507
6,000,000 6.38%, 01/15/00 ...................... 6,010,014
4,000,000 7.75%, 02/15/01 ...................... 4,217,436
4,000,000 7.50%, 05/15/02 ...................... 4,199,040
5,000,000 6.50%, 05/15/05 ...................... 4,932,795
4,000,000 5.88%, 11/15/05 ...................... 3,772,676
-------------
31,145,356
-------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION - 8.20%
500,000 8.15%, 05/11/98 ...................... 518,680
6,200,000 6.50%, 12/01/02 ...................... 6,105,059
1,000,000 7.86%, 05/25/04, MTN ................. 1,015,869
2,000,000 7.85%, 09/10/04 ...................... 2,035,498
1,000,000 8.18%, 09/22/04, MTN ................. 1,013,949
3,000,000 8.50%, 08/01/05 ...................... 3,141,627
-------------
13,830,682
-------------
U.S. TREASURY STRIP (A) - 4.32%
8,500,000 5.16%, 11/15/98, Interest (B) ........ 7,286,540
-------------
U.S. GOVERNMENT BACKED BONDS - 1.33%
500,000 Farm Credit System Financial
Assistance Corp
9.45%, 11/21/03. ..................... 534,375
1,800,000 Israel Aid
5.45%, 02/15/01 ...................... 1,716,750
-------------
2,251,125
-------------
TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS ......................... 92,539,933
(Cost $93,804,935) -------------
CORPORATE NOTES AND BONDS - 32.97%
FINANCIAL - 23.19%
4,000,000 Associates Corp. of North America
6.00%, 03/15/99 ...................... 3,950,000
2,000,000 Associates Corp. of North America, MTN
7.40%, 05/03/02 ...................... 2,050,000
4,000,000 Bank One Milwaukee,
National Association, MTN
6.35%, 03/19/01 ...................... 3,935,000
3,000,000 Barclays North America Capital Corp.
9.75%, 05/15/21 ...................... 3,427,500
200,000 Chubb Corp., Debenture
8.75%, 11/15/99 ...................... 212,500
4,520,000 CIT Group Holdings, Inc. MTN
6.20%, 04/15/98 ...................... 4,514,350
550,000 Ford Capital BV
9.50%, 06/01/10 ...................... 638,000
250,000 General Electric Capital Corp.
8.30%, 09/20/09 ...................... 275,000
1,000,000 General Electric Capital Corp., MTN
8.13%, 02/01/99 ...................... 1,042,500
2,500,000 National Westminster Bancorp
Subordinated Note
9.38%, 11/15/03 ...................... 2,834,375
3,000,000 Norwest Corp., MTN
7.65%, 03/15/05 ...................... 3,090,000
3,000,000 Norwest Financial, Inc.
8.50%, 08/15/98 ...................... 3,138,750
4,500,000 Paccar Financial Corp., MTN
6.06%, 03/15/99 ...................... 4,443,750
5,500,000 Wachovia Bank, MTN
7.00%, 05/12/99 ...................... 5,575,625
-------------
39,127,350
-------------
CONSUMER STAPLES - 7.15%
2,500,000 Anheuser Busch Cos.
6.90%, 10/01/02 ...................... 2,506,250
3,600,000 Coca Cola Enterprises, Inc.
7.00%, 11/15/99 ...................... 3,640,500
2,500,000 duPont (E.I.) deNemours & Co.
8.25%, 01/15/22 ...................... 2,550,000
250,000 Procter & Gamble Co.
8.50%, 08/10/09 ...................... 280,000
3,000,000 Sara Lee Corp., MTN
7.40%, 03/22/02 ...................... 3,090,000
-------------
12,066,750
-------------
TECHNOLOGY - 2.63%
2,500,000 International Business Machines Corp.
7.25%, 11/01/02 ...................... 2,550,000
1,750,000 International Business Machines Corp.
8.38%, 11/01/19 ...................... 1,896,563
-------------
4,446,563
-------------
TOTAL CORPORATE NOTES AND BONDS ...... 55,640,663
(Cost $54,648,473)
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 22
THE GALAXY FUND
HIGH QUALITY BOND FUND
PORTFOLIO OF INVESTMENTS(CONTINUED)
APRIL 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
PAR VALUE (NOTE 2)
----------- ---------
<S> <C> <C>
ASSET-BACKED SECURITIES - 8.18%
$5,388,779 Banc One Auto Grantor Trust
1996-A Certificate, Class A
6.10%, 10/15/02 ....................... $ 5,374,465
5,500,000 Discover Card Trust
1993-A Credit Card Pass Thru
Certificate, Class A
6.25%, 08/16/00 ....................... 5,487,708
3,000,000 Sears Credit Account Master Trust II
1996-1 Certificate, Class A
6.20%, 02/16/06 ....................... 2,935,629
-------------
TOTAL ASSET-BACKED SECURITIES ......... 13,797,802
(Cost $13,843,046) -------------
FOREIGN BOND - 1.82%
3,000,000 Province of Ontario
7.38%, 01/27/03 ....................... 3,067,500
-------------
TOTAL FOREIGN BOND .................... 3,067,500
(Cost $2,994,750) -------------
REPURCHASE AGREEMENT - 1.28%
2,152,989 Chase Securities, Inc.
5.20%, 05/01/96, Dated 04/30/96
Repurchase Price $2,153,300
(Collateralized by U. S.
Treasury Bond 7.25%
Due 05/15/2016; Total
Par Value $2,080,000;
Total Market Value $2,199,600 ......... 2,152,989
-------------
TOTAL REPURCHASE AGREEMENT ............ 2,152,989
(Cost $2,152,989) -------------
TOTAL INVESTMENTS - 99.09% ........................ 167,198,887
(Cost $167,444,193) -------------
NET OTHER ASSETS AND LIABILITIES - 0.91% .......... 1,530,730
-------------
NET ASSETS - 100.00% .............................. $ 168,729,617
=============
</TABLE>
- ----------------------------
(A) Annualized yield at time of purchase.
(B) Stripped securities represent the splitting of cash flows into interest
and principal. Holders, as indicated, are entitled to that portion of
the payments representing interest only or principal only.
MTN Medium Term Note
See Notes to Financial Statements.
19
<PAGE> 23
THE GALAXY FUND
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1996 (unaudited)
<TABLE>
<CAPTION>
INTERMEDIATE
SHORT-TERM GOVERNMENT CORPORATE HIGH QUALITY
BOND FUND INCOME FUND BOND FUND BOND FUND
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments (Note 2)
Investments at cost .......................... $ 99,417,295 $ 287,786,580 $ 115,430,054 $ 165,291,204
Repurchase agreements ........................ 1,486,526 16,324,360 2,786,304 2,152,989
Net unrealized appreciation (depreciation) ... (515,525) (2,207,979) (1,860,571) (245,306)
------------- ------------- ------------- -------------
Total investments at value ................ 100,388,296 301,902,961 116,355,787 167,198,887
Cash ............................................ 14,585 296,394 12,607 17,435
Receivable for investments sold ................. 4,969,116 7,554,421 216,943 5,007,031
Receivable for shares sold ...................... 338,355 288,228 232,194 160,689
Interest and dividend receivables ............... 1,103,997 3,142,503 1,956,502 2,909,442
Receivable from Investment Adviser (Note 4) ..... 48,927 1,146 3,052 3,063
Deferred organizational expense (Note 2) ........ 2,434 -- 14,248 880
------------- ------------- ------------- -------------
Total Assets .............................. 106,865,710 313,185,653 118,791,333 175,297,427
------------- ------------- ------------- -------------
LIABILITIES:
Dividends payable ............................... 206,375 889,782 382,269 258,397
Payable for investments purchased ............... 5,125,089 7,708,526 1,902,720 4,990,625
Payable for shares repurchased .................. 154,844 317,737 25,469 1,145,639
Advisory fee payable (Note 3) ................... 45,355 147,194 52,979 76,372
Payable to Fleet and affiliates (Note 3) ........ 7,016 6,419 10,366 17,782
Payable to FDISG (Note 3) ....................... 9,236 56,435 17,370 32,281
Trustees' fees and expenses payable (Note 3) .... 260 2,657 9,019 1,745
Accrued expenses and other payables ............. 39,515 100,269 102,718 44,969
------------- ------------- ------------- -------------
Total Liabilities ......................... 5,587,690 9,229,019 2,502,910 6,567,810
------------- ------------- ------------- -------------
NET ASSETS ......................................... $ 101,278,020 $ 303,956,634 $ 116,288,423 $ 168,729,617
============= ============= ============= =============
NET ASSETS CONSIST OF:
Par value (Note 5) .............................. $ 10,191 $ 30,481 $ 11,196 $ 16,400
Paid-in capital in excess of par value .......... 103,676,883 328,412,186 116,628,670 172,888,916
Undistributed (overdistributed) net investment
income ........................................ 19,340 298,687 12,253 73,096
Accumulated net realized gain (loss) on
investments sold .............................. (1,912,869) (22,576,741) 1,496,875 (4,003,489)
Net unrealized appreciation (depreciation)
of investments ................................ (515,525) (2,207,979) (1,860,571) (245,306)
------------- ------------- ------------- -------------
TOTAL NET ASSETS ................................... $ 101,278,020 $ 303,956,634 $ 116,288,423 $ 168,729,617
============= ============= ============= =============
Retail A Shares:
Net Assets ...................................... $ 38,391,205 $ 86,750,281 $-- $ 30,212,836
Shares of beneficial interest outstanding ....... 3,863,060 8,699,697 -- 2,936,547
NET ASSET VALUE and redemption
price per share .............................. $ 9.94 $ 9.97 $-- $ 10.29
Sales charge - 3.75% of offering price .......... 0.39 0.39 -- 0.40
------------- ------------- ------------- -------------
Maximum offering price per share ................ $ 10.33 $ 10.36 $-- $ 10.69
============= ============= ============= =============
Retail B Shares:
Net Assets ...................................... $ 230,337 $-- $-- $ 241,745
Shares of beneficial interest outstanding ....... 23,180 -- -- 23,497
NET ASSET VALUE and offering
price per share* ............................. $ 9.94 $-- $-- $ 10.29
============= ============= ============= =============
Trust Shares:
Net Assets ...................................... $ 62,656,478 $ 217,206,353 $ 116,288,423 $ 138,275,036
Shares of beneficial interest outstanding ....... 6,304,625 21,781,578 11,195,618 13,439,680
NET ASSET VALUE, offering and redemption
price per share ............................. $ 9.94 $ 9.97 $ 10.39 $ 10.29
============= ============= ============= =============
</TABLE>
- --------------------------
*Redemption price per share is equal to the Net Asset Value per share less any
applicable contingent deferred sales charge.
See Notes to Financial Statements.
20
<PAGE> 24
THE GALAXY FUND
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED APRIL 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
INTERMEDIATE
SHORT-TERM GOVERNMENT CORPORATE HIGH QUALITY
BOND FUND INCOME FUND BOND FUND BOND FUND
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2) .................................. $ 2,816,509 $ 10,030,288 $ 3,592,703 $ 5,447,692
Dividends (Note 2) ................................. 157,440 458,005 110,547 97,776
------------ ------------ ------------ ------------
Total Investment Income ...................... 2,973,949 10,488,293 3,703,250 5,545,468
------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fee (Note 3) ................... 360,284 1,147,790 403,587 631,090
Administration fee (Note 3) ........................ 40,983 130,642 45,854 71,858
Custodian fee ...................................... 8,038 11,577 8,788 11,844
Fund accounting fee (Note 3) ....................... 24,825 32,869 17,313 28,547
Legal fee (Note 3) ................................. 1,673 7,287 1,107 3,804
Audit fee .......................................... 5,955 13,796 4,926 7,265
Transfer agent fee (Note 3) ........................ 34,751 103,046 38,308 115,386
12b-1 fee (Note 3) ................................. 72 -- -- 117
Shareholder servicing fee (Note 3) ................. 28,191 60,627 -- 23,676
Trustees' fees and expenses (Note 3) ............... 917 4,019 519 2,177
Amortization of organization costs (Note 2) ........ 1,815 -- 1,964 785
Reports to shareholders ............................ 17,414 26,560 1,279 6,823
Registration fees .................................. 19,948 18,953 23,142 20,167
Insurance .......................................... 1,467 4,707 47 2,194
Miscellaneous ...................................... 2,024 7,614 784 1,969
------------ ------------ ------------ ------------
Total Expenses before reimbursement/waiver ... 548,357 1,569,487 547,618 927,702
Less: Reimbursement/Waiver (Note 4) .......... (111,488) (306,077) (91,391) (170,992)
------------ ------------ ------------ ------------
Total Expenses net of reimbursement/waiver ... 436,869 1,263,410 456,227 756,710
------------ ------------ ------------ ------------
NET INVESTMENT INCOME ................................. 2,537,080 9,224,883 3,247,023 4,788,758
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN(LOSS) ON INVESTMENTS (Note 2):
Net realized gain (loss) on investments sold ....... 637,221 (636,479) 1,497,042 1,587,491
Net change in unrealized appreciation (depreciation)
of investments .................................. (1,590,126) (8,053,662) (4,069,966) (7,280,189)
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS .............................. (952,905) (8,690,141) (2,572,924) (5,692,698)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS ................... $ 1,584,175 $ 534,742 $ 674,099 $ (903,940)
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
21
<PAGE> 25
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE GOVERNMENT
SHORT-TERM BOND FUND INCOME 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 .......................... $ 66,629,823 $ 73,904,105 $ 265,595,212 $ 306,813,102
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income ................................... 2,537,080 3,704,119 9,224,883 17,527,248
Net realized gain (loss) on investments sold ............ 637,221 (421,060) (636,479) (2,953,843)
Net change in unrealized appreciation (depreciation)
of investments ....................................... (1,590,126) 2,480,497 (8,053,662) 19,422,871
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations ...................................... 1,584,175 5,763,556 534,742 33,996,276
------------- ------------- ------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
RETAIL A SHARES:
Net investment income ................................... (961,299) (1,667,283) (2,552,471) (4,989,851)
------------- ------------- ------------- -------------
Total Dividends ...................................... (961,299) (1,667,283) (2,552,471) (4,989,851)
------------- ------------- ------------- -------------
RETAIL B SHARES:
Net investment income ................................... (566) -- -- --
------------- ------------- ------------- -------------
Total Dividends ...................................... (566) -- -- --
------------- ------------- ------------- -------------
TRUST SHARES:
Net investment income ................................... (1,575,215) (2,036,836) (6,672,412) (12,537,397)
------------- ------------- ------------- -------------
Total Dividends ...................................... (1,575,215) (2,036,836) (6,672,412) (12,537,397)
------------- ------------- ------------- -------------
Total Dividends to shareholders ......................... (2,537,080) (3,704,119) (9,224,883) (17,527,248)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS (1) ........ 35,601,102 (9,333,719) 47,051,563 (57,686,918)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets ................ 34,648,197 (7,274,282) 38,361,422 (41,217,890)
------------- ------------- ------------- -------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A) ............. $ 101,278,020 $ 66,629,823 $ 303,956,634 $ 265,595,212
============= ============= ============= =============
(A) Accumulated undistributed (overdistributed) net
investment income: ...................................... $ 19,340 $ 19,340 $ 298,687 $ 298,687
============= ============= ============= =============
</TABLE>
(1) For detail on share transactions by series, see Statements of Changes
in Net Assets - Capital Stock Activity on pages 24 and 25.
See Notes to Financial Statements.
22
<PAGE> 26
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
CORPORATE BOND FUND HIGH QUALITY BOND FUND
---------------------------------- ---------------------------------
SIX MONTHS ENDED PERIOD ENDED SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1996 OCTOBER 31, APRIL 30, 1996 OCTOBER 31,
(UNAUDITED) 1995(1) (UNAUDITED) 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD .......................... $ 37,390,970 $ -- $ 164,723,305 $ 145,429,196
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS:
Net investment income ................................... 3,247,023 2,067,947 4,788,758 9,372,737
Net realized gain (loss) on investments sold ............ 1,497,042 281,758 1,587,491 (2,232,295)
Net change in unrealized appreciation (depreciation)
of investments ....................................... (4,069,966) 2,209,395 (7,280,189) 18,291,500
------------- ------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations ...................................... 674,099 4,559,100 (903,940) 25,431,942
------------- ------------- ------------- -------------
DIVIDENDS TO SHAREHOLDERS FROM:
RETAIL A SHARES:
Net investment income .................................... -- -- (854,925) (1,631,664)
Dividends in excess of net investment income ............. -- -- -- (3,143)
------------- ------------- ------------- -------------
Total Dividends ...................................... -- -- (854,925) (1,634,807)
------------- ------------- ------------- -------------
RETAIL B SHARES:
Net investment income .................................... -- -- (1,008) --
------------- ------------- ------------- -------------
Total Dividends ...................................... -- -- (1,008) --
------------- ------------- ------------- -------------
TRUST SHARES:
Net investment income .................................... (3,247,023) (2,067,947) (3,932,825) (7,723,052)
Dividends in excess of net investment income ............. -- -- -- (14,878)
Net realized gain on investments ......................... (269,672) -- -- --
------------- ------------- ------------- -------------
Total Dividends ...................................... (3,516,695) (2,067,947) (3,932,825) (7,737,930)
------------- ------------- ------------- -------------
Total Dividends to shareholders ......................... (3,516,695) (2,067,947) (4,788,758) (9,372,737)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) FROM SHARE TRANSACTIONS(2) ......... 81,740,049 34,899,817 9,699,010 3,234,904
------------- ------------- ------------- -------------
Net increase (decrease) in net assets ................ 78,897,453 37,390,970 4,006,312 19,294,109
------------- ------------- ------------- -------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A) ............. $ 116,288,423 $ 37,390,970 $ 168,729,617 $ 164,723,305
============= ============= ============= =============
(A) Accumulated undistributed (overdistributed) net
investment income: ...................................... $ 12,253 $ 12,253 $ 73,096 $ 73,096
============= ============= ============= =============
</TABLE>
- ----------------------------------------------------
(1) The Corporate Bond Fund commenced operations on December 12, 1994.
(2) For detail on share transactions by series, see Statements of Changes
in Net Assets - Capital Stock Activity on pages 24 and 25.
See Notes to Financial Statements.
23
<PAGE> 27
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS -
CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
SHORT-TERM BOND FUND INTERMEDIATE GOVERNMENT INCOME FUND
------------------------------- -----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
APRIL 30, 1996 ENDED APRIL 30, 1996 ENDED
(UNAUDITED) OCTOBER 31, 1995 (UNAUDITED) OCTOBER 31, 1995
------------ -------------- ---------- ------------
DOLLAR AMOUNTS
RETAIL A SHARES:
<S> <C> <C> <C> <C>
Sold ....................... $ 5,747,327 $ 8,050,740 $ 7,805,304 $ 8,076,188
Issued in connection with
acquisition (Note 7) .... 7,787,792 -- 10,486,443 --
Issued to shareholders in
reinvestment of dividends 811,246 1,308,564 1,846,496 3,456,642
Repurchased ............... (7,169,580) (12,823,541) (10,500,153) (31,399,298)
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding.... $ 7,176,785 $ (3,464,237) $ 9,638,090 $(19,866,468)
============ ============ ============ ============
RETAIL B SHARES:
Sold.................... $ 230,512 $ -- N/A N/A
Issued to shareholders in
reinvestment of dividends 516 -- N/A N/A
Repurchased ............... -- -- N/A N/A
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding.... $ 231,028 $ -- N/A N/A
============ ============ ============ ============
TRUST SHARES:
Sold ...................... $ 29,707,868 $ 10,145,423 $ 18,934,544 $ 22,701,923
Issued in connection with
acquisition (Note 7) .... 30,804,627 -- 46,190,350 --
Issued to shareholders in
reinvestment of dividends 555,129 1,360,406 1,651,122 4,002,421
Repurchased ............... (32,874,335) (17,375,311) (29,362,543) (64,524,794)
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding ...... $ 28,193,289 $ (5,869,482) $ 37,413,473 $(37,820,450)
============ ============ ============ ============
SHARE ACTIVITY
RETAIL A SHARES:
Sold ...................... 588,509 809,377 795,822 804,775
Issued in connection with
acquisition (Note 7) .... 769,928 -- 1,010,018 --
Issued to shareholders in
reinvestment of dividends 80,549 132,385 180,077 346,569
Repurchased ............... (711,983) (1,305,939) (1,026,240) (3,194,928)
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding ...... 727,003 (364,177) 959,677 (2,043,584)
============ ============ ============ ============
RETAIL B SHARES:
Sold ...................... 23,128 -- N/A N/A
Issued to shareholders in
reinvestment of dividends 52 -- N/A N/A
Repurchased ............... -- -- N/A N/A
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding ...... 23,180 -- N/A N/A
============ ============ ============ ============
TRUST SHARES:
Sold ...................... 2,976,376 1,020,628 1,926,824 2,266,661
Issued in connection with
acquisition (Note 7) .... 3,042,900 -- 4,449,125 --
Issued to shareholders in
reinvestment of dividends 55,130 137,810 160,904 401,560
Repurchased ............... (3,258,320) (1,764,334) (2,854,369) (6,493,207)
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding ...... 2,816,086 (605,896) 3,682,484 (3,824,986)
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
24
<PAGE> 28
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS -
Capital Stock Activity (continued)
<TABLE>
<CAPTION>
CORPORATE BOND FUND HIGH QUALITY BOND FUND
-------------------------------------- -----------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
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 ...................... N/A N/A $ 8,040,586 $ 8,003,866
Issued to shareholders in
reinvestment of dividends N/A N/A 638,976 1,132,273
Repurchased ............... N/A N/A (7,528,838) (8,535,985)
--------------- --------------- ------------ ------------
Net increase (decrease) in
shares outstanding ...... N/A N/A $ 1,150,724 $ 600,154
=============== =============== ============ ============
RETAIL B SHARES:
Sold ...................... N/A N/A $ 243,914 $ --
Issued to shareholders in
reinvestment of dividends N/A N/A 1,017 --
Repurchased ............... N/A N/A -- --
--------------- --------------- ------------ ------------
Net increase (decrease) in
shares outstanding ...... N/A N/A $ 244,931 $ --
=============== =============== ============ ============
TRUST SHARES:
Sold ...................... $ 9,799,286 $ 39,666,165 $ 25,224,790 $ 36,501,865
Issued in connection with
acquisition (Note 7) .... 88,144,360 -- -- --
Issued to shareholders in
reinvestment of dividends 1,572,850 2,040,905 2,572,455 5,380,120
Repurchased ............... (17,776,447) (6,807,253) (19,493,890) (39,247,235)
--------------- --------------- ------------ ------------
Net increase (decrease) in
shares outstanding ...... $ 81,740,049 $ 34,899,817 $ 8,303,355 $ 2,634,750
=============== =============== ============ ============
SHARE ACTIVITY
RETAIL A SHARES:
Sold ...................... N/A N/A 752,496 788,979
Issued to shareholders in
reinvestment of dividends N/A N/A 59,990 112,202
Repurchased ............... N/A N/A (706,477) (864,201)
--------------- --------------- ------------ ------------
Net increase (decrease) in
shares outstanding ...... N/A N/A 106,009 36,980
=============== =============== ============ ============
RETAIL B SHARES:
Sold ...................... N/A N/A 23,399 --
Issued to shareholders in
reinvestment of dividends N/A N/A 98 --
Repurchased ............... N/A N/A -- --
--------------- --------------- ------------ ------------
Net increase (decrease) in
shares outstanding ...... N/A N/A 23,497 --
=============== =============== ============ ============
TRUST SHARES:
Sold ...................... 1,050,167 3,956,883 2,361,753 3,623,670
Issued in connection with
acquisition (Note 7) .... 8,188,057 -- -- --
Issued to shareholders in
reinvestment of dividends 147,420 195,224 241,473 534,027
Repurchased ............... (1,670,736) (671,397) (1,826,521) (3,943,913)
--------------- --------------- ------------ ------------
Net increase (decrease) in
shares outstanding ...... 7,714,908 3,480,710 776,705 213,784
=============== =============== ============ ============
</TABLE>
See Notes to Financial Statements.
25
<PAGE> 29
THE GALAXY FUND
SHORT-TERM 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 .................... $ 10.06 $ 9.73 $ 10.30 $ 10.09 $ 10.00
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ............................ 0.26 0.55 0.44 0.47 0.42
Net realized and unrealized gain (loss) on
investments.......................................... (0.12) 0.33 (0.51) 0.22 0.09
---------- ---------- ---------- ---------- ----------
Total from Investment Operations: ................. 0.14 0.88 (0.07) 0.69 0.51
---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income ................. (0.26) (0.55) (0.44) (0.47) (0.42)
Dividends from net realized capital gains ............ -- -- -- (0.01) --
Dividends in excess of net realized capital gains .... -- -- (0.06) -- --
---------- ---------- ---------- ---------- ----------
Total Dividends: .................................. (0.26) (0.55) (0.50) (0.48) (0.42)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value .............. (0.12) 0.33 (0.57) 0.21 0.09
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of period .......................... $ 9.94 $ 10.06 $ 9.73 $ 10.30 $ 10.09
========== ========== ========== ========== ==========
Total Return(4) ......................................... 1.35%** 9.28% (0.68)% 6.98% 5.21%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....................... $ 38,391 $ 31,542 $ 34,061 $ 85,211 $ 57,403
Ratios to average net assets:
Net investment income including reimbursement/waiver . 5.12%* 5.54% 4.43% 4.51% 5.77%*
Operating expenses including reimbursement/waiver .... 1.08%* 0.99% 0.93% 0.86% 0.90%*
Operating expenses excluding reimbursement/waiver .... 1.30%* 1.32% 1.14% 1.06% 1.20%*
Portfolio Turnover Rate ................................. 130%** 289% 233% 100% 114%**
</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>
Six months ended Years ended October 31,
-------------------------------------------
April 30, 1996 1995 1994 1993(2) 1992(2)
---------------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Retail A Shares $ 0.25 $ 0.52 $ 0.42 $ 0.45 $ 0.40
Trust Shares 0.26 0.54 0.42 0.45 0.40
Retail B Shares 0.06 -- -- -- --
</TABLE>
See Notes to Financial Statements.
26
<PAGE> 30
<TABLE>
<CAPTION>
TRUST SHARES RETAIL B SHARES
YEARS ENDED OCTOBER 31, PERIOD ENDED
SIX MONTHS ENDED
APRIL 30, 1996 --------------------------------------- APRIL 30, 1996(3)
(UNAUDITED) 1995 1994 1993(2) 1992(1)(2) (UNAUDITED)
----------- --------- ------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period ..................... $ 10.06 $ 9.73 $ 10.30 $ 10.09 $ 10.00 $ 10.09
------- ------- ------ ------- ------- -------
Income from Investment Operations:
Net investment income (A) .............................. 0.27 0.57 0.44 0.47 0.42 0.07
Net realized and unrealized gain (loss) on investments.. (0.12) 0.33 (0.51) 0.22 0.09 (0.15)
------- ------- ------- ------- ------- -------
Total from Investment Operations: ................... 0.15 0.90 (0.07) 0.69 0.51 (0.08)
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income ................... (0.27) (0.57) (0.44) (0.47) (0.42) (0.07)
Dividends from net realized capital gains .............. -- -- -- (0.01) -- --
Dividends in excess of net realized capital gains ...... -- -- (0.06) -- -- --
------- ------- ------- ------- ------- -------
Total Dividends: .................................... (0.27) (0.57) (0.50) (0.48) (0.42) (0.07)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value ............... (0.12) 0.33 (0.57) 0.21 0.09 (0.15)
------- ------- ------- ------- ------- -------
Net Asset Value, End of period ........................... $ 9.94 $ 10.06 $ 9.73 $ 10.30 $ 10.09 $ 9.94
======= ======= ======= ======= ======= =======
Total Return(4) .......................................... 1.50%** 9.55% (0.66)% 6.98% 5.21%** (0.77)%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ........................ $62,656 $35,088 $39,843 $85,211 $57,403 $ 230
Ratios to average net assets:
Net investment income including reimbursement/waiver ... 5.39%* 5.79% 4.45% 4.51% 5.77%* 5.12%*
Operating expenses including reimbursement/waiver ...... 0.80%* 0.74% 0.91% 0.86% 0.90%* 1.72%*
Operating expenses excluding reimbursement/waiver ...... 1.04%* 1.02% 1.11% 1.06% 1.20%* 1.94%*
Portfolio Turnover Rate .................................. 130%** 289% 233% 100% 114%** 130%**
</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>
Six months ended Years ended October 31,
-------------------------------------------
April 30, 1996 1995 1994 1993(2) 1992(2)
---------------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
Retail A Shares $ 0.25 $ 0.52 $ 0.42 $ 0.45 $ 0.40
Trust Shares 0.26 0.54 0.42 0.45 0.40
Retail B Shares 0.06 -- -- -- --
</TABLE>
See Notes to Financial Statements.
27
<PAGE> 31
THE GALAXY FUND
INTERMEDIATE GOVERNMENT INCOME 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) 1992(1) 1991(1)
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period .... $ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46 $ 9.73
----------- ----------- ----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income (A) ............. 0.30 0.61 0.57 0.65 0.71 0.73
Net realized and unrealized gain (loss)
on investments ..................... (0.31) 0.60 (1.03) 0.10 0.40 0.71
----------- ----------- ----------- ----------- ----------- -----------
Total from Investment Operations: (0.01) 1.21 (0.46) 0.75 1.11 1.44
----------- ----------- ----------- ----------- ----------- -----------
Less Dividends:
Dividends from net investment income .. (0.30) (0.61) (0.56) (0.64) (0.74) (0.71)
Dividends in excess of net
investment income .................. -- -- (0.01) (0.03) -- --
Dividends from net realized capital
gains .............................. -- -- -- (0.19) -- --
Dividends in excess of
net realized capital gains ......... -- -- (0.01) -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Dividends: ................ (0.30) (0.61) (0.58) (0.86) (0.74) (0.71)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net asset
value .............................. (0.31) 0.60 (1.04) (0.11) 0.37 0.73
----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value, End of period .......... $ 9.97 $ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46
=========== =========== =========== =========== =========== ===========
Total Return (2) ........................ (0.17)%** 12.85% (4.42)% 7.06% 10.95% 15.35%
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....... $ 86,750 $ 79,558 $ 94,669 $ 447,359 $ 199,135 $ 99,942
Ratios to average net assets:
Net investment income including
reimbursement/waiver ............... 5.82%* 6.10% 5.58% 6.03% 6.52% 7.25%
Operating expenses including
reimbursement/waiver ............... 1.03%* 1.02% 0.78% 0.80% 0.80% 0.96%
Operating expenses excluding
reimbursement/waiver ............... 1.23%* 1.26% 0.99% 1.00% 0.94% 0.96%
Portfolio Turnover ...................... 132%** 145% 124% 153% 103% 150%
</TABLE>
- ----------------------------------
(1) 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.
(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 was as follows:
<TABLE>
<CAPTION>
Six months ended Years ended October 31,
-----------------------------------------------------------
April 30, 1996 1995 1994 1993(1) 1992(1) 1991(1)
---------------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Retail A Shares $ 0.29 $ 0.52 $ 0.42 $ 0.45 $ 0.40 $ 0.73
Trust Shares 0.30 0.54 0.42 0.45 0.40 0.73
</TABLE>
See Notes to Financial Statements.
28
<PAGE> 32
<TABLE>
<CAPTION>
TRUST SHARES
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1996 -----------------------------------------------------------------
(UNAUDITED) 1995 1994 1993(1) 1992(1) 1991(1)
------------ ----------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period .... $ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46 $ 9.73
----------- ----------- ---------- --------- --------- ---------
Income from Investment Operations:
Net investment income (A) ............. 0.31 0.64 0.57 0.65 0.71 0.73
Net realized and unrealized gain (loss)
on investments ..................... (0.31) 0.60 (1.03) 0.10 0.40 0.71
---------- ----------- ---------- --------- --------- ---------
Total from Investment Operations: -- 1.24 (0.46) 0.75 1.11 1.44
---------- ----------- ---------- --------- --------- ---------
Less Dividends:
Dividends from net investment income .. (0.31) (0.64) (0.56) (0.64) (0.74) (0.71)
Dividends in excess of net
investment income .................. -- -- (0.01) (0.03) -- --
Dividends from net realized capital
gains .............................. -- -- -- (0.19) -- --
Dividends in excess of
net realized capital gains ......... -- -- (0.01) -- -- --
---------- ----------- ---------- --------- --------- ---------
Total Dividends: ................ (0.31) (0.64) (0.58) (0.86) (0.74) (0.71)
---------- ----------- ---------- --------- --------- ---------
Net increase (decrease) in net asset (0.31) 0.60 (1.04) (0.11) 0.37 0.73
value .............................. ---------- ----------- ---------- --------- --------- ---------
$ 9.97 $ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46
Net Asset Value, End of period .......... ========== =========== =========== ========= ========= =========
Total Return (2) ........................ (0.02)%** 13.18% (4.39)% 7.06% 10.95% 15.35%
Ratios/Supplemental Data:
Net Assets, End of period (000's) ....... $ 217,206 $ 186,037 $ 212,144 $ 447,359 $ 199,135 $ 99,942
Ratios to average net assets:
Net investment income including
reimbursement/waiver ............... 6.11%* 6.39% 5.61% 6.03% 6.52% 7.25%
Operating expenses including
reimbursement/waiver ............... 0.74%* 0.73% 0.75% 0.80% 0.80% 0.96%
Operating expenses excluding
reimbursement/waiver ............... 0.94%* 0.94% 0.95% 1.00% 0.94% 0.96%
Portfolio Turnover ...................... 132%** 145% 124% 153% 103% 150%
</TABLE>
- ----------------------------------
(1) 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.
(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 was as follows:
<TABLE>
<CAPTION>
Years ended October 31,
Six months ended ------------------------------------------------------
April 30, 1996 1995 1994 1993(1) 1992(1) 1991(1)
---------------- --------- --------- --------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Retail A Shares $ 0.29 $ 0.52 $ 0.42 $ 0.45 $ 0.40 $ 0.73
Trust Shares 0.30 0.54 0.42 0.45 0.40 0.73
</TABLE>
See Notes to Financial Statements.
29
<PAGE> 33
THE GALAXY FUND
CORPORATE BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD.
TRUST SHARES
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1996 PERIOD ENDED
(UNAUDITED) OCTOBER 31, 1995(1)
----------- -------------------
<S> <C> <C>
Net Asset Value, Beginning of period ...................... $ 10.74 $ 10.00
----------- -----------
Income from Investment Operations:
Net investment income (A) .............................. 0.32 0.61
Net realized and unrealized gain (loss) on investments.. (0.27) 0.74
----------- -----------
Total from Investment Operations: ................... 0.05 1.35
----------- -----------
Less Dividends:
Dividends from net investment income ................... (0.32) (0.61)
Dividends from net realized capital gains .............. (0.08) --
----------- -----------
Total Dividends: .................................... (0.40) (0.61)
----------- -----------
Net increase (decrease) in net asset value ................ (0.35) 0.74
----------- -----------
Net Asset Value, End of period ............................ $ 10.39 $ 10.74
=========== ===========
Total Return .............................................. 0.42%** 13.85%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ......................... $ 116,288 $ 37,391
Ratios to average net assets:
Net investment income including
reimbursement/waiver ................................ 6.03%* 6.61%*
Operating expenses including
reimbursement/waiver ................................ 0.85%* 1.06%*
Operating expenses excluding
reimbursement/waiver ................................ 1.02%* 1.26%*
Portfolio Turnover Rate ................................... 44%** 41%**
</TABLE>
- --------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 12, 1994.
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator for the period ended April
30, 1996 and the period ended October 31, 1995 were $0.31 and $0.57,
respectively.
See Notes to Financial Statements.
30
<PAGE> 34
THE GALAXY FUND
HIGH QUALITY 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(2) 1991(1)(2)
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period ....... $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35 $ 10.00
--------- --------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income (A) ............... 0.29 0.62 0.64 0.66 0.68 0.64
Net realized and unrealized gain (loss)
on investments ....................... (0.34) 1.09 (1.56) 0.93 0.36 0.33
--------- --------- --------- --------- --------- ---------
Total from Investment Operations:.. (0.05) 1.71 (0.92) 1.59 1.04 0.97
--------- --------- --------- --------- --------- ---------
Less Dividends:
Dividends from net investment income .... (0.29) (0.62) (0.64) (0.66) (0.71) (0.62)
Dividends from net realized capital
gains ................................ -- -- -- (0.16) (0.08) --
Dividends in excess of
net realized capital gains ........... -- -- (0.27) -- -- --
--------- --------- --------- --------- --------- ---------
Total Dividends: .................. (0.29) (0.62) (0.91) (0.82) (0.79) (0.62)
--------- --------- --------- --------- --------- ---------
Net increase (decrease) in net asset
value ................................. (0.34) 1.09 (1.83) 0.77 0.25 0.35
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of period ............ $ 10.29 $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35
========= ========= ========= ========= ========= =========
Total Return (3) .......................... (0.51)%** 18.46% (8.41)% 15.63% 10.32% 10.04%**
Ratios/Supplemental Data:
Net Assets, End of period (000's) ......... $ 30,213 $ 30,093 $ 26,654 $ 162,594 $ 108,774 $ 57,580
Ratios to average net assets:
Net investment income including
reimbursement/waiver ................. 5.51%* 6.16% 6.25% 5.98% 6.55% 7.25%*
Operating expenses including
reimbursement/waiver ................. 1.08%* 1.02% 0.81% 0.76% 0.87% 0.95%*
Operating expenses excluding
reimbursement/waiver ................. 1.29%* 1.26% 1.02% 0.96% 0.94% 0.95%*
Portfolio Turnover Rate ................... 89%** 110% 108% 128% 121% 145%**
</TABLE>
- -----------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 14, 1990.
(2) For periods prior to the year ended October 31, 1994, the per share
amounts and selected ratios reflect the financial results of both
Retail A and Trust Shares.
(3) Calculation does not include sales charge for Retail A Shares.
(A) Net investment income per share for Retail A Shares before
reimbursement/waiver of fees by the Investment Adviser and/or
Administrator for the period ended April 30, 1996, for the years ended
October 31, 1995, 1994, 1993 and 1992 and for the period ended October
31, 1991 were $0.28, $0.59, $0.62, $0.63, $0.67 and $0.64,
respectively.
See Notes to Financial Statements.
31
<PAGE> 35
THE GALAXY FUND
HIGH QUALITY BOND FUND
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
TRUST SHARES
SIX MONTHS ENDED YEARS ENDED OCTOBER 31,
APRIL 30, 1996 ---------------------------------------------------------
(UNAUDITED) 1995 1994 1993(2) 1992(2)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of period ....... $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35
----------- ----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income (A & B) ........... 0.30 0.64 0.65 0.66 0.68
Net realized and unrealized gain (loss)
on investments ....................... (0.34) 1.09 (1.56) 0.93 0.36
----------- ----------- ----------- ----------- -----------
Total from Investment Operations:.. (0.04) 1.73 (0.91) 1.59 1.04
----------- ----------- ----------- ----------- -----------
Less Dividends:
Dividends from net investment income .... (0.30) (0.64) (0.65) (0.66) (0.71)
Dividends from net realized capital
gains ................................ -- -- -- (0.16) (0.08)
Dividends in excess of
net realized capital gains ........... -- -- (0.27) -- --
----------- ----------- ----------- ----------- -----------
Total Dividends: .................. (0.30) (0.64) (0.92) (0.82) (0.79)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net asset value.. (0.34) 1.09 (1.83) 0.77 0.25
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of period ............. $ 10.29 $ 10.63 $ 9.54 $ 11.37 $ 10.60
=========== =========== =========== =========== ===========
Total Return(4) ............................ (0.40)%** 18.66% (8.39)% 15.63% 10.32%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .......... $ 138,275 $ 134,631 $ 118,776 $ 162,594 $ 108,774
Ratios to average net assets:
Net investment income including
reimbursement/waiver ................. 5.73%* 6.33% 6.28% 5.98% 6.55%
Operating expenses including
reimbursement/waiver ................. 0.86%* 0.85% 0.78% 0.76% 0.87%
Operating expenses excluding
reimbursement/waiver ................. 1.06%* 1.07% 0.98% 0.96% 0.94%
Portfolio Turnover Rate .................... 89%** 110% 108% 128% 121%
</TABLE>
<TABLE>
<CAPTION>
TRUST SHARES RETAIL B SHARES
YEARS ENDED OCTOBER 31, PERIOD ENDED
----------------------- APRIL 30, 1996(3)
1991(1)(2) (UNAUDITED)
----------- -----------
<S> <C> <C>
Net Asset Value, Beginning of period ....... $ 10.00 $ 10.72
----------- -----------
Income from Investment Operations:
Net investment income (A & B) ........... 0.64 0.08
Net realized and unrealized gain (loss)
on investments ....................... 0.33 (0.43)
----------- -----------
Total from Investment Operations:.. 0.97 (0.35)
----------- -----------
Less Dividends:
Dividends from net investment income .... (0.62) (0.08)
Dividends from net realized capital
gains ................................ -- --
Dividends in excess of
net realized capital gains ........... -- --
----------- -----------
Total Dividends: .................. (0.62) (0.08)
----------- -----------
Net increase (decrease) in net asset value.. 0.35 (0.43)
----------- -----------
Net Asset Value, End of period ............. $ 10.35 $ 10.29
=========== ===========
Total Return(4) ............................ 10.04%** (3.24)%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .......... $ 57,580 $ 242
Ratios to average net assets:
Net investment income including
reimbursement/waiver ................. 7.25%* 5.61%*
Operating expenses including
reimbursement/waiver ................. 0.95%* 1.59%*
Operating expenses excluding
reimbursement/waiver ................. 0.95%* 1.80%*
Portfolio Turnover Rate .................... 145%** 89%**
</TABLE>
- -----------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 14, 1990.
(2) For periods prior to the year ended October 31, 1994, the per share
amounts and selected ratios reflect the financial results of both
Retail 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 B Shares.
(A) Net investment income per share for Trust Shares before
reimbursement/waiver of fees by the Investment Adviser and/or
Administrator for the period ended April 30, 1996, for the years ended
October 31, 1995, 1994, 1993 and 1992 and for the period ended October
31, 1991 were $0.28, $0.62, $0.63, $0.63, $0.67 and $0.64,
respectively.
(B) Net investment income per share for Retail B Shares before
reimbursement/waiver of fees by the Investment Adviser and/or
Administrator for the period ended April 30, 1996 was $0.07.
See Notes to Financial Statements.
32
<PAGE> 36
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 Short-Term Bond, Intermediate Government
Income (formerly Intermediate Bond), Corporate Bond and High Quality Bond Funds
(individually, a "Fund", collectively, the "Funds") only.
The Short-Term Bond and High Quality Bond Funds are authorized to issue
three series of shares (Trust Shares, Retail A Shares and Retail B Shares). The
Intermediate Government Income and Corporate Bond Funds are authorized to issue
two series of shares (Trust Shares and Retail A Shares). Currently, the
Short-Term Bond and High Quality Bond Funds offer all three series of shares,
the Intermediate Government Income Fund offers Trust Shares and Retail A Shares
and the Corporate Bond Fund offers Trust Shares only. 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 bears the following series specific expenses:
distribution and/or shareholder servicing fees and transfer agency charges. Six
years after purchase, Retail B Shares will convert automatically to Retail A
Shares.
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 a trade date basis. Net realized gains or losses on sales of
securities sold 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.
REPURCHASE AGREEMENTS: Each Fund may engage in repurchase agreement
transactions with institutions that the Trust's investment adviser has
determined are creditworthy pursuant to guidelines established by the Trust's
Board of Trustees. Each repurchase agreement transaction is recorded at cost.
Each Fund requires that the securities purchased in a repurchase agreement
transaction
33
<PAGE> 37
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
(UNAUDITED)
be transferred to the Trust's Custodian in a manner that is intended to enable
the Fund to obtain those securities in the event of a counterparty default. The
value of the collateral securities, including accrued interest, is monitored
daily to ensure that the value of the collateral equals or exceeds 102% of the
repurchase price. Repurchase agreement transactions involve certain risks in the
event of default or insolvency of the counterparty, including possible delays or
restrictions upon a Fund's ability to dispose of the underlying securities and a
possible decline in the value of the underlying securities during the period
while the Fund seeks to assert its rights.
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 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 the commencement of each Fund's operations. In the event
that any of the initial shares purchased by a 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.
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 Shareholder 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 (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.
The Trust has adopted a distribution and shareholder services plan (the "12b
- -1 Plan") with respect to Retail B
34
<PAGE> 38
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
(UNAUDITED)
Shares of the Short-Term Bond and High Quality Bond Funds. 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 each of the Funds'
outstanding Retail B Shares. The fees paid 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 each of
the Funds' outstanding Retail B Shares owned of record or beneficially by the
institution's customers. The Trust intends to limit the Funds' payments for
shareholder liaison and administrative support services under the 12b-1 Plan to
an aggregate fee of not more than 0.15% 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>
Short-Term Bond .................. $28,175 $ 16 $ 72
Intermediate Government Income ... 60,627 N/A N/A
Corporate Bond ................... N/A N/A N/A
High Quality Bond ................ 23,649 27 117
</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. In addition, effective November 1, 1994, Trust Shares also bear
additional transfer agency fees in order to compensate FDISG for payments made
to Fleet Trust Company, an affiliate of the Investment Adviser, for performing
certain sub-accounting and administrative functions on a per account basis with
respect to Trust Shares held by defined contribution plans. 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>
Short-Term Bond ..... $ 25,972 $ 15 $ 8,764
Intermediate
Government Income ... 77,118 -- 25,928
Corporate Bond ...... -- -- 38,308
High Quality Bond ... 31,499 50 83,837
</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 the
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 4, 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 voluntarily agreed to waive a portion of its fees and
to reimburse the Funds for certain expenses so that total expenses would not
exceed certain expense limitations established for each series. The Investment
Adviser, at its discretion, may revise or discontinue the voluntary fee waivers
and expense reimbursements. For the six months ended April 30, 1996, the
Investment Adviser waived fees and/or reimbursed expenses with respect to the
Funds in the following amounts:
<TABLE>
<CAPTION>
FEES WAIVED BY REIMBURSEMENT BY
FUND INVESTMENT ADVISER INVESTMENT ADVISER
- ---- ------------------ ------------------
<S> <C> <C>
Short-Term Bond ......... $ 96,076 $ 15,412
Intermediate
Government Income .... 306,077 --
Corporate Bond .......... 91,391 --
High Quality Bond ....... 168,291 2,701
</TABLE>
35
<PAGE> 39
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
(UNAUDITED)
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 each consisting of one or more series including: Class L - Series 1
shares (Trust Shares), Class L - Series 2 shares (Retail A Shares) and Class L -
Series 3 shares (Retail B Shares)- Short-Term Bond Fund; Class D shares (Trust
Shares) and Class D- Special Series 1 shares (Retail A Shares)- Intermediate
Government Income Fund; Class T - Series 1 shares (Trust Shares) and Class T -
Series 2 shares (Retail A Shares)- Corporate Bond Fund; and Class J - Series 1
shares (Trust Shares), Class J - Series 2 shares (Retail A Shares) and Class J -
Series 3 shares (Retail B Shares) - High Quality Bond Fund. Each share
represents an equal proportionate interest in the respective Fund, bears the
same fees and expenses (except that 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 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>
PURCHASES SALES
------------------------------- -------------------------------
FUND GOVERNMENT OTHER GOVERNMENT OTHER
---- ---------- ----- ---------- -----
<S> <C> <C> <C> <C>
Short-Term Bond ...... $ 57,186,981 $ 69,159,177 $ 82,232,797 $ 23,881,954
Intermediate
Government
Income ............... 287,037,937 136,033,376 271,216,238 106,469,810
Corporate Bond ....... 48,449,342 73,278,238 35,488,029 5,954,284
High Quality Bond .... 111,137,145 43,163,659 138,986,668 6,171,384
</TABLE>
The aggregate gross unrealized appreciation and depreciation, net unrealized
appreciation (depreciation), and cost for 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>
Short-Term Bond ...... $ 158,427 $ (673,952)
Intermediate
Government
Income ............... 950,969 (3,158,948)
Corporate Bond ....... 1,382,415 (3,242,986)
High Quality Bond..... 2,221,916 (2,467,222)
FUND NET COST
- ---- --- ----
Short-Term Bond ...... $ (515,525) $ 100,903,821
Intermediate
Government
Income ............... (2,207,979) 304,110,940
Corporate Bond ....... (1,860,571) 118,216,358
High Quality Bond .... (245,306) 167,444,193
</TABLE>
At October 31, 1995 the following Funds had capital loss carryforwards:
<TABLE>
<CAPTION>
FUND AMOUNT EXPIRATION
- ---- ------ ----------
<S> <C> <C>
Short-Term Bond ....... $ 2,061,577 2002
473,903 2003
Intermediate Government
Income ................ 18,723,999 2002
3,216,263 2003
High Quality Bond ..... 2,590,214 2002
2,998,422 2003
</TABLE>
7. 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 Limited Term Income
Fund, the Shawmut Intermediate Government Income Fund and the Shawmut Fixed
Income Fund were transferred to the Galaxy Short-Term Bond Fund, the Galaxy
Intermediate Government Income Fund and the Galaxy Corporate Bond Fund,
respectively, in exchange for shares of the Galaxy Short-Term Bond Fund, the
Galaxy Intermediate Government Income Fund and the Galaxy Corporate Bond Fund,
respectively. Accordingly, the net assets of the Shawmut Short-Term Bond Fund,
the Shawmut Intermediate Government Income Fund and the Shawmut Fixed Income
Fund, respectively, were exchanged for 769,927 Retail A Shares and 3,042,900
Trust Shares of the Galaxy Short-Term Bond Fund, 1,010,018 Retail A Shares and
4,449,125 Trust Shares of the Galaxy Intermediate Government Income Fund and
8,188,057 Trust Shares of the Galaxy Corporate Bond Fund, respectively. The
reorganization, which qualified as a tax-free reorganization for Federal income
tax purposes, was completed on December 4, 1995 following approval of the
reorganization by The Shawmut Fund
36
<PAGE> 40
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS(CONTINUED)
(UNAUDITED)
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
Short-Term Limited Term Short-Term
Bond Income Bond
-------------- -------------- --------------
<S> <C> <C> <C>
Net Assets ............................ $ 67,193,642 $ 38,592,419 $ 105,786,061
Shares outstanding .................... 6,639,613 4,010,158 10,452,440
Retail Net Asset Value, per share ..... $ 10.12 $ 9.63 $ 10.12
Trust Net Asset Value, per share ...... $ 10.12 $ 9.62 $ 10.12
Unrealized Appreciation ............... $ 1,401,348 $ 520,971
<CAPTION>
Before Acquisition After Acquisition
------------------------------------- ----------------------
Galaxy Shawmut Galaxy
Intermediate Intermediate Intermediate
Government Government Government
Income Income Income
------------- -------------- --------------
<S> <C> <C> <C>
Net Assets ............................ $ 268,704,491 $ 56,676,793 $ 325,381,284
Shares outstanding..................... 25,878,466 5,718,050 31,337,609
Retail and Trust Net Asset Value,
per share ........................... $ 10.38 $ 9.91 $ 10.38
Unrealized Appreciation ............... $ 8,182,521 $ 1,253,530
<CAPTION>
Before Acquisition After Acquisition
------------------------------------- ----------------------
Galaxy Shawmut Galaxy
Corporate Fixed Corporate
Bond Income Bond
-------------- -------------- --------------
<S> <C> <C> <C>
Net Assets ............................ $ 37,891,079 $ 88,144,360 $ 126,035,439
Shares outstanding .................... 3,518,577 8,818,538 11,706,634
Retail and Trust Net Asset Value,
per share ........................... $ 10.77 $ 10.00 $ 10.77
Unrealized Appreciation ............... $ 2,501,831 $ 1,370,661
</TABLE>
8. 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.
37
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[LOGO] 4400 Computer Drive -----------------
Box 5108 BULK RATE
Westboro, MA 01581-5108 U.S. POSTAGE
PAID
PERMIT NO. 54201
BOSTON, MA
-----------------
FN-084 (5/96)
