<PAGE>
[LOGO OF GALAXY FUNDS APPEARS HERE]
[PHOTO APPEARS HERE]
- --------------------------------------------------------------------------------
Money Market Funds Report
- --------------------------------------------------------------------------------
Money Market Fund . Government Fund . Tax-Exempt Fund .
U.S. Treasury Fund . Connecticut Municipal Money Market Fund .
Massachusetts Municipal Money Market Fund
- --------------------
Annual
Report
For the Year Ended
October 31, 1996
- --------------------
<PAGE>
Chairman's Message
- ------------------
Dear Shareholder:
Enclosed is your annual report for the Galaxy Money Market Funds for the 12
months ended October 31, 1996. Included are a Market Overview, which explains
the primary economic and market factors affecting money market yields during
that time, as well as Portfolio Reviews that show how Fleet Investment Advisors
managed each of the Funds to make the most of these conditions.
In the past year money market yields grew more volatile -- reversing course
as investors changed their views of the economy, inflation and interest rates.
Such uncertainty caused similar fluctuations in stock and bond prices. Toward
the end of the period, investors seemed hopeful that economic growth and
inflation would remain moderate and interest rates would become more stable.
Such an environment shows why it may be important to keep your investments
well diversified and why money market funds may represent an integral part of
your asset allocation strategy. Because different types of investments often
move in different directions, diversifying among several asset classes helps to
smooth out returns over time. Keeping some of your portfolio in money market
funds, and other liquid assets may help you meet your short-term financial goals
despite potential near-term volatility in stock and bond investments.
To stay on track, you may want to "rebalance" your portfolio each year.
This is particularly true in a year like the one just past, when market changes
were substantial. As investment classes within your portfolio gain in value, you
can maintain a diversified portfolio by reinvesting those gains in other asset
classes, which may have declined in value or stayed the same, in accordance with
your long-term allocation strategy.
We hope you find the following report helpful as you review your investment
mix. If you have questions about the material it contains, or need information
on any of the Galaxy Funds, please call the Galaxy Service Center at 800-628-
0414.
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>
Market Overview
- ---------------
Money Market Overview
By Fleet Investment Advisors Inc.
In the past year, investors were often uncertain about where the economy
and interest rates were headed. When the economy seemed to strengthen, investors
looked for the Federal Reserve (the "Fed") to stem future inflation by raising
interest rates. On signs of steady inflation and slower growth, investors looked
for interest rates to fall.
Yields for money market instruments changed direction frequently in the past
year. By anticipating these changes and making the most of higher yields, the
Galaxy Money Market Funds earn competitive returns for the 12 months ended
October 31, 1996.
A Changing Economic Outlook
When the period began, economic growth was relatively slow. The gross
domestic product ("GDP"), which measures U.S. goods and services, grew at an
annualized rate of 0.3% in the fourth quarter of 1995 -- down from a third-
quarter annualized rate of 3.8%. Yields on fixed-income securities fell during
this time, on expectations that the Fed would spur the economy by cutting
interest rates.
In mid-December, the Fed reduced its Fed Funds rate from 5.75% to 5.5%. As
investors waited for further rate cuts, and for legislation to balance the
federal budget, money market yields continued to fall. By the end of December,
the yield for three-month Treasury bills had dropped to 5% -- down from 5.5% at
the end of October.
With evidence of further economic weakening in February of 1996, the Fed cut
the Fed Funds rate to 5.25%. Although a stalemate in federal budget talks caused
a brief rise in yields, yields generally moved lower.
Later in the quarter, unexpectedly strong employment reports caused
investors to worry that the economy was growing fast enough for higher
inflation, causing interest rates to rise. As GDP growth accelerated to
annualized rates of 2.0% in the first quarter of 1996 and 4.7% in the second
quarter, money market yields became more volatile.
Volatility increased in the third quarter of 1996. Although GDP growth
slowed to an annualized rate of 2.0%, and inflation was stable, investors
remained uncertain due to seemingly mixed messages from other economic
indicators. Between July and October, the yields for three-month Treasuries
fluctuated between 5.01% and 5.26%. At the end of October three-month Treasuries
were yielding 5.15%.
Responding to Changes in Yields
During the year we tried to maximize returns for the Galaxy Money Market
Funds by adjusting the maturities of their investments. We kept the average
maturities of their portfolios short when we expected yields to rise, so we
could move into higher yielding investments more quickly. We added longer-term
investments when we expected yields to fall so we could lock in higher yields
for a longer period of time.
"With evidence of further economic weakening in February of 1996, the Fed cut
the Fed Funds rate to 5.25%. Although a stalemate in federal budget talks caused
a brief rise in yields, yields generally moved lower."
1
<PAGE>
Market Overview
- ---------------
Performance At-A-Glance As of October 31, 1996
<TABLE>
<CAPTION>
Retail Trust
Shares Shares
------- ------
<S> <C> <C>
Galaxy Money Market Fund
7-day average yield............. 4.62% 4.84%
30-day average yield............ 4.63% 4.84%
Galaxy Government Fund
7-day average yield............. 4.58% 4.80%
30-day average yield............ 4.57% 4.80%
Galaxy Tax-Exempt Fund
7-day average yield............. 2.81% 2.95%
30-day average yield............ 2.78% 2.92%
Galaxy U.S. Treasury Fund
7-day average yield............. 4.49% 4.66%
30-day average yield............ 4.49% 4.65%
Galaxy Connecticut Municipal
Money Market Fund
7-day average yield............. 2.84%
30-day average yield............ 2.74%
Galaxy Massachusetts Municipal
Money Market Fund
7-day average yield............. 2.83%
30-day average yield............ 2.74%
</TABLE>
Investments in the Galaxy Money Market Funds are neither insured nor guaranteed
by the U.S. Government, and there can be no assurance that the Funds will be
able to maintain a stable net asset value of $1.00 per share. Yields are
historical and will vary with market performance. Past performance is no
guarantee of future results.
Trust Shares were first issued on November 1, 1994.
Retail Shares are currently charged an annualized shareholder servicing fee of
0.10% of average daily net assets (See Note 3 in the Notes to Financial
Statements).
As yields fluctuated, spreads between yields for U.S. Treasury
securities and other instruments fluctuated. Where possible, we took advantage
of attractive yield opportunities in commercial paper and issues of U.S.
government agencies.
As always, we kept the Funds' portfolios well diversified by issuers,
asset mix and maturity dates. This helped us take further advantage of a
changing money market environment.
Slower Growth to Come
Increasingly, it appears that economic growth is slowing. If current
trends continue, Fleet Investment Advisors believes GDP will track at an
annualized rate near 2% into 1997. This should keep the annual rate of inflation
near a moderate 3%.
Although unexpected spikes in growth or inflation could cause the Fed to
raise interest rates modestly, we expect rates to remain at current levels or
move slightly lower. Money market yields should be more stable in this
environment.
Because investors may still worry about inflation in the months ahead,
and money market yields may move temporarily higher, we will keep the average
maturities of the Galaxy Money Market Funds near those of comparable money
market funds with similar investment objectives. Meanwhile, we will continue to
look for attractive opportunities in selected issues with longer maturities.
"Where possible, we took advantage of attractive yield opportunities in
commercial paper and issues of U.S. government agencies".
2
<PAGE>
Portfolio Reviews
- -----------------
Galaxy Taxable Money Market Funds
By Karen Arneil and
Thomas DeMarco
Portfolio Managers
In the past year, fluctuations in money market yields brought many
opportunities for the Galaxy Taxable Money Market Funds -- which include the
Galaxy Money Market Fund, the Galaxy Government Fund, and the Galaxy U.S.
Treasury Fund. By changing the mix of investments and maturities in the Funds to
make the most of higher yields and widening spreads, we helped the Funds earn
returns for the 12 months ended October 31, 1996 that compared favorably with
returns for other funds with similar investment objectives.
During the period, Trust and Retail A Shares of the Galaxy Money Market
Fund earned total returns of 5.00% and 4.78%, respectively, versus 4.86% for
money market funds tracked by Lipper Analytical Services ("Lipper"). Trust and
Retail A Shares of the Galaxy Government Fund had total returns of 4.95% and
4.72%, respectively, during the period, versus 4.81% for U.S. Government money
market funds tracked by Lipper. Over the same time, Trust and Retail A Shares of
the Galaxy U.S. Treasury Fund earned total returns of 4.80% and 4.63%,
respectively, versus 4.79% for U.S. Treasury money market funds tracked by
Lipper.
Investment Strategy
From November of 1995 through January of 1996, when yields were falling,
we extended the average days-to-maturity to lock in higher yields for a longer
period of time. However, the Funds' average maturities remained shorter than
their peers, which helped us take advantage of rising yields in February and
March.
For the rest of the period, we positioned the Funds to take advantage of
additional fluctuations in yield. Throughout the period, we took advantage of
changes in the spreads between different money market instruments, purchasing
suitable securities for each of the Funds that represented good value.
At the end of October, 1996, the Galaxy Money Market Fund had an average
maturity of 36 days, the Galaxy Government Fund had an average maturity of 32
days and the Galaxy U.S. Treasury Fund had an average maturity of 39 days.
[PHOTO OF KAREN ARNEIL AND THOMAS DEMARCO APPEARS HERE]
Galaxy Money
Market Fund
Distribution of Total Net
Assets as of October 31, 1996
[PIE GRAPH APPEARS HERE]
Certificates of Deposit 4% Repurchase Agreement & Net
Other Assets & Liabilities 9%
Commercial Paper 51%
U.S. Gov't. & Agency Obligations 36%
Galaxy Money Market Fund
7-Day Average Yield
[LINE GRAPH APPEARS HERE]
Galaxy Money Market Fund
Galaxy Galaxy
Retail A Trust
Shares Shares
11/1/95 4.94 5.19
11/30/95 4.97 5.21
12/31/95 4.96 5.19
1/31/96 4.98 5.14
2/28/96 4.58 4.79
3/31/96 4.51 4.72
4/30/96 4.53 4.74
5/31/96 4.57 4.77
6/30/96 4.57 4.79
7/31/96 4.64 4.83
8/31/96 4.65 4.84
9/30/96 4.67 4.89
10/31/96 4.62 4.84
3
<PAGE>
Portfolio Reviews
- -----------------
Going Forward
With more signs that the economy is slowing, we have been selectively
adding longer-term issues to the Funds again. As slower growth helps interest
rates edge lower, these purchases will help the Funds enjoy higher yields. For
now, we expect to keep the average maturities of the Funds' portfolios neutral.
We continue to search for value among all asset types and maturities. As
always, we will keep the Funds well-diversified in terms of issuers, asset mix
and maturity structure. Having helped make the most of money market changes in
the past 12 months, such diversification should keep returns competitive during
future market fluctuations.
Galaxy
Government Fund
Distribution of Total Net
Assets as of October 31, 1996
[PIE GRAPH APPEARS HERE]
U.S. Treasury Bills 5%
Federal Home Loan Mortgage Corporation 23%
Federal Farm Credit Bank 19%
Federal National Mortgage Association 28%
Federal Home Loan Bank 8%
Repurchase Agreement & Net Other Assets & Liabilities 8%
U.S. Treasury Notes 9%
Galaxy
U.S. Treasury Fund
[PIE CHART APPEARS HERE]
Distribution of Total Net Assets as of October 31, 1996
Federal Farm Credit Bank 18%
U.S. Treasury Strip & Net Other Assets & Liabilities 2%
U.S. Treasury Bills 47%
Federal Home Loan Bank 15%
U.S. Treasury Notes 18%
Karen Arneil and Tom DeMarco have managed the Galaxy Money Market Fund, the
Galaxy Government Fund and the Galaxy US Treasury Fund since September 1996.
They have managed money market investments since 1993. Prior to September the
Funds were managed by Pat Galuska.
Galaxy Government Fund
7-Day Average Yield
[LINE GRAPH APPEARS HERE]
Galaxy Government Money Market Fund
Trust
Retail A Institutional
Shares Shares
11/1/95 4.94 5.21
11/30/95 4.95 5.22
12/31/95 4.92 5.19
1/31/96 4.79 5
2/28/96 4.53 4.74
3/31/96 4.5 4.71
4/30/96 4.48 4.68
5/31/96 4.48 4.69
6/30/96 4.5 4.71
7/31/96 4.54 4.75
8/31/96 4.61 4.82
9/30/96 4.63 4.85
10/31/96 4.58 4.8
Galaxy U.S. Treasury Fund
7-Day Average Yield
[LINE GRAPH APPEARS HERE]
Galaxy U.S. Treasury Money Market Fund 7-Day Yields
Galaxy Galaxy
Retail A Institutional
Shares Shares
Nov 1, 95 4.74 4.9
Nov 30, 95 4.75 4.91
Dec 31, 95 4.73 4.89
Jan 31, 96 4.62 4.79
Feb 28, 96 4.36 4.53
Mar 31, 96 4.41 4.57
Apr 30, 96 4.43 4.59
5/30/96 4.43 4.59
6/30/96 4.54 4.69
7/31/96 4.52 4.68
8/31/96 4.55 4.71
9/30/96 4.56 4.72
10/31/96 4.49 4.66
Galaxy Tax-Exempt Money Market Funds
By Karen Arneil and
Thomas DeMarco
Portfolio Managers
In the 12 months ended October 31, 1996, the tax-exempt money market faced
major changes in supply and demand, as well as increased fluctuation in interest
rates. By making the most of these changes, we enhanced returns for the Galaxy
Tax-Exempt Money Market Funds -- which include the Galaxy Tax-Exempt Fund, the
Galaxy Connecticut Municipal Money Market Fund and the Galaxy Massachusetts
Municipal Money Market Fund.
4
<PAGE>
Portfolio Reviews
- -----------------
Galaxy
Tax-Exempt Fund
Distribution of Total Net
Assets as of October 31, 1996
[PIE CHART APPEARS HERE]
East 33%
North Central 17%
Mountain 3%
Other Territories & Net Other Assets & Liabilities 2%
South 38%
Pacific 7%
During the period Trust and Retail A Shares of the Galaxy Tax-Exempt Fund
had total returns of 2.97% and 2.82%, respectively, compared with an average
return of 2.99% for tax-exempt money market funds tracked by Lipper. Shares of
the Galaxy Connecticut Municipal Money Market Fund had a total return of 2.83%,
versus 2.84% for other Connecticut tax-exempt money market funds tracked by
Lipper. Shares of the Galaxy Massachusetts Municipal Money Market Fund had a
total return of 2.83%., versus 2.96% for other Massachusetts tax-exempt money
market funds tracked by Lipper.
Enhancing Fund Yields
As yields for money market securities fell late in 1995, we tried to
improve the yields for the Galaxy Tax-Exempt Money Market Funds by adding issues
with longer maturities. In December, a seasonal decline in demand for tax-exempt
instruments raised the yields for these securities. To capture more of the
increase in yields we added issues with floating interest rates.
Galaxy Tax-Exempt Fund
7-Day Average Yield
<TABLE>
[LINE GRAPH APPEARS HERE]
Galaxy
Galaxy Retail Trust
A Shares Shares
<S> <C> <C>
Nov 1,95 3.03 3.18
Nov 30,95 3.06 3.21
Dec 31,95 3.38 3.52
Jan 31,96 2.79 2.93
Feb 28,96 2.61 2.75
Mar 31,96 2.63 2.77
Apr 30,96 2.68 2.84
May 31,96 2.83 2.97
Jun 30,96 2.81 2.95
Jul 31,96 2.8 2.94
Aug 31,96 2.81 2.95
Sep 30,96 2.87 3
Oct 31,96 2.81 2.95
</TABLE>
Galaxy Tax-Exempt Fund-Trust
. Galaxy Tax-Exempt Fund-Retail A
November 1, 1995 October 31, 1996
In January of 1996, when yields for floating-rate instruments had edged
lower, we cautiously added more longer-term, fixed-income securities to the
Funds' portfolios to lock in the better yields over a longer period of time. We
kept the average maturities of the Funds' investments relatively short, however,
which let us respond more quickly to rising yields in February and March. When
investors sold short-term municipals to pay income taxes in April, and tax-
exempt yields moved higher, we bought longer-term issues again..
Galaxy Connecticut Municipal
Money Market Fund
7-Day Average Yield
November 1, 1995 October 31, 1996
<TABLE>
[LINE GRAPH APPEARS HERE]
Galaxy Retail Shares
<S> <C>
11/1/95
11/30/95
12/31/95 3.65
1/31/96 2.77
2/28/96 2.67
3/31/96 2.68
4/30/96 3.06
5/31/96 2.86
6/30/96 2.79
7/31/96 2.84
8/31/96 2.77
9/30/96 3.01
10/31/96 2.84
</TABLE>
Galaxy Connecticut Municipal Money Market Fund
5
<PAGE>
Portfolio Reviews
Galaxy
Connecticut Municipal
Money Market Fund
Distribution of Total Net Assets as of October 31, 1996
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Pacific 1%
East 3%
North Central 3%
Cash Equivalents &
Net Other Assets &
Liabilities 8%
Puerto Rico 9%
South 18%
Connecticut 58%
</TABLE>
At October 31, 1996, the Tax-Exempt Fund's average maturity was 49 days.
The average maturities of the Connecticut and Massachusetts Municipal Money
Market Funds were 49 and 50 days, respectively, on October 31, 1996.
Looking Ahead
If the economy slows and interest rates edge lower as we expect, supplies
of tax-exempt money market instruments may improve. That could put upward
pressure on yields.
Because demand for tax-exempt issues often increases in January, adding
downward pressure on yields, we will likely look for instruments that mature
after that time to maintain the best yields that we can while maintaining an
average maturity that is neutral.
Karen Arneil and Tom DeMarco have managed the Galaxy Tax-Exempt Fund, the Galaxy
Connecticut Municipal Money Market Fund and the Galaxy Massachusetts Municipal
Money Market Fund since September 1996. They have managed money market
investments since 1993. Prior to September the Funds were managed by Pat
Galuska.
Galaxy
Massachusetts Municipal
Money Market Fund
Distribution of Total Net
Assets as of October 31, 1996
[PIE CHART APPEARS HERE]
<TABLE>
<S> <C>
Pacific 1%
North Central 1%
East 3%
Puerto Rico 5%
Cash Equivalents & Net Other
Assets & Liabilities 9%
South 9%
Massachusetts 72%
</TABLE>
Galaxy
Massachusetts Municipal
Money Market Fund
7-Day Average Yield
[LINE GRAPH APPEARS HERE]
<TABLE>
<S> <C>
12/31/95 3.6
1/31/96 2.68
2/28/96 2.66
3/31/96 2.65
4/30/96 3.02
5/31/96 2.88
6/30/96 2.79
7/31/96 2.82
8/31/96 2.8
9/30/96 3
10/31/96 2.83
</TABLE>
- --------------------------------------------------------------------------------
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 and may revise or discontinue such practice at any time.
Without such waivers and/or reimbursements, performance would be lower. Past
performance is no guarantee of future results. Unless otherwise indicated, total
return figures in this report include changes in share price, deduction of the
front-end sales charge, where applicable, and reinvestment of dividends and
capital gains distributions, if any. There can be no assurance that the Funds
will be able to maintain a stable net asset value of $1.00 per share.
6
<PAGE>
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.
"A well-balanced asset allocation plan may help to control your risk while
pursuing your goals."
Diversification
A fundamental investment practice is "diversification." A well-balanced asset
allocation plan may help to control your risk while pursuing your goals. Many
mutual funds offer a low-cost way to diversify your investments while you
benefit from professional management. Galaxy's comprehensive array of investment
choices can be used in combination to match the needs of nearly everyone.
Exchange Privileges
As your investment needs change, you can conveniently exchange your shares in
one fund for shares in another fund.
Quarterly Magazine
Service also means giving you the practical information you need, in language
you can understand, to make smart investment decisions. The quarterly magazine,
Galaxy Observer, brings news, strategies and simple, straight-forward
explanations of investment basics and terminology.
Consolidated Statements
Timely, comprehensive mutual fund account statements offer detailed information
on your individual account. If you have a Fleet One or a Fleet Private Banking
Account, your Galaxy Fund information can be added to these statements.
Investment Specialists
In many Fleet branch offices or in the convenience of your home or office you
can visit one-on-one with an Investment Specialist* who can help you select the
investments that match your individual needs. This service is at no cost to you.
24-Hour Access to Registered Representatives
24 hours a day, seven days a week, 365 days a year, we are ready and available
to help. Our toll-free telephone lines offer round-the-clock access to Fund
information and service. Call 1-800-628-0414 for information on initial
purchases and current performance.
Customer Service
Quality customer service is only a phone call away. Call 1-800-628-0414 between
9 a.m. and 5 p.m. to arrange bank wires, or to make telephone exchanges and
redemptions.
In addition, Galaxy's state-of-the-art InvestConnect automated voice response
system is available to serve you 24-hours a day, seven days a week by calling
1-800-FOR-GLXY (367-4599).
- --------------------------------------------------------------------------------
Certain shareholder services may not be available for Trust Share investors.
Please consult your Fund Prospectus.
* Shares of the Funds are distributed through 440 Financial Distributors, Inc.,
member NASD and SIPC. Investment Specialists are registered representatives of
FIS Securities, Inc., member NASD, Fleet Enterprises, Inc., member NASD and
SIPC, or MDS Securities Inc., member NASD and SIPC."
7
<PAGE>
Trustees
and Officers
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
Neil Forrest
Vice President &
Assistant Treasurer
Investment Adviser
Fleet Investment
Advisors Inc.
75 State Street
Boston, Massachusetts
02109
Distributor
440 Financial
Distributors, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
Administrator
First Data Investor
Services Group, Inc.
4400 Computer Drive
Westborough,
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.
[LOGO OF RECYCLED PAPER APPEARS HERE]
This report was printed on recycled paper.
8
<PAGE>
Money Market Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
----------- ----------
COMMERCIAL PAPER (A) - 51.23%
Finance - 30.67%
<S> <C> <C>
$ 25,000,000 AIG Funding Inc.
5.21%, 11/12/96 ....................... $ 24,960,201
30,000,000 Associates Corp N.A.
5.27%, 11/07/96 ....................... 29,973,650
25,000,000 Banc One Corp.
5.27%, 11/05/96 ....................... 24,985,361
25,000,000 Bank of America
5.40%, 01/08/97 ....................... 25,000,000
25,000,000 Bank of Novia Scotia
5.38%, 12/13/96 ....................... 24,843,083
25,000,000 Cargill, Inc.
5.22%, 11/15/96 ....................... 24,949,250
40,000,000 Ford Motor Credit Co.
5.27%, 11/08/96 ....................... 39,959,011
30,000,000 General Electric Capital Corp.
5.33%, 11/25/96 ....................... 29,893,400
30,000,000 General Electric Capital Corp.
5.25%, 12/17/96 ....................... 29,798,750
28,500,000 General Re Corp.
5.48%, 12/03/96 ....................... 28,361,173
14,600,000 General Re Corp.
5.25%, 12/24/96 ....................... 14,487,154
25,000,000 IBM Credit Corp.
5.32%, 11/26/96 ....................... 24,907,639
30,000,000 IBM Credit Corp.
5.26%, 12/16/96 ....................... 29,802,750
30,000,000 Morgan (J.P.) & Co. Inc.
5.24%, 12/05/96 ....................... 29,851,533
20,000,000 Morgan (J.P.) & Co. Inc.
5.43%, 12/09/96 ....................... 19,885,367
30,000,000 National Rural Utilities
Cooperative Finance Corp.
5.28%, 11/14/96 ....................... 29,942,800
15,000,000 National Rural Utilities
Cooperative Finance Corp.
5.34%, 11/26/96 ....................... 14,944,375
17,379,000 National Rural Utilities
Cooperative Finance Corp.
5.32%, 01/09/97 ....................... 17,201,792
25,000,000 Pemex Capital, Inc.
5.36%, 04/14/97 ....................... 24,389,556
40,000,000 Pitney Bowes Credit Corp.
5.32%, 01/21/97 ....................... 39,521,200
30,000,000 State Street Boston Corp.
5.24%, 11/20/96 ....................... 29,917,033
33,700,000 Toyota Motor Credit Corp.
5.27%, 11/19/96 ....................... 33,611,201
10,000,000 Toyota Motor Credit Corp.
5.31%, 01/13/97 ....................... 9,892,325
15,000,000 Toyota Motor Credit Corp.
5.30%, 02/07/97 ....................... 14,783,583
15,000,000 USAA Capital Corp.
5.32%, 02/04/97 ....................... 14,789,417
8,500,000 Xerox Credit Corp.
5.25%, 11/22/96 ....................... 8,473,969
-----------
639,125,573
-----------
Consumer Staples - 5.20%
$ 30,000,000 Abbott Laboratories
5.23%, 11/05/96........................ $ 29,982,567
18,200,000 Colgate Palmolive Co.
5.25%, 12/31/96........................ 18,040,750
10,000,000 Heinz (H.J.) Co.
5.26%, 11/20/96........................ 9,972,239
15,700,000 Heinz (H.J.) Co.
5.24%, 11/27/96........................ 15,640,584
25,000,000 Sara Lee Corp.
5.25%, 12/24/96........................ 24,806,771
10,100,000 Warner Lambert Co.
5.30%, 01/06/97........................ 10,001,862
-----------
108,444,773
-----------
Telecommunications - 4.55%
16,000,000 Bellsouth Telecommunications, Inc.
5.27%, 11/06/96........................ 15,988,289
23,000,000 Southwestern Bell Telephone Co.
5.55%, 11/01/96........................ 23,000,000
21,000,000 Southwestern Bell Telephone Co.
5.35%, 11/18/96........................ 20,946,946
22,000,000 Southwestern Bell Telephone Co.
5.30%, 11/21/96........................ 21,935,222
13,000,000 U.S. West Communications, Inc.
5.28%, 12/02/96........................ 12,940,893
-----------
94,811,350
-----------
Technology - 3.99%
25,000,000 Hewlett Packard Co.
5.21%, 11/06/96........................ 24,981,910
35,000,000 Hewlett Packard Co.
5.27%, 11/13/96........................ 34,938,517
23,400,000 Xerox Corp.
5.31%, 01/10/97........................ 23,158,395
-----------
83,078,822
-----------
Communication - 2.40%
50,000,000 Disney (Walt) Co.
5.25%, 11/01/96........................ 50,000,000
-----------
Drugs and Chemicals - 2.21%
46,000,000 Monsanto Co.
5.32%, 11/01/96........................ 46,000,000
-----------
Consumer Cyclical - 1.44%
30,000,000 Wal-Mart Stores, Inc.
5.21%, 11/04/96........................ 29,986,975
-----------
Utilities - 0.48%
10,000,000 Baltimore Gas & Electric Co.
5.25%, 11/14/96........................ 9,981,042
-----------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Money Market Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Basic Materials - 0.29%
$ 6,000,000 Air Products & Chemicals Inc.
5.23%, 11/18/96.................... $ 5,985,182
-------------------
Total Commercial Paper............. 1,067,413,717
-------------------
(Cost $1,067,413,717)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 36.32%
Federal National Mortgage
Association - 12.40%
50,000,000 5.21%, 11/04/96 (A)................ 49,978,291
18,000,000 5.70%, 11/12/96 (A)................ 17,971,510
15,000,000 5.18%, 11/26/96 (A)................ 14,946,042
16,800,000 7.59%, 12/13/96, MTN............... 16,834,971
50,000,000 7.88%, 12/20/96, MTN............... 50,145,587
24,900,000 5.20%, 12/26/96 (A)................ 24,702,183
25,000,000 5.26%, 01/07/97 (A)................ 24,755,264
25,000,000 5.29%, 01/27/97 (A)................ 24,680,396
35,000,000 5.49%, 03/17/97 (A)................ 34,273,439
-------------------
258,287,683
-------------------
Federal Farm Credit Bank - 11.28%
25,000,000 5.33%, 11/01/96.................... 25,000,000
50,000,000 5.45%, 11/01/96.................... 50,000,000
75,000,000 5.34%, 12/02/96.................... 75,000,000
20,000,000 5.42%, 12/02/96.................... 20,000,000
15,000,000 5.56%, 01/02/97.................... 15,000,000
50,000,000 5.66%, 02/03/97.................... 50,000,000
-------------------
235,000,000
-------------------
U.S. Treasury Notes - 7.22%
150,000,000 7.50%, 12/31/96.................... 150,518,239
-------------------
Federal Home Loan Bank (A) - 3.37%
41,000,000 5.19%, 11/18/96.................... 40,899,516
30,000,000 5.24%, 03/26/97.................... 29,366,833
-------------------
70,266,349
-------------------
Federal Home Loan Mortgage
Corporation (A) - 2.05%
25,000,000 5.18%, 12/11/96.................... 24,855,972
18,000,000 5.27%, 12/13/96.................... 17,889,330
-------------------
42,745,302
-------------------
Total U.S. Government and
Agency Obligations................. 756,817,573
-------------------
(Cost $756,817,573)
CERTIFICATES OF DEPOSITS - 3.60%
$ 25,000,000 Bank One Milwaukee
5.29%, 12/06/96.................... $ 25,000,000
25,000,000 Swiss Bank Corp.
5.53%, 12/18/96.................... 25,000,322
25,000,000 Wachovia Bank
5.30%, 11/15/96.................... 25,000,000
-------------------
Total Certificates of Deposits..... 75,000,322
-------------------
(Cost $75,000,322)
REPURCHASE AGREEMENT - 9.08%
189,160,015 HSBC Securities, Inc.
5.50%, 11/01/96, Dated 10/31/96
Repurchase Price $189,188,914
(Collaterized by
U.S. Treasury Bonds 8.13% to 9.88%,
due 2015 to 2019;
Total Par $147,025,000;
Market Value $193,993,954)........ 189,160,015
-------------------
Total Repurchase Agreement........ 189,160,015
-------------------
(Cost 189,160,015)
Total Investments - 100.23%............................. 2,088,391,627
-------------------
(Cost $2,088,391,627) *
Net Other Assets and =Liabilities - (0.23)%............ (4,857,680)
-------------------
Net Assets - 100.00% ................................... $ 2,083,533,947
===================
</TABLE>
- -----------------------------------------------------------
* Aggregate cost for Federal tax purposes.
(A) Annualized yields at time of purchase.
MTN Meduium Term Note
See Notes to Financial Statements.
10
<PAGE>
Government Fund
[LOGO OF FLEET GALAXY PORTFOLIO OF INVESTMENTS
APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
----------- ----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 91.31%
Federal National Mortgage
Association (A) - 27.57%
<S> <C> <C>
$ 50,000,000 5.21%, 11/04/96 ........................ $ 49,978,292
40,000,000 5.17%, 11/05/96 ........................ 39,977,022
40,000,000 5.70%, 11/12/96 ........................ 39,936,689
27,545,000 5.20%, 11/20/96 ........................ 27,469,404
40,000,000 5.18%, 11/26/96 ........................ 39,856,111
11,000,000 5.21%, 12/27/96 ........................ 10,910,680
25,000,000 5.26%, 01/07/97 ........................ 24,755,264
20,000,000 7.60%, 01/10/97 ........................ 20,075,716
15,000,000 5.29%, 01/27/97 ........................ 14,808,238
25,000,000 5.22%, 03/18/97 ........................ 24,503,851
----------------
292,271,267
----------------
Federal Home Loan Mortgage
Corporation (A) - 22.93%
50,000,000 5.53%, 11/01/96 ........................ 50,000,000
80,000,000 5.18%, 11/19/96 ........................ 79,793,050
15,000,000 5.41%, 12/06/96 ........................ 14,921,104
20,000,000 5.27%, 12/13/96 ........................ 19,877,033
29,000,000 5.18%, 12/16/96 ........................ 28,812,225
50,000,000 5.41%, 12/20/96 ........................ 49,646,111
----------------
243,049,523
----------------
Federal Farm Credit Bank - 18.86%
25,000,000 5.33%, 11/01/96 ........................ 25,000,000
50,000,000 5.45%, 11/01/96 ........................ 50,000,000
50,000,000 5.34%, 12/02/96 ........................ 50,000,000
25,000,000 5.42%, 12/02/96 ........................ 25,000,000
50,000,000 5.66%, 02/03/97 ........................ 50,000,000
----------------
200,000,000
----------------
U.S. Treasury Notes - 9.47%
75,000,000 7.50%, 12/31/96 ........................ 75,253,906
25,000,000 7.50%, 01/31/97 ........................ 25,131,335
----------------
100,385,241
----------------
Federal Home Loan Bank (A) - 7.53%
50,000,000 5.20%, 11/13/96 ........................ 49,913,333
30,000,000 5.19%, 11/18/96 ........................ 29,926,900
----------------
79,840,233
----------------
U.S. Treasury Bills (A) - 4.95%
7,681,000 5.08%, 11/07/96 ........................ 7,674,407
44,910,000 5.06%, 11/14/96 ........................ 44,826,480
----------------
52,500,887
----------------
Total U.S. Government and
Agency Obligations ..................... 968,047,151
----------------
(Cost $968,047,151)
REPURCHASE AGREEMENT - 8.49%
$ 90,048,802 HSBC Securities
5.50%, 11/01/96, Dated 10/31/96
Repurchase Price $90,062,559
(Collateralized by U.S. Treasury Bonds
8.13%, due 2019 to 2021;
Total Par $78,425,000;
Market Value $92,849,778) .............. $ 90,048,802
----------------
Total Repurchase Agreement ............. 90,048,802
----------------
(Cost $90,048,802)
Total Investments - 99.80% 1,058,095,953
----------------
(Cost $1,058,095,953)*
Net Other Assets and Liabilities - 0.20% 2,074,100
---------------
Net Assets - 100.00% .............................................. $ 1,060,170,053
===============
</TABLE>
- ---------------------------------------
* Aggregate cost for Federal tax purposes.
(A) Annualized yields at time of purchase.
See Notes to Financial Statements.
11
<PAGE>
[LOGO OF FLEET GALAXY Tax-Exempt Fund
APPEARS HERE] PORTFOLIO OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
----------- ----------
MUNICIPAL SECURITIES - 98.84%
Arizona - 2.22%
<S> <C> <C>
$ 5,200,000 Mesa Municipal Development Corp.
Series 1996A
3.38%, 11/07/96
LOC: West Deutsche Landesbank .......... $ 5,200,000
1,500,000 Special Fund of Industrial Commission
3.45%, 11/05/96
Insured: FGIC .......................... 1,500,000
------------------
6,700,000
------------------
California - 0.07%
200,000 Los Angeles Regional Airports
Improvement Corp., Lease Revenue
American Airlines, LA International
Airport
3.65%, 12/01/24 (A)
LOC: Wachovia Bank ..................... 200,000
------------------
Colorado - 1.00%
3,000,000 Arapahoe County School District 05
Cherry Creek, TAN
4.50%, 06/30/97 ........................ 3,012,709
------------------
Connecticut - 1.66%
5,000,000 Cheshire, BAN
4.00%, 08/08/97 ........................ 5,009,657
------------------
Delaware - 1.52%
4,000,000 Delaware State
Economic Development Authority, IDR
W.L.Gore & Associates
3.65%, 02/19/97
LOC: Morgan Guaranty ................... 4,000,000
600,000 Wilmington Hospital Revenue
Franciscan Health System, Series A
3.65%, 07/01/11 (A)
LOC: Societe Generale .................. 600,000
------------------
4,600,000
------------------
Florida - 4.98%
2,000,000 Jacksonville, Series A
3.40%, 11/26/96
LOC: Morgan Guaranty ................... 2,000,000
3,000,000 Jacksonville, Series A
3.55%, 12/05/96 ........................ 3,000,000
4,000,000 Jacksonville
3.55%, 12/18/96 ........................ 4,000,000
Florida (continued)
$ 5,000,000 Pinellas County, Educational Facilities
Authority Revenue, Pooled Independent
Higher Education, GO
3.55%, 11/25/96
Insured: MBIA .......................... $ 5,000,000
1,050,000 West Orange
Memorial Hospital Tax District Revenue
Series A-2
3.55%, 11/26/96
LOC: Rabobank .......................... 1,050,000
------------------
15,050,000
------------------
Georgia - 2.52%
3,800,000 Burke County Development Authority
PCR, Oglethorpe Power Corp., Series A
3.40%, 12/03/96
LOC: Credit Suisse ..................... 3,800,000
2,300,000 Burke County Development Authority
PCR, Oglethorpe Power Corp., Series A
3.60%, 01/15/97
LOC: Credit Suisse ..................... 2,300,000
1,500,000 Georgia Municipal Gas
Authority Revenue
3.45%, 11/07/96 ........................ 1,500,000
------------------
7,600,000
------------------
Illinois - 6.52%
3,500,000 Chicago O'Hare International Airport
Revenue, American Airlines, Series C
3.65%, 12/01/17 (A) .................... 3,500,000
1,800,000 Chicago O'Hare International Airport
Revenue, General Airport, Second Lien
Series C
3.55%, 01/01/18 (A)
LOC: Societe Generale .................. 1,800,000
1,000,000 Illinois Health Facilities
Authority Revenue, Series D
Alexian Brothers Medical Center
3.55%, 11/20/96
LOC: Morgan Guaranty ................... 1,000,000
1,000,000 Illinois Health Facilities
Authority Revenue, Series D
Alexian Brothers Medical Center
3.50%, 11/25/96
Insured: MBIA .......................... 1,000,000
2,335,000 Illinois Health Facilities
Authority Revenue, Series D
Alexian Brothers Medical Center
3.55%, 11/25/96
LOC: Morgan Guaranty ................... 2,335,000
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
[LOGO OF THE Tax-Exempt Fund
GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- ----------
<S> <C> <C>
Ilinois (continued)
$ 3,950,000 Illinois Health Facilities
Authority Revenue, Series D
Alexian Brothers Medical Center
3.50%, 12/02/96
LOC: Morgan Guaranty ................. $ 3,950,000
1,100,000 Illinois Health Facilities
Authority Revenue, Series 1989A
3.55%, 12/04/96
LOC: Northern Trust .................. 1,100,000
2,645,000 Illinois Health Facilities
Authority Revenue, Series D
Alexian Brothers Medical Center
3.50%, 12/05/96
Insured: MBIA ........................ 2,645,000
2,350,000 Illinois Health Facilities
Authority Revenue, Series D
Alexian Brothers Medical Center
3.55%, 01/02/97
LOC: Morgan Guaranty ................. 2,350,000
--------------
19,680,000
--------------
Indiana - 0.99%
3,000,000 Mt. Vernon
Pollution Control & Solid Waste Disposal
General Electric Project, Series A
3.55%, 02/19/97
LOC: General Electric ................ 3,000,000
--------------
Kansas - 0.89%
2,700,000 Burlington, PCR, Series 1985 C-2
3.45%, 12/02/96
LOC: National Rural .................. 2,700,000
--------------
Louisiana - 7.12%
5,500,000 Louisiana Public Facilities Authority
Revenue
3.30%, 11/01/96
LOC: Credit Suisse ................... 5,500,000
2,900,000 Louisiana Public Facilities Authority
SHCSR
3.55%, 11/04/96
LOC: Toronto Dominion 2,900,000
3,000,000 Louisiana Public Facilities Authority
Revenue
3.40%, 11/12/96
LOC: Credit Suisse ................... 3,000,000
6,700,000 Louisiana Public Facilities Authority
SHCSR
3.40%, 11/18/96
LOC: Toronto Dominion ................ 6,700,000
<CAPTION>
Value
Par Value (Note 2)
--------- ----------
<S> <C> <C>
Louisiana (continued)
$ 2,200,000 Louisiana Public Facilities Authority
Revenue, Series 1993
3.45%, 11/19/96
LOC: Credit Suisse ................... $ 2,200,000
1,200,000 Louisiana Public Facilities Authority
College & University Equipment &
Capital, Series A
3.55%, 09/01/10 (A)
SPA: Societe Generale ................ 1,200,000
--------------
21,500,000
--------------
Maine - 0.66%
2,000,000 Cumberland County, TAN
3.50%, 12/31/96 ...................... 2,000,158
--------------
Massachusetts - 8.64%
2,000,000 Ashland, BAN, GO
3.65%, 04/08/97 ...................... 1,999,953
4,000,000 Massachusetts Bay Transportation
Authority, Series C
3.55%, 11/01/96
LOC: West Deutsche Landesbank ........ 4,000,000
4,300,000 Massachusetts Bay Transportation
Authority, Series C
3.50%, 11/04/96
LOC: West Deutsche Landesbank ........ 4,300,000
2,000,000 Massachusetts Bay Transportation
Authority, Series C
3.45%, 12/03/96
LOC: West Deutsche Landesbank ........ 2,000,000
2,100,000 Massachusetts Bay Transportation
Authority, Series C
3.35%, 12/09/96
LOC: West Deutsche Bank .............. 2,100,000
8,800,000 Massachusetts State, GO, Series B
3.60%, 12/01/97 (A)
LOC: National Westminster ............ 8,800,000
1,783,570 North Adams, BAN, Lot B
4.25%, 07/01/97 ...................... 1,783,570
1,100,000 Westfield, State Grant Anticipation Note
4.00%, 11/01/96 ...................... 1,100,000
--------------
26,083,523
--------------
Michigan - 2.76%
1,140,000 Cornell Township
Economic Development Corp., IDR
Mead-Escanaba Paper Co.
3.35%, 12/04/96
LOC: Credit Suisse ................... 1,140,000
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
[LOGO OF M.M. FUNDS Tax-Exempt Fund
APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- ----------
<S> <C> <C>
Michigan (continued)
$ 3,500,000 Cornell Township
Economic Development Corp., IDR
Mead-Escanaba Paper Co.
3.50%, 02/10/97
LOC: Credit Suisse ................. $ 3,500,000
3,500,000 Delta County
Economic Development Corp., EIR
Mead-Escanaba Paper Co., Series A
3.45%, 12/02/96
LOC: Swiss Bank .................... 3,500,000
200,000 Michigan State Strategic Fund, PCR
Consumers Power Project
3.60%, 04/15/18 (A)
LOC: Union Bank of Switzerland ..... 200,000
-------------
8,340,000
-------------
Minnesota - 5.37%
3,500,000 Rochester Health Care Facilities Revenue
Mayo Foundation/Mayo Medical Center
Series A
3.45%, 11/05/96 .................... 3,500,000
4,900,000 Rochester Health Care Facilities Revenue
Mayo Foundation/Mayo Medical Center
Series C
3.45%, 11/06/96
LOC: Credit Suisse ................. 4,900,000
3,000,000 Rochester Health Care Facilities Revenue
Mayo Foundation/Mayo Medical Center
Series C
3.45%, 11/07/96
LOC: Credit Suisse .................. 3,000,000
2,700,000 Rochester Health Care Facilities Revenue
Mayo Foundation/Mayo Medical Center
Series C
3.40%, 12/03/96
LOC: Credit Suisse .................. 2,700,000
1,000,000 Rochester Health Care Facilities Revenue
Mayo Foundation/Mayo Medical Center
Series A
3.40%, 12/03/96 ..................... 1,000,000
1,100,000 Rochester Health Care Facilities Revenue
Series E
3.60%, 01/22/97
LOC: Credit Suisse .................. 1,100,000
-------------
16,200,000
-------------
Missouri - 3.23%
5,100,000 Missouri State Environmental Improvement
& Energy Resource Authority, PCR
Union Electric, Series A
3.45%, 11/21/96
LOC: Union Bank of Switzerland ...... 5,100,000
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- ----------
<S> <C> <C>
Missouri (continued)
$ 1,655,000 Missouri State Environmental Improvement
& Energy Resource Authority, PCR
Union Electric, Series A
3.45%, 11/26/96
LOC: Union Bank of Switzerland ...... $ 1,655,000
3,000,000 Missouri State Environmental Improvement
& Energy Resource Authority, PCR
Union Electric, Series A
3.55%, 01/13/97
LOC: Union Bank of Switzerland ...... 3,000,000
-------------
9,755,000
-------------
New Hampshire - 7.14%
1,200,000 Durham, TAN
3.46%, 12/31/96 ..................... 1,200,210
5,000,000 Merrimack County, TAN
3.75%, 12/30/96 ..................... 5,000,347
8,050,000 Rockingham County, TAN
4.00%, 12/31/96 ..................... 8,052,559
3,000,000 Salem, TAN, GO
3.60%, 12/17/96 ..................... 3,000,363
4,300,000 Strafford County, TAN
3.92%, 12/27/96 ..................... 4,301,442
-------------
21,554,921
-------------
New Jersey - 4.77%
13,000,000 New Jersey State, Series 1997A
3.40%, 11/18/96
LOC: Union Bank of Switzerland ...... 13,000,000
1,400,000 New Jersey State Turnpike Authority
Series D
3.40%, 01/01/18 (A)
Insured: FGIC, LOC: Societe Generale. 1,400,000
-------------
14,400,000
-------------
New York - 1.89%
1,100,000 New York Municipal Water Finance
Authority, Series 3
3.55%, 12/04/96
LOC: Toronto Dominion ............... 1,100,000
1,000,000 New York Municipal Water Finance
Authority, Series 4
3.55%, 12/04/96
LOC: Credit Suisse .................. 1,000,000
600,000 New York Municipal Water Finance
Authority, Water & Sewer System
Revenue, Series C
3.55%, 06/15/22 (A)
Insured: FGIC ....................... 600,000
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
[LOGO OF THE GALAXY Tax-Exempt Fund
FUND APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- ----------
<C> <S> <C>
New York (continued)
$ 2,000,000 New York State Energy Research &
Development Authority, PCR
Orange & Rockland Project, Series A
3.40%, 10/01/14 (A)
Insured: FGIC, LOC: Societe Generale..... $ 2,000,000
1,000,000 New York State Energy Research &
Development Authority, PCR
Niagara Mohawk Power Corp., Series C
3.60%, 12/01/25 (A)
LOC: Canadian Imperial Bank.............. 1,000,000
--------------
5,700,000
--------------
North Carolina - 1.89%
5,700,000 North Carolina Eastern Municipal
Power Agency, Series B
3.55%, 02/04/97
LOC: Union Bank of Switzerland........... 5,700,000
--------------
Ohio - 0.33%
1,000,000 Ohio State Air Quality Development
Authority Revenue
Environmental Mead Corp.
3.60%, 10/01/01 (A)
LOC: Deutsche Bank....................... 1,000,000
--------------
Oregon - 1.26%
1,600,000 Port Portland, PCR, Reynolds Metals
3.65%, 12/01/09 (A)
LOC: Bank of Nova Scotia................. 1,600,000
2,200,000 Umatilla County Hospital Facilities
Authority, Hospital Revenue
Franciscan Health System, Series B
3.65%, 12/01/24 (A)
LOC: Toronto Dominion.................... 2,200,000
--------------
3,800,000
--------------
Pennsylvania - 5.93%
2,500,000 Allegheny County, HDA
Health Center Development, Inc., Series B
3.55%, 01/15/97
LOC: PNC Bank............................ 2,500,000
2,000,000 Beaver County, IDA, PCR
3.50%, 11/07/96
LOC: Swiss Bank.......................... 2,000,000
1,400,000 Beaver County, IDA, PCR
3.45%, 11/08/96.......................... 1,400,000
5,000,000 Delaware County, IDA, Series 1998 B
3.50%, 12/05/96
Insured: FGIC............................ 5,000,000
Pennsylvania (continued)
$ 4,200,000 Delaware County, IDA, Series 1998 B
3.55%, 01/14/97
Insured: FGIC............................ $ 4,200,000
1,600,000 Delaware County, IDA, Series 1998 B
3.55%, 02/10/97
Insured: FGIC............................ 1,600,000
1,100,000 Delaware County, IDA, Airport Facilities
United Parcel Service Project
3.60%, 12/01/15 (A)...................... 1,100,000
100,000 St. Mary Hospital Authority, Hospital
Revenue, Franciscan Health System
Series B
3.60%, 12/01/24 (A)
LOC: Toronto Dominion.................... 100,000
--------------
17,900,000
--------------
Rhode Island - 0.33%
1,000,000 Rhode Island Housing & Mortgage
Finance Corp., Homeownership
Opportunity, Series 19-C
3.45%, 10/01/16 (A)...................... 1,000,000
--------------
South Carolina - 4.19%
2,400,000 South Carolina Jobs Economic
Development Authority Revenue
St. Francis Hospital
3.65%, 07/01/22 (A)
LOC: Chemical Bank....................... 2,400,000
3,600,000 York County, PCR
Duke Power Co. Project
3.55%, 11/01/96
LOC: Duke Power.......................... 3,600,000
4,000,000 York County, PCR
Duke Power Co. Project
3.45%, 12/05/96
LOC: Duke Power.......................... 4,000,000
2,650,000 York County, PCR
Duke Power Co. Project
3.45%, 02/12/97
LOC: Duke Power.......................... 2,650,000
--------------
12,650,000
--------------
Tennessee - 1.29%
1,000,000 Metropolitan Government Nashville &
Davidson County, Health & Education
Facilities Board Revenue, Baptist Hospital
3.45%, 11/01/96
LOC: Nations Bank of Georgia............. 1,000,000
2,900,000 Metropolitan Nashville Airport Authority
Special Facilities Revenue
American Airlines, Series B
3.65%, 10/01/12 (A)
LOC: Bayerische Landesbank............... 2,900,000
--------------
3,900,000
--------------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Tax-Exempt Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- ----------
<C> <S> <C>
Texas - 11.69%
$ 2,000,000 Austin Utility System Revenue, Series A
3.55%, 12/04/96
LOC: Swiss Bank Corp. ................... $ 2,000,000
2,500,000 Guadalupe-Blanco River Authority, PCR
Central Power & Light Co. Project
3.60%, 11/01/15 (A)...................... 2,500,000
1,400,000 Harris County HFDC, SHCSR
Sisters of Charity
3.45%, 11/19/96
LOC: Toronto Dominion.................... 1,400,000
2,000,000 Harris County, HFDC, SHCSR
Sisters of Charity
3.50%, 11/20/96
LOC: Toronto Dominion.................... 2,000,000
5,000,000 Harris County, HFDC, Series 1993
3.55%, 01/13/97
LOC: Toronto Dominion.................... 5,000,000
1,300,000 Harris County, HFDC
Special Facilities Revenue
Texas Medical Center Project
3.65%, 02/15/22 (A)
Insured: MBIA............................ 1,300,000
1,200,000 Lone Star Airport Improvement
Authority Revenue, Multiple Mode
Demand Revenue, Series A2
3.65%, 12/01/14 (A)
LOC: Royal Bank of Canada................ 1,200,000
300,000 Lone Star Airport Improvement Authority
Multiple Mode Demand Revenue
American Airlines Inc. Project, Series A5
3.65%, 12/01/14 (A)
LOC: Royal Bank of Canada................ 300,000
200,000 North Central, HFDC
Hospital Revenue, Series C
Presbyterian Medical Center
3.65%, 12/01/15 (A)
Insured: MBIA............................ 200,000
4,600,000 Plano, HFDC
Hospital Revenue, Series 1989
3.50%, 11/20/96
Insured: MBIA............................ 4,600,000
1,000,000 San Antonio Electric & Gas System
Series A
3.45%, 11/05/96.......................... 1,000,000
Texas (continued)
$ 2,500,000 Texas A & M, Board of Regents
Permanent University Fund, Series B
3.50%, 11/06/96
LOC: Morgan Guaranty..................... $ 2,500,000
1,200,000 Texas A & M, Board of Regents
Permanent University Fund, Series B
3.55%, 01/07/97
LOC: Morgan Guaranty..................... 1,200,000
10,000,000 Texas State, TRAN
4.75%, 08/29/97 10,080,024
--------------
35,280,024
--------------
Utah - 0.80%
2,400,000 Intermountain Power Agency
Power Supply Revenue, Series 1985 E
3.30%, 11/21/96
LOC: Bank of America..................... 2,400,000
--------------
Virginia - 1.33%
3,000,000 Peninsula Ports Authority Coal Terminal
Dominion Terminal Project, Series A
3.45%, 01/23/97
LOC: National Westminster................ 3,000,000
1,000,000 Peninsula Ports Authority Coal Terminal
Dominion Terminal Project, Series C
3.60%, 07/01/16 (A)
LOC: National Westminster................ 1,000,000
--------------
4,000,000
--------------
Washington - 3.33%
6,750,000 Seattle Municipal Light & Power Revenue
3.55%, 11/04/96.......................... 6,750,000
3,300,000 Washington State
Public Power Supply System
Nuclear Project No.1 Revenue, Series 1A-1
3.55%, 07/01/17 (A)
LOC: Bank of America..................... 3,300,000
--------------
10,050,000
--------------
District of Columbia - 1.33%
3,000,000 District of Columbia, GO, Series A-2
3.70%, 10/01/07 (A)...................... 3,000,000
1,000,000 District of Columbia, GO, Series A-3
3.70%, 10/01/07 (A)...................... 1,000,000
--------------
4,000,000
--------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
[LOGO OF THE GALAXY FUND APPEARS HERE]
Tax-Exempt Fund
PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- ------------
<S> <C> <C>
Wyoming - 1.19%
$ 1,000,000 Lincoln County, PCR
3.65%, 01/23/97
LOC: Union Bank of Switzerland......... $ 1,000,000
2,600,000 Platte County, PCR
Tri-State G & T, Series A
3.60%, 07/01/14 (A)
LOC: Societe Generale.................. 2,600,000
--------------
3,600,000
--------------
Total Investments - 98.84%....................................... 298,365,992
(Cost $298,365,992) * --------------
Net Other Assets and Liabilities - 1.16%......................... 3,488,880
--------------
Net Assets - 100.00%............................................. $ 301,854,872
==============
</TABLE>
- ----------------------------------------------------
* Aggregate cost for Federal tax purposes.
(A) Variable rate demand notes are payable upon not more than one,
seven or thirty business days notice. Put bonds and notes have
demand features which mature within one year. The interest
rate shown reflects the rate in effect at October 31, 1996.
BAN Bond Anticipation Notes
EIR Environmental Improvement Revenue
FGIC Financial Guaranty Insurance Corp.
GO General Obligation
HDA Hospital Development Authority
HFDC Health Facilities Development Corp.
IDA Industrial Development Authority
IDR Industrial Development Revenue
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SHCSR School Health Care System Revenue
SPA Stand-by Purchase Agreement
TAN Tax Anticipation Notes
TRAN Tax & Revenue Anticipation Notes
See Notes to Financial Statements.
17
<PAGE>
[LOGO OF FLEET GALAXY U.S. Treasury Fund
APPEARS HERE] PORTFOLIO OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
U.S. GOVERNMENT AND AGENCY OBLIGATONS - 99.66%
U.S. Treasury Bills (A) - 47.15%
<S> <C> <C>
$ 52,886,000 5.08%, 11/07/96...................... $ 52,842,193
40,665,000 5.06%, 11/14/96...................... 40,593,007
20,000,000 5.06%, 11/21/96...................... 19,943,944
40,000,000 4.96%, 12/05/96...................... 39,815,267
100,000,000 5.22%, 12/12/96...................... 99,421,160
50,000,000 4.86%, 12/19/96...................... 49,675,667
25,000,000 5.02%, 01/30/97...................... 24,686,250
25,000,000 5.29%, 03/06/97...................... 24,541,232
25,000,000 5.30%, 03/13/97...................... 24,532,500
----------------
376,051,220
----------------
<CAPTION>
Federal Farm Credit Bank - 18.43%
<S> <C> <C>
15,000,000 5.15%, 11/01/96 (A).................. 15,000,000
57,000,000 5.45%, 11/01/96...................... 57,000,000
50,000,000 5.34%, 12/02/96...................... 50,000,000
25,000,000 5.66%, 02/03/97...................... 25,000,000
----------------
147,000,000
----------------
<CAPTION>
U.S. Treasury Notes - 17.58%
<S> <C> <C>
40,000,000 4.38%, 11/15/96...................... 39,990,104
50,000,000 7.50%, 12/31/96...................... 50,169,271
50,000,000 6.25%, 01/31/97...................... 50,113,247
----------------
140,272,622
----------------
<CAPTION>
Federal Home Loan Bank (A) - 14.62%
<S> <C> <C>
96,620,000 5.53%, 11/01/96...................... 96,620,000
20,000,000 5.16%, 11/14/96...................... 19,962,733
----------------
116,582,733
----------------
<CAPTION>
U.S. Treasury Strip (A) - 1.88%
<S> <C> <C>
15,000,000 5.06%, 11/15/96, Principal (B)....... 14,970,486
----------------
Total Investments - 99.66%..................................... 794,877,061
(Cost $794,877,061)* ----------------
Net Other Assets and Liabilities - 0.34%....................... 2,684,410
----------------
Net Assets - 100.00%........................................... $ 797,561,471
================
</TABLE>
- -----------------------------------------------------
* Aggregate cost for Federal tax purposes is $794,884,787.
(A) Annualized yields 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.
See Notes to Financial Statements.
18
<PAGE>
Connecticut Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS
October 31, 1996
[LOGO OF FLEET GALAXY APPEARS HERE]
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- ----------
<S> <C> <C>
MUNICIPAL SECURITIES - 92.28%
California - 0.90%
$ 1,000,000 San Jose Redevelopment Agency
Revenue, Merged Area Redevelopment
Project, Series B
3.55%, 07/01/26 (A)
LOC: Morgan Guaranty.................... $ 1,000,000
--------------
Connecticut - 58.23%
815,000 Branford, SAN
3.45%, 04/09/97......................... 815,000
3,500,000 Connecticut State, IDA
Allen Group, Inc.
3.65%, 02/01/13 (A)
LOC: Bayerische Vereinsbank............. 3,500,000
1,100,000 Connecticut State, IDA
Trudy Corp. Project 1984
3.45%, 10/01/09 (A)
LOC: Citibank........................... 1,100,000
600,000 Connecticut State, IDA
Martin-Brower Co. Project
3.20%, 05/01/05 (A)
LOC: Chemical Bank...................... 600,000
2,600,000 Connecticut State Development Authority
PCR, Central Vermont Public Service
3.50%, 12/01/15 (A)
LOC: Toronto Dominion Bank.............. 2,600,000
18,200,000 Connecticut State Development Authority
PCR, Connecticut Light & Power Co. Project
3.55%, 09/01/28 (A)
LOC: Deutsche Bank...................... 18,200,000
2,000,000 Connecticut State Development Authority
PCR, Western Massachusetts Electric Co.
Series A
3.35%, 09/01/28 (A)
LOC: Union Bank of Switzerland.......... 2,000,000
1,000,000 Connecticut State HEFA
Pomfret School Issue, Series A
3.25%, 07/01/24 (A)
LOC: Credit Local De France............. 1,000,000
1,205,000 Connecticut State HEFA
Yale-New Haven Hospital, Series E
5.25%, 06/01/12 (A)
Insured: FGIC........................... 1,205,000
200,000 Connecticut State Housing Finance
Authority, Housing Mortgage Finance
Program, Series B4, Subseries B-4
6.60%, 11/15/96......................... 200,196
150,000 Connecticut State Housing Finance
Authority, Housing Mortgage Finance
Program, Series F2
4.10%, 05/15/97......................... 150,272
<CAPTION>
Value
Par Value (Note 2)
--------- ----------
<S> <C> <C>
Connecticut (continued)
$ 2,100,000 Connecticut State Housing Finance
Authority, Housing Mortgage Finance
Program, Series G
3.45%, 05/15/18 (A)
Insured: AMBAC.......................... $ 2,100,000
6,000,000 Connecticut State Special Assessment
Unemployment Compensation Advisory
Fund, Series C
3.90%, 11/15/01 (A)
Insured: FGIC........................... 6,000,000
1,000,000 Connecticut State, Special Tax Obligation
Revenue, Transportation Infrastructure
Purpose, Series A
4.13%, 06/01/97
Insured: FGIC........................... 1,002,260
150,000 Connecticut State Clean Water Fund
Revenue
4.10%, 12/01/96......................... 150,060
1,300,000 Connecticut State Development Authority
Revenue, Conco Project
3.60%, 11/01/05 (A)
LOC: Bayerische Vereinsbank............. 1,300,000
4,700,000 Connecticut State Development Authority
Health Care Revenue
Corporate Independent Living Project
3.35%, 07/01/15 (A)
LOC: Chemical Bank...................... 4,700,000
3,625,000 Danbury, BAN
4.00%, 01/08/97......................... 3,628,939
789,000 East Lyme, BAN
3.79%, 07/29/97......................... 789,222
1,450,000 Fairfield, SAN
3.75%, 06/06/97......................... 1,452,498
1,260,000 Groton City, GO, BAN
4.00%, 07/10/97......................... 1,263,675
2,050,000 Manchester, Temp Notes, Lot B
3.60%, 05/28/97......................... 2,051,692
250,000 Middletown, GO
4.00%, 04/15/97......................... 250,400
160,000 New Britain, GO
7.60%, 04/01/97
Insured: FGIC........................... 162,311
300,000 New Haven
Air Rights Parking Facility Revenue
5.70%, 12/01/96
Insured: MBIA........................... 300,528
4,750,000 Newtown, BAN, GO
3.03%, 12/18/96......................... 4,750,236
1,140,000 Prospect, BAN
3.75%, 07/24/97......................... 1,140,316
370,000 Simsbury, GO
6.13%, 01/15/97......................... 371,711
756,700 Thompson, BAN
4.50%, 07/18/97......................... 760,060
822,000 Westport, BAN, Lot B
3.90%, 06/27/97......................... 823,290
--------------
64,367,666
--------------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
[LOGO OF FLEET GALAXY Connecticut Municipal Money Market Fund
APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- ----------
<S> <C> <C>
Illinois - 1.36%
$ 1,500,000 Chicago O'Hare International Airport
American Airlines, Series A
3.65%, 12/01/17 (A)
LOC: West Deutsche Landesbank........... $ 1,500,000
--------------
Massachusetts - 0.18%
200,000 Massachusetts State Water Resource
Authority Series 1994
3.25%, 11/01/96
LOC: Morgan Guaranty.................... 200,000
--------------
Pennsylvania - 3.26%
3,600,000 Delaware County, IDA
Airport Facilities Revenue
United Parcel Service Project
3.60%, 12/01/15 (A)..................... 3,600,000
--------------
Puerto Rico - 8.91%
4,900,000 Puerto Rico Commonwealth
Government Development Bank
3.30%, 12/01/15 (A)
LOC: Credit Suisse...................... 4,900,000
3,900,000 Puerto Rico Commonwealth
Highway & Transportation
Authority, Series X
3.30%, 07/01/99 (A)
LOC: Union Bank of Switzerland.......... 3,900,000
1,000,000 Puerto Rico Public Buildings Authority
Public Education & Health Facilities
Prerefunded 07/01/97, Series H
7.88%, 07/01/07......................... 1,046,900
--------------
9,846,900
--------------
South Carolina - 3.71%
4,100,000 South Carolina Jobs Economic
Development Authority
St. Francis Hospital
3.65%, 07/01/22 (A)
LOC: Chemical Bank...................... 4,100,000
--------------
South Dakota - 1.18%
1,300,000 Lawrence County, PCR
Homestake Mining Project
3.60%, 04/01/03 (A)
LOC: Bank of Nova Scotia................ 1,300,000
--------------
Tennessee - 4.25%
$ 2,100,000 Metropolitan Nashville Airport Authority
Special Facilities Revenue
American Airlines, Series A
3.65%, 10/01/12 (A)
LOC: Credit Suisse...................... $ 2,100,000
2,600,000 Metropolitan Nashville Airport Authority
Special Facilities Revenue
American Airlines, Series B
3.65%, 10/01/12 (A)
LOC: Bayerische Landesbank.............. 2,600,000
--------------
4,700,000
--------------
Texas - 6.87%
2,100,000 Grapevine, IDC, Multiple Mode
American Airlines, Series B-1
3.65%, 12/01/24 (A)
LOC: Morgan Guaranty.................... 2,100,000
600,000 Guadalupe-Blanco River Authority, PCR
Central Power & Light Co. Project
3.60%, 11/01/15 (A)..................... 600,000
1,300,000 Lone Star Airport Improvement Authority
Multiple Mode, Series A-1
3.65%, 12/01/14 (A)
LOC: Royal Bank of Canada............... 1,300,000
1,000,000 Lone Star Airport Improvement Authority
Multiple Mode, Series A-3
3.65%, 12/01/14 (A)
LOC: Royal Bank of Canada............... 1,000,000
1,700,000 Lone Star Airport Improvement Authority
Multiple Mode, Series A-4
3.65%, 12/01/14 (A)
LOC: Royal Bank of Canada............... 1,700,000
100,000 Lone Star Airport Improvement Authority
Multiple Mode, Series B-5
3.65%, 12/01/14 (A)
LOC: Royal Bank Of Canada............... 100,000
800,000 Texas A & M University System
Permanent Board of Regents
3.60%, 11/06/96......................... 800,000
--------------
7,600,000
--------------
Virginia - 3.43%
3,800,000 Peninsula Ports Authority
Coal Terminal Revenue
Dominion Terminal Project, Series C
3.60%, 07/01/16 (A)
LOC: National Westminster............... 3,800,000
--------------
Total Municipal Securites............... 102,014,566
--------------
(Cost $102,014,566)
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
[LOGO OF FLEET GALAXY Connecticut Municipal Money Market Fund
APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
----------- --------
<C> <S> <C>
INVESTMENT COMPANIES - 7.31%
3,879,174 Dreyfus Connecticut
Municipal Money Market Fund ............... $ 3,879,174
4,196,851 Federated Municipal Trust
Connecticut Municipal Cash Trust .......... 4,196,851
-------------
Total Investment Companies ................ 8,076,025
-------------
(Cost $8,076,025)
Total Investments - 99.59% ................................... 110,090,591
-------------
(Cost $110,090,591)*
Net Other Assets and Liabilities - 0.41% ..................... 453,850
-------------
Net Assets - 100.00% ......................................... $ 110,544,441
=============
</TABLE>
- -------------------------------------------------------
* Aggregate cost for Federal tax purposes.
(A) Variable rate demand notes are payable upon not more than one,
seven or thirty business days notice. Put bonds and notes have
demand features which mature within one year. The interest
rate shown reflects the rate in effect at October 31, 1996.
AMBAC American Municipal Bond Assurance Corp.
BAN Bond Anticipation Notes
FGIC Federal Guaranty Insurance Corp.
GO General Obligation
HEFA Health and Educational Facilities Authority
IDA Industrial Development Authority
IDC Industrial Development Corp.
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SAN Sewer Assessment Notes
SPA Stand-by Purchase Agreement
See Notes to Financial Statements.
21
<PAGE>
[LOGO OF FLEET GALAXY Massachusetts Municipal Money Market Fund
APPEARS HERE] PORTFOLIO OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<C> <S> <C>
MUNICIPAL SECURITIES - 91.49%
Alabama - 0.21%
$ 100,000 North Alabama Environmental Improvement
Authority, PCR, Reynolds Metals
3.65%, 12/01/00 (A)
LOC: Bank of Nova Scotia................... $ 100,000
------------
Delaware - 0.64%
300,000 Wilmington Hospital Revenue
Franciscan Health System, Series B
3.65%, 07/01/11 (A)
LOC: Societe Generale...................... 300,000
------------
Kansas - 0.42%
200,000 Burlington, PCR, Series 1985C-2
3.45%, 12/02/96
LOC: National Rural........................ 200,000
------------
Massachusetts - 72.49%
1,000,000 Andover, GO
State Aid Anticipation Note
3.75%, 12/20/96............................ 1,000,196
2,000,000 Barnstable, BAN
4.00%, 10/23/97............................ 2,005,637
1,000,000 Boston Water & Sewer Commission
General, Senior Series A
3.50%, 11/01/24 (A)
LOC: State Street Bank & Trust............. 1,000,000
1,500,000 Braintree, BAN
3.63%, 12/20/96............................ 1,500,115
1,605,000 Dedham, BAN, GO
3.75%, 02/12/97............................ 1,605,657
1,110,322 Framingham, State Aid Anticipation Note
4.25%, 03/28/97............................ 1,113,048
1,140,000 Marlborough, GO
5.90%, 02/01/97............................ 1,146,244
1,000,000 Massachusetts Bay Transportation
Authority, Series C
3.50%, 11/06/96
LOC: West Deutsche Landesbank.............. 1,000,000
1,000,000 Massachusetts Bay Transportation
Authority, Series C
3.50%, 12/02/96............................ 1,000,000
LOC: West Deutschebank
2,000,000 Massachusetts Bay Transportation Authority
General Transportation System, Series 1984A
3.40%, 03/01/14 (A)
LOC: State Street Bank & Trust............. 2,000,000
1,500,000 Massachusetts Municipal Wholesale
Electric Co., Power Supply System Revenue
Series C
3.45%, 07/01/19 (A)
LOC: Canadian Imperial Bank................ 1,500,000
4,650,000 Massachusetts State, GO, Series B
3.60%, 12/01/97 (A)
LOC: National Westminster.................. 4,650,000
100,000 Massachusetts State, GO, Series E
3.60%, 12/01/97 (A)
LOC: ABN-AMRO Bank......................... 100,000
2,700,000 Massachusetts State HEFA
Capital Assets Program, Series D
3.55%, 01/01/35 (A)
Insured: MBIA; SPA: Credit Suisse.......... 2,700,000
2,000,000 Massachusetts State HEFA
Capital Asset Program, Series G-1
3.35%, 01/01/19 (A)
Insured: MBIA.............................. 2,000,000
2,000,000 Massachusetts State HEFA
Newton Wellesley Hospital, Series F
3.40%, 07/01/25 (A)
Insured: MBIA.............................. 2,000,000
1,000,000 Massachusetts State Housing Finance
Agency, Multi-Family, Series A
3.40%, 12/01/25 (A)........................ 1,000,000
1,000,000 Massachusetts State Industrial Finance
Agency, Governor Dummer Academy
3.50%, 07/01/26 (A)........................ 1,000,000
1,900,000 Massachusetts State Industrial Finance
Agency, Resource Recovery Revenue
Ogden Haverhill Project, Series A
3.35%, 12/01/06 (A)
LOC: Union Bank of Switzerland............. 1,900,000
1,000,000 Massachusetts State Water Resource
Authority, Series 1994
3.55%, 01/10/97
LOC: Morgan Guaranty....................... 1,000,000
638,000 Norwell, GO
4.50%, 10/01/97
Insured: FSA............................... 641,964
2,000,000 Peabody, BAN
4.00%, 08/15/97............................ 2,002,544
250,000 Provincetown
3.60%, 12/01/96............................ 250,000
------------
34,115,405
------------
Missouri - 0.85%
400,000 Missouri State HEFA
St. Louis University
3.75%, 12/01/05 (A)........................ 400,000
------------
Ohio - 0.85%
400,000 Montgomery County Hospital Revenue
Miami Valley Hospital, Series B
3.55%, 02/03/97
LOC: Northern Trust........................ 400,000
------------
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
[LOGO OF FLEET GALAXY Massachusetts Municipal Money Market Fund
APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<C> <S> <C>
Oregon - 0.85%
$ 400,000 Port St. Helens, PCR
Portland General Electric, Series B
3.65%, 06/01/10 (A)
LOC: Societe Generale...................... $ 400,000
------------
Pennsylvania - 2.34%
800,000 Delaware County, IDA, Airport Facilities
United Parcel Service Project
3.60%, 12/01/15 (A)........................ 800,000
300,000 St. Mary Hospital Authority, Hospital
Revenue, Franciscan Health System
Series C
3.60%, 12/01/24 (A)
LOC: Toronto Dominion...................... 300,000
------------
1,100,000
------------
Puerto Rico - 4.64%
650,000 Puerto Rico Commonwealth Government
Development Bank
3.30%, 12/01/15 (A)
LOC: Credit Suisse......................... 650,000
1,535,000 Puerto Rico Commonwealth Highway &
Transportation Authority, Series X
3.30%, 07/01/99 (A)
LOC: Union Bank of Switzerland............. 1,535,000
------------
2,185,000
------------
South Carolina - 4.25%
2,000,000 South Carolina Jobs Economic
Development Authority, St. Francis Hospital
3.65%, 07/01/22 (A)
LOC: Chemical Bank......................... 2,000,000
------------
Texas - 3.74%
200,000 Grapevine, IDC
Multiple Mode, American Airlines, Series B3
3.65%, 12/01/24 (A)
LOC: Morgan Guaranty Trust................. 200,000
1,000,000 Harris County Health Facilities
Development Corp., SHCSR
Sisters of Charity
3.40%, 11/12/96
LOC: Toronto Dominion...................... 1,000,000
200,000 Lone Star Airport Improvement Authority
Multiple Mode, Series A2
3.65%, 12/01/14 (A)
LOC: Royal Bank of Canada.................. 200,000
360,000 Texas Higher Education Authority, Inc.
Educational Equipment & Improvement
Series B
3.55%, 12/01/25 (A)
Insured: FGIC.............................. 360,000
------------
1,760,000
------------
Washington - 0.21%
100,000 Washington State Public Power
Supply System, Nuclear Project No.1
Revenue, Series 1A-1
3.55%, 07/01/17 (A)
LOC: Bank of America $ 100,000
------------
Total Municipal Securities................. 43,060,405
------------
(Cost $43,060,405)
<CAPTION>
Shares
------
<C> <S> <C>
INVESTMENT COMPANIES-8.18%
1,940,629 Dreyfus Massachusetts
Tax Exempt Money Market .................. 1,940,629
1,911,084 Federated Municipal Trust
Massachusetts Municipal Cash Trust ....... 1,911,084
------------
Total Investment Companies ............... 3,851,713
------------
(Cost $3,851,713)
Total Investments - 99.67% .................................. 46,912,118
------------
(Cost $46,912,118)*
Net Other Assets and Liabilities - 0.33% .................... 153,936
------------
Net Assets - 100.00% ........................................ $ 47,066,054
============
</TABLE>
- ---------------------------------------------------
* Aggregate cost for Federal tax purposes.
(A) Variable rate demand notes are payable upon not more than one,
seven or thirty business days notice. Put bonds and notes have
demand features which mature within one year. The interest rate
shown reflects the rate in effect at October 31, 1996.
BAN Bond Anticipation Notes
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance, Inc.
GO General Obligation
HEFA Health and Educational Facilities Authority
IDA Industrial Development Authority
IDC Industrial Development Corp.
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SHCSR School Health Care System Revenue
SPA Stand-by Purchase Agreement
See Notes to Financial Statements.
23
<PAGE>
[LOGO OF THE GALAXY STATEMENTS OF ASSETS AND LIABILITIES
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Money Market Government Tax-Exempt U.S. Treasury
Fund Fund Fund Fund
------------ ---------- ---------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost........................ $ 1,899,231,612 $ 968,047,151 $ 298,365,992 $ 794,877,061
Repurchase agreements...................... 189,160,015 90,048,802 -- --
---------------- ---------------- --------------- --------------
Total investments at value............... 2,088,391,627 1,058,095,953 298,365,992 794,877,061
Cash........................................ -- -- 75,956 1,512
Receivable for shares sold.................. 708,622 62,110 2,702,588 411,352
Interest receivable......................... 9,823,828 5,900,895 1,369,408 4,425,020
Receivable from investment adviser (Note 4). -- 65 7,924 309
Deferred organizational expense (Note 2).... -- -- -- 270
---------------- ---------------- --------------- --------------
Total Assets.............................. 2,098,924,077 1,064,059,023 302,521,868 799,715,524
---------------- ---------------- --------------- --------------
LIABILITIES:
Dividends payable........................... 3,870,174 3,002,426 478,655 1,298,032
Payable for shares repurchased.............. 9,784,413 262,556 347 448,305
Investment advisory fee payable (Note 3).... 661,156 350,497 104,630 258,304
Payable to Fleet and affiliates (Note 3).... 117,618 29,117 3,624 28,409
Payable to FDISG (Note 3)................... 271,990 120,340 35,113 61,113
Trustees' fees and expenses payable (Note 3) 15,748 10,165 2,494 8,036
Payable to Custodian........................ 15,084 -- -- --
Accrued expenses and other payables......... 653,947 113,869 42,133 51,854
---------------- ---------------- --------------- --------------
Total Liabilities......................... 15,390,130 3,888,970 666,996 2,154,053
---------------- ---------------- --------------- --------------
NET ASSETS................................... $ 2,083,533,947 $ 1,060,170,053 $ 301,854,872 $ 797,561,471
================ ================ =============== ==============
NET ASSETS consist of:
Par value (Note 6).......................... $ 2,084,662 $ 1,061,088 $ 302,006 $ 798,039
Paid-in capital in excess of par value...... 2,082,569,001 1,060,026,847 301,704,411 797,241,402
Undistributed (overdistributed) net
investment income.......................... 233,572 (45,378) (19,974) 316,530
Accumulated net realized gain (loss) on
investments sold........................... (1,353,288) (872,504) (131,571) (794,500)
---------------- ---------------- --------------- --------------
TOTAL NET ASSETS............................. $ 2,083,533,947 $ 1,060,170,053 $ 301,854,872 $ 797,561,471
================ ================ =============== ==============
Retail Shares:
Net assets.................................. $ 1,159,311,794 $ 326,411,214 $ 117,547,870 $ 443,230,426
Shares of beneficial interest outstanding... 1,159,964,557 326,593,717 117,604,866 443,459,845
NET ASSET VALUE, offering and redemption
price per share............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
================ ================ =============== ==============
Trust Shares:
Net assets.................................. $ 924,222,153 $ 733,758,839 $ 184,307,002 $ 354,331,045
Shares of beneficial interest outstanding... 924,697,009 734,494,218 184,401,550 354,579,593
NET ASSET VALUE, offering and redemption
price per share............................ $ 1.00 $ 1.00 $ 1.00 $ 1.00
================ ================ =============== ==============
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
[LOGO OF THE GALAXY STATEMENTS OF ASSETS AND LIABILITIES
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Money Market Fund Money Market Fund
--------------------- ------------------------
<S> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost........................ $ 110,090,591 $ 46,912,118
Repurchase agreements...................... -- --
-------------- -------------
Total investments at value............... 110,090,591 46,912,118
Cash........................................ -- 3,116
Receivable for shares sold.................. -- 1,500
Interest receivable......................... 673,131 214,357
Receivable from investment adviser (Note 4). 20,484 47,314
Deferred organizational expense (Note 2).... -- --
-------------- -------------
Total Assets.............................. 110,784,206 47,178,405
-------------- -------------
LIABILITIES:
Dividends payable........................... 85,582 42,265
Payable for shares repurchased.............. 28,067 957
Investment advisory fee payable (Note 3).... 34,824 15,337
Payable to Fleet and affiliates (Note 3).... 21,677 7,687
Payable to FDISG (Note 3)................... 27,602 12,730
Trustees' fees and expenses payable (Note 3) 1,290 561
Payable to Custodian........................ 6,018 --
Accrued expenses and other payables......... 34,705 32,814
-------------- -------------
Total Liabilities......................... 239,765 112,351
-------------- -------------
NET ASSETS................................... $ 110,544,441 $ 47,066,054
============== =============
NET ASSETS consist of:
Par value (Note 6).......................... $ 110,554 $ 47,078
Paid-in capital in excess of par value...... 110,449,573 47,031,556
Undistributed (overdistributed) net
investment income.......................... (8,250) --
Accumulated net realized gain (loss) on (7,436) (12,580)
investments sold........................... -------------- -------------
$ 110,544,441 $ 47,066,054
TOTAL NET ASSETS............................. ============== =============
Retail Shares:
Net assets.................................. $ 110,544,441 $ 47,066,054
Shares of beneficial interest outstanding... 110,553,508 47,078,470
NET ASSET VALUE, offering and redemption $ 1.00 $ 1.00
price per share............................ ============== =============
Trust Shares:
Net assets.................................. N/A N/A
Shares of beneficial interest outstanding... N/A N/A
NET ASSET VALUE, offering and redemption
price per share............................ N/A N/A
=============== =============
</TABLE>
See Notes to Financial Statements
25
<PAGE>
[LOGO OF THE GALAXY STATEMENTS OF OPERATIONS
FUND APPEARS HERE] For the year ended October 31, 1996
<TABLE>
<CAPTION>
Money Market Government Tax-Exempt U.S. Treasury
Fund Fund Fund Fund
------------ ---------- ---------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2)................................. $ 99,750,826 $ 52,319,000 $ 11,134,666 $ 35,539,430
------------- ------------- ------------ -------------
EXPENSES:
Investment advisory fee (Note 3):
Shawmut Bank, N.A............................... -- -- -- --
Fleet Investment Advisors Inc................... 7,345,438 3,903,784 1,287,527 2,716,788
Administration fee (Note 3):
Federated Administrative Services............... -- -- -- --
FDISG........................................... 1,556,983 828,248 273,302 577,419
Custodian fee (Note 3)............................ 54,942 39,051 30,704 22,122
Fund accounting fee (Note 3)...................... 141,494 117,468 74,471 86,339
Legal fee (Note 3)................................ 89,569 64,979 16,903 34,678
Audit fee......................................... 10,394 18,259 14,078 16,099
Shareholder servicing fee (Note 3)................ 765,457 320,372 125,962 348,084
Transfer agent fee (Note 3)....................... 1,757,777 417,741 70,682 255,733
Trustees' fees and expenses (Note 3).............. 57,275 35,567 8,978 23,737
Amortization of organization costs (Note 2)....... -- -- -- 623
Reports to shareholders (Note 3).................. 424,848 115,022 11,986 59,224
Registration fee.................................. 448,095 31,982 9,017 15,398
Insurance......................................... 21,854 36,935 6,175 9,981
Miscellaneous..................................... 161,712 16,487 6,753 4,420
------------- ------------- ------------ -------------
Total expenses before
reimbursement/waiver (Note 4)................. 12,835,838 5,945,895 1,936,538 4,170,645
------------- ------------- ------------ -------------
Less: reimbursement/waiver (Note 4)............. (628,610) (126,769) (16,727) (829)
------------- ------------- ------------ -------------
Total expenses net of reimbursement
/waiver..................................... 12,207,228 5,819,126 1,919,811 4,169,816
------------- ------------- ------------ -------------
NET INVESTMENT INCOME.............................. 87,543,598 46,499,874 9,214,855 31,369,614
------------- ------------- ------------ -------------
NET REALIZED GAIN (LOSS)
ON INVESTMENTS SOLD (Note 2)...................... (43,235) 47,761 (7,422) 113,403
------------- ------------- ------------ -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS................................... $ 87,500,363 $ 46,547,635 $ 9,207,433 $ 31,483,017
============= ============= ============ =============
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
[LOGO OF THE GALAXY STATEMENTS OF OPERATIONS
FUND APPEARS HERE] For the year ended October 31, 1996
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Money Market Fund Money Market Fund
--------------------- -----------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest (Note 2)................................. $ 3,610,549 $ 1,429,025
------------ ------------
EXPENSES:
Investment advisory fee (Note 3):
Shawmut Bank, N.A............................... 43,242 17,003
Fleet Investment Advisors Inc................... 386,073 154,616
Administration fee (Note 3):
Federated Administrative Services............... 12,973 5,101
FDISG........................................... 81,178 32,643
Custodian fee (Note 3)............................ 11,199 9,813
Fund accounting fee (Note 3)...................... 30,884 23,615
Legal fee (Note 3)................................ 4,973 1,941
Audit fee......................................... 8,701 8,822
Shareholder servicing fee (Note 3)................ 104,877 38,441
Transfer agent fee (Note 3)....................... 16,413 8,909
Trustees' fees and expenses (Note 3).............. 3,736 1,495
Amortization of organization costs (Note 2)....... -- --
Reports to shareholders (Note 3).................. 16,998 14,437
Registration fee.................................. 30,333 30,198
Insurance......................................... 1,605 1,616
Miscellaneous..................................... 13,682 817
------------ ------------
Total expenses before 766,867 349,467
reimbursement/waiver (Note 4)................. ------------ ------------
(93,862) (90,548)
Less: reimbursement/waiver (Note 4)............. ------------ ------------
673,005 258,919
Total expenses net of reimbursement ------------ ------------
/waiver..................................... 2,937,544 1,170,106
------------ ------------
NET INVESTMENT INCOME..............................
NET REALIZED GAIN (LOSS) (817) (12,416)
ON INVESTMENTS SOLD (Note 2)...................... ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................................. $ 2,936,727 $ 1,157,690
============ ============
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
[LOGO OF THE GALAXY STATEMENTS OF CHANGES IN NET ASSETS
FUND APPEARS HERE]
<TABLE>
<CAPTION>
Money Market Fund Government Fund
--------------------------------- ---------------------------------
Years ended October 31, Years ended October 31,
--------------------------------- ---------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period......................... $ 914,816,047 $ 797,398,959 $ 999,474,334 $ 759,106,251
-------------- -------------- -------------- --------------
Increase (Decrease) in Net Assets
resulting from operations:
Net investment income................................. 87,543,598 45,307,493 46,499,874 47,733,613
Net realized gain (loss) on investments sold.......... (43,235) 37,848 47,761 66,217
-------------- -------------- -------------- --------------
Net increase in net assets
resulting from operations........................... 87,500,363 45,345,341 46,547,635 47,799,830
-------------- -------------- -------------- --------------
Dividends to shareholders from:
Retail Shares:
Net investment income................................. (44,808,226) (27,715,120) (14,950,690) (13,760,220)
Dividends in excess of net investment income.......... -- -- (14,560) (14,560)
-------------- -------------- -------------- --------------
Total Dividends...................................... (44,808,226) (27,715,120) (14,965,250) (13,774,780)
-------------- -------------- -------------- --------------
Trust Shares:
Net investment income................................. (42,735,672) (17,592,373) (31,503,806) (33,928,015)
Dividends in excess of net investment income.......... -- -- (30,818) (30,818)
-------------- -------------- -------------- --------------
Total Dividends...................................... (42,735,672) (17,592,373) (31,534,624) (33,958,833)
-------------- -------------- -------------- --------------
Total Dividends to shareholders..................... (87,543,898) (45,307,493) (46,499,874) (47,733,613)
-------------- -------------- -------------- --------------
Net increase (decrease) from
share transactions/(1)/................................. 1,168,761,435 117,379,240 60,647,958 240,301,866
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets................. 1,168,717,900 117,417,088 60,695,719 240,368,083
-------------- -------------- -------------- --------------
NET ASSETS at end of period (including line A)............ $2,083,533,947 $ 914,816,047 $1,060,170,053 $ 999,474,334
============== ============== ============== ==============
(A) Undistributed (overdistributed)
net investment income................................ $ 233,572 $ 233,872 $ (45,378) $ (45,378)
============== ============== ============== ==============
</TABLE>
- ------------------------------------
(1) For detail on share transactions by series, see Statements of Changes in Net
Assets - Capital Stock Activity on pages 31 and 32.
See Notes to Financial Statements
28
<PAGE>
[LOGO OF THE GALAXY STATEMENTS OF CHANGES IN NET ASSETS
FUND APPEARS HERE]
<TABLE>
<CAPTION>
Tax-Exempt Fund U.S. Treasury Fund
--------------------------------- ---------------------------------
Years ended October 31, Years ended October 31,
--------------------------------- ---------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period......................... $ 307,761,973 $ 271,049,871 $ 589,657,171 $ 466,992,827
-------------- -------------- -------------- --------------
Increase (Decrease) in Net Assets
resulting from operations:
Net investment income................................. 9,214,855 9,379,233 31,369,614 26,699,713
Net realized gain (loss) on investments sold.......... (7,422) (3,848) 113,403 143,680
-------------- -------------- -------------- --------------
Net increase in net assets
resulting from operations........................... 9,207,433 9,375,385 31,483,017 26,843,393
-------------- -------------- -------------- --------------
Dividends to shareholders from:
Retail Shares:
Net investment income................................. (3,693,979) (3,605,651) (16,420,997) (12,819,050)
Dividends in excess of net investment income.......... (7,790) (8,338) -- --
-------------- -------------- -------------- --------------
Total Dividends..................................... (3,701,769) (3,613,989) (16,420,997) (12,819,050)
-------------- -------------- -------------- --------------
Trust Shares:
Net investment income................................. (5,500,678) (5,753,384) (14,948,617) (13,880,663)
Dividends in excess of net investment income.......... (12,184) (11,860) -- --
-------------- -------------- -------------- --------------
Total Dividends...................................... (5,512,862) (5,765,244) (14,948,617) (13,880,663)
-------------- -------------- -------------- --------------
Total Dividends to shareholders...................... (9,214,631) (9,379,233) (31,369,614) (26,699,713)
-------------- -------------- -------------- --------------
Net increase (decrease) from
share transactions/(1)/................................. (5,899,903) 36,715,950 207,790,897 122,520,664
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets................. (5,907,101) 36,712,102 207,904,300 122,664,344
-------------- -------------- -------------- --------------
NET ASSETS at end of period (including line A)........... $ 301,854,872 $ 307,761,973 $ 797,561,471 $ 589,657,171
============== ============== ============== ==============
(A) Undistributed (overdistributed)
net investment income............................... $ (19,974) $ (20,198) $ 316,530 $ 316,530
============== ============== ============== ==============
</TABLE>
- ------------------------------------
(1) For detail on share transactions by series, see Statements of Changes in Net
Assets - Capital Stock Activity on pages 31 and 32.
See Notes to Financial Statements.
29
<PAGE>
[LOGO OF THE GALAXY
FUND APPEARS HERE] STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Money Market Fund Money Market Fund
--------------------------------- ---------------------------------
Years ended October 31, Years ended October 31,
--------------------------------- ---------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period......................... $ 102,636,161 $ 115,016,804 $ 40,326,146 $ 31,516,428
-------------- -------------- -------------- --------------
Increase (Decrease) in Net Assets
resulting from operations:
Net investment income.................................. 2,937,544 3,221,080 1,170,106 1,065,404
Net realized gain (loss) on investments sold........... (817) -- (12,416) --
-------------- -------------- -------------- --------------
Net increase (decrease) in net
assets resulting from operations.................... 2,936,727 3,221,080 1,157,690 1,065,404
-------------- -------------- -------------- --------------
Dividends to shareholders from:
Retail Shares:
Net investment income................................. (2,937,544) (2,176,450) (1,170,106) (1,065,404)
Dividends in excess of net investment income.......... (8,250) -- -- --
-------------- -------------- -------------- --------------
Total Dividends..................................... (2,945,794) (2,176,450) (1,170,106) (1,065,404)
-------------- -------------- -------------- --------------
Trust Shares:
Net investment income................................. -- (1,044,630) -- --
Dividends in excess of net investment income.......... -- -- -- --
-------------- -------------- -------------- --------------
Total Dividends..................................... -- (1,044,630) -- --
-------------- -------------- -------------- --------------
Total Dividends to shareholders.................... (2,945,794) (3,221,080) (1,170,106) (1,065,404)
-------------- -------------- -------------- --------------
Net increase (decrease) from
share transactions/(1)/................................. 7,917,347 (12,380,643) 6,752,324 8,809,718
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets................. 7,908,280 (12,380,643) 6,739,908 8,809,718
-------------- -------------- -------------- --------------
NET ASSETS at end of period (including line A)........... $ 110,544,441 $ 102,636,161 $ 47,066,054 $ 40,326,146
============== ============== ============== ==============
(A) Undistributed (overdistributed)
net investment income............................... $ (8,250) $ -- $ -- $ --
============== ============== ============== ==============
</TABLE>
- --------------------------------------
(1) For detail on share transactions by series, see Statements of Changes in Net
Assets - Capital Stock Activity on page 32.
See Notes to Financial Statements.
30
<PAGE>
[LOGO OF M.M. FUNDS STATEMENTS OF CHANGES IN NET ASSETS -
APPEARS HERE] Capital Stock Activity
<TABLE>
<CAPTION>
Money Market Fund Government Fund
------------------------------------ -----------------------------------
Years ended October 31, Years ended October 31,
------------------------------------ -----------------------------------
1996 1995 1996 1995
--------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail Shares:
Sold .................................... $ 2,569,450,390 $ 1,445,098,060 $ 690,219,757 $ 712,147,106
Issued in connection with
acquisition (Note 9) .................. 267,075,370 -- -- --
Issued to shareholders in
reinvestment of dividends ............. 44,351,046 27,461,273 14,857,984 12,994,355
Retail Shares exchanged
for Trust Shares ...................... -- (331,747,252) -- (599,306,852)
Repurchased ............................. (2,302,302,319) (1,357,935,592) (699,477,779) (564,978,965)
--------------- --------------- -------------- ---------------
Net increase (decrease) in
shares outstanding ................. $ 578,574,487 $ (217,123,511) $ 5,599,962 $ (439,144,356)
=============== =============== ============== ===============
Trust Shares:
Sold .................................... $2,715,304,160 $ 1,570,072,835 $1,594,273,956 $ 1,848,815,024
Issued in connection with
acquisition (Note 9) .................. 511,455,645 -- -- --
Issued to shareholders in
reinvestment of dividends ............. 601,681 359,911 657,170 698,987
Retail Shares exchanged
for Trust Shares ...................... -- 331,747,252 -- 599,306,852
Repurchased ............................. (2,637,174,538) (1,567,677,247) (1,539,883,130) (1,769,374,641)
--------------- --------------- -------------- ---------------
Net increase (decrease) in
shares outstanding ................. $ 590,186,948 $ 334,502,751 $ 55,047,996 $ 679,446,222
=============== =============== ============== ===============
SHARE ACTIVITY
Retail Shares:
Sold .................................... 2,569,450,390 1,445,098,060 690,219,757 712,147,106
Issued in connection with
acquisition (Note 9) .................. 267,079,142 -- -- --
Issued to shareholders in
reinvestment of dividends ............. 44,351,046 27,461,273 14,857,984 12,994,355
Retail Shares exchanged
for Trust Shares ...................... -- (331,747,252) -- (599,306,852)
Repurchased ............................. (2,302,302,319) (1,357,935,592) (699,477,779) (564,978,965)
--------------- --------------- -------------- ---------------
Net increase (decrease) in
shares outstanding ................. 578,578,259 (217,123,511) 5,599,962 (439,144,356)
=============== =============== ============== ===============
Trust Shares:
Sold .................................... 2,715,304,160 1,570,072,835 1,594,273,956 1,848,815,024
Issued in connection with
acquisition (Note 9) .................. 511,462,955 -- -- --
Issued to shareholders in
reinvestment of dividends ............. 601,681 359,911 657,170 698,987
Retail Shares exchanged
for Trust Shares ...................... -- 331,747,252 -- 599,306,852
Repurchased ............................. (2,637,174,538) (1,567,677,247) (1,539,883,130) (1,769,374,641)
--------------- --------------- -------------- ---------------
Net increase (decrease) in
shares outstanding ................. 590,194,258 334,502,751 55,047,996 679,446,222
=============== =============== ============== ===============
<CAPTION>
Tax-Exempt Fund
-----------------------------------
Years ended October 31,
-----------------------------------
1996 1995
--------------- ----------------
<S> <C> <C>
DOLLAR AMOUNTS
Retail Shares:
Sold .................................... $ 320,444,954 $ 253,791,401
Issued in connection with
acquisition (Note 9) .................. -- --
Issued to shareholders in
reinvestment of dividends ............. 3,692,232 3,601,508
Retail Shares exchanged
for Trust Shares ...................... -- (170,424,138)
Repurchased ............................. (333,641,800) (231,049,660)
--------------- ----------------
Net increase (decrease) in
shares outstanding ................. $ (9,504,614) $ (144,080,889)
=============== ================
Trust Shares:
Sold .................................... $ 224,132,385 $ 231,604,600
Issued in connection with
acquisition (Note 9) .................. -- --
Issued to shareholders in
reinvestment of dividends ............. 27,737 1,439
Retail Shares exchanged
for Trust Shares ...................... -- 170,424,138
Repurchased ............................. (220,555,411) (221,233,338)
--------------- ----------------
Net increase (decrease) in
shares outstanding ................. $ 3,604,711 $ 180,796,839
=============== ================
SHARE ACTIVITY
Retail Shares:
Sold .................................... 320,444,954 253,791,401
Issued in connection with
acquisition (Note 9) .................. -- --
Issued to shareholders in
reinvestment of dividends ............. 3,692,232 3,601,508
Retail Shares exchanged
for Trust Shares ...................... -- (170,424,138)
Repurchased ............................. (333,641,800) (231,049,660)
--------------- ----------------
Net increase (decrease) in
shares outstanding ................. (9,504,614) (144,080,889)
=============== ================
Trust Shares:
Sold .................................... 224,132,385 231,604,600
Issued in connection with
acquisition (Note 9) .................. -- --
Issued to shareholders in
reinvestment of dividends ............. 27,737 1,439
Retail Shares exchanged
for Trust Shares ...................... -- 170,424,138
Repurchased ............................. (220,555,411) (221,233,338)
--------------- ----------------
Net increase (decrease) in
shares outstanding ................. 3,604,711 180,796,839
=============== ===============
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
[LOGO OF M.M. FUNDS STATEMENTS OF CHANGES IN NET ASSETS -
APPEARS HERE] Capital Stock Activity (continued)
<TABLE>
<CAPTION>
Connecticut Municipal
U.S. Treasury Fund Money Market Fund
------------------------------------- -------------------------------------
Years ended October 31, Years ended October 31,
------------------------------------- -------------------------------------
1996 1995 1996 1995
---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail Shares:
Sold ................................... $ 853,166,073 $ 563,677,781 $ 259,542,285 $ 91,123,997
Issued to shareholders in
reinvestment of dividends ............ 16,296,206 12,770,628 1,891,469 2,171,244
Retail Shares exchanged
for Trust Shares ..................... -- (238,429,770) -- --
Repurchased ............................ (744,916,145) (486,832,805) (253,516,407) (102,486,267)
---------------- ----------------- ---------------- ----------------
Net increase (decrease) in
shares outstanding ................ $ 124,546,134 $ (148,814,166) $ 7,917,347 $ (9,191,026)
================ ================= ================ ================
Trust Shares:
Sold ................................... $ 884,449,801 $ 708,739,059 N/A $ 64,377,465
Issued to shareholders in
reinvestment of dividends ............ 282,478 266,550 N/A --
Retail Shares exchanged
for Trust Shares ..................... -- 238,429,770 N/A --
Repurchased ............................ (801,487,516) (676,100,549) N/A (67,567,082)
---------------- ----------------- ---------------- ----------------
Net increase (decrease) in
shares outstanding ................ $ 83,244,763 $ 271,334,830 N/A $ (3,189,617)
================ ================= ================ ================
SHARE ACTIVITY
Retail Shares:
Sold ................................... 853,166,073 563,677,781 259,542,285 91,123,997
Issued to shareholders in
reinvestment of dividends ............ 16,296,206 12,770,628 1,891,469 2,171,244
Retail Shares exchanged
for Trust Shares ..................... -- (238,429,770) -- --
Repurchased ............................ (744,916,145) (486,832,805) (253,516,407) (102,486,267)
---------------- ----------------- ---------------- ----------------
Net increase (decrease) in
shares outstanding ................ 124,546,134 (148,814,166) 7,917,347 (9,191,026)
================ ================= ================ ================
Trust Shares:
Sold ................................... 884,449,801 708,739,059 N/A 64,377,465
Issued to shareholders in
reinvestment of dividends ............ 282,478 266,550 N/A --
Retail Shares exchanged
for Trust Shares ..................... -- 238,429,770 N/A --
Repurchased ............................ (801,487,516) (676,100,549) N/A (67,567,082)
---------------- ----------------- ---------------- ----------------
Net increase (decrease) in
shares outstanding ................ 83,244,763 271,334,830 N/A (3,189,617)
================ ================= ================ ================
<CAPTION>
Massachusetts Municipal
Money Market Fund
-------------------------------------
Years ended October 31,
-------------------------------------
1996 1995
---------------- -----------------
<S> <C> <C>
DOLLAR AMOUNTS
Retail Shares:
Sold ................................... $ 72,519,201 $ 81,833,286
Issued to shareholders in
reinvestment of dividends ............ 679,571 562,598
Retail Shares exchanged
for Trust Shares ..................... -- --
Repurchased ............................ (66,446,448) (73,586,166)
---------------- -----------------
Net increase (decrease) in
shares outstanding ................ $ 6,752,324 $ 8,809,718
================ =================
Trust Shares:
Sold ................................... N/A N/A
Issued to shareholders in
reinvestment of dividends ............ N/A N/A
Retail Shares exchanged
for Trust Shares ..................... N/A N/A
Repurchased ............................ N/A N/A
---------------- -----------------
Net increase (decrease) in
shares outstanding ................ N/A N/A
================ =================
SHARE ACTIVITY
Retail Shares:
Sold ................................... 72,519,201 81,833,286
Issued to shareholders in
reinvestment of dividends ............ 679,571 562,598
Retail Shares exchanged
for Trust Shares ..................... -- --
Repurchased ............................ (66,446,448) (73,586,166)
---------------- -----------------
Net increase (decrease) in
shares outstanding ................ 6,752,324 8,809,718
================ =================
Trust Shares:
Sold ................................... N/A N/A
Issued to shareholders in
reinvestment of dividends ............ N/A N/A
Retail Shares exchanged
for Trust Shares ..................... N/A N/A
Repurchased ............................ N/A N/A
---------------- -----------------
Net increase (decrease) in
shares outstanding ................ N/A N/A
================ =================
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
[LOGO OF M.M. FUNDS Money Market Fund
APPEARS HERE] FINANCIAL HIGHLIGHTS
For a Retail A Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------------------
1996 1995 1994(1) 1993(1) 1992(1)
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A) ..................... 0.05 0.05 0.03 0.03 0.04
Net realized gain (loss) on investments ....... -- -- -- -- --
---------- -------- -------- -------- --------
Total from Investment Operations: ............. 0.05 0.05 0.03 0.03 0.04
---------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income .......... (0.05) (0.05) (0.03) (0.03) (0.04)
Dividends from net realized capital gains (B).. -- -- -- -- --
---------- -------- -------- -------- --------
Total Dividends: .............................. (0.05) (0.05) (0.03) (0.03) (0.04)
---------- -------- -------- -------- --------
Net increase (decrease) in net asset value ......... -- -- -- -- --
---------- -------- -------- -------- --------
Net Asset Value, End of Period ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ======== ========
Total Return (C) ................................... 4.78% 5.23% 3.35% 2.78% 4.07%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................. $1,159,312 $580,762 $797,399 $577,558 $590,911
Ratios to average net assets:
Net investment income
including reimbursement/waiver ................ 4.67% 5.12% 3.38% 2.74% 3.74%
Operating expenses
including reimbursement/waiver ................ 0.77% 0.74% 0.64% 0.63% 0.58%
Operating expenses
excluding reimbursement/waiver ................ 0.80% 0.76% 0.64% 0.63% 0.58%
</TABLE>
- --------------------------------------------------------------------------------
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As of
such date, the existing series of shares was designated as Retail A Shares
and the Fund began issuing a second series of shares designated as Trust
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
Years ended October 31,
---------------------------------------------------------
1996 1995 1994(1) 1993(1) 1992(1)
------ ------- ------- ------- -------
$ 0.05 $ 0.05 $ 0.03 $ 0.03 $ 0.04
(B) Represents less than $0.01 per share for year 1992.
(C) Total return for 1994 includes the effect of the voluntary capital
contribution from the Investment Adviser (see Note 5). Without this capital
contribution, the total return would have been 3.35%.
See Notes to Financial Statements.
33
<PAGE>
[LOGO OF M.M. FUNDS Money Market Fund
APPEARS HERE] FINANCIAL HIGHLIGHTS
For a Trust Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
-----------------------------------
1996 1995(1)
----------- ------------
<S> <C> <C>
Net Asset Value, Beginning of Period ................... $ 1.00 $ 1.00
-------- --------
Income from Investment Operations:
Net investment income (A) ........................ 0.05 0.05
Net realized gain (loss) on investments .......... -- --
-------- --------
Total from Investment Operations: ................ 0.05 0.05
-------- --------
Less Dividends:
Dividends from net investment income ............. (0.05) (0.05)
Dividends from net realized capital gains ........ -- --
-------- --------
Total Dividends: ................................. (0.05) (0.05)
-------- --------
Net increase (decrease) in net asset value ............. -- --
-------- --------
Net Asset Value, End of Period ......................... $ 1.00 $ 1.00
======== ========
Total Return ........................................... 5.00% 5.43%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ...................... $924,222 $334,054
Ratios to average net assets:
Net investment income
including reimbursement/waiver .................. 4.89% 5.30%
Operating expenses
including reimbursement/waiver ................... 0.55% 0.55%
Operating expenses
excluding reimbursement/waiver ................... 0.58% 0.56%
</TABLE>
- --------------------------------------------------
(1) On November 1, 1994, the Fund began issuing a second series of shares
designated as Trust Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
Years ended October 31,
--------------------------
1996 1995
-------- --------
$ 0.05 $ 0.05
See Notes to Financial Statements.
34
<PAGE>
[LOGO OF M.M. FUNDS Government Fund
APPEARS HERE] FINANCIAL HIGHLIGHTS
For a Retail A Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
--------------------------------------------------------------------------
1996 1995 1994(1) 1993(1) 1992(1)
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------
Income from Investment Operations:
Net investment income (A) ......................... 0.05 0.05 0.03 0.03 0.04
Net realized gain (loss) on investments ........... -- -- -- -- --
-------- -------- -------- -------- -------
Total from Investment Operations: .............. 0.05 0.05 0.03 0.03 0.04
-------- -------- -------- -------- -------
Less Dividends:
Dividends from net investment income .............. (0.05) (0.05) (0.03) (0.03) (0.04)
Dividends from net realized capital gains (B) ..... -- -- -- -- --
-------- -------- -------- -------- -------
Total Dividends: ................................ (0.05) (0.05) (0.03) (0.03) (0.04)
-------- -------- -------- -------- -------
Net increase (decrease) in net asset value ........ -- -- -- -- --
-------- -------- -------- -------- -------
Net Asset Value, End of Period ....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== =======
Total Return (C) ..................................... 4.72% 5.20% 3.49% 2.83% 4.19%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................... $326,411 $320,795 $759,106 $685,304 $636,338
Ratios to average net assets:
Net investment income
including reimbursement/waiver ................. 4.62% 5.11% 3.36% 2.79% 3.67%
Operating expenses
including reimbursement/waiver ................. 0.75% 0.73% 0.54% 0.55% 0.53%
Operating expenses
excluding reimbursement/waiver ................. 0.76% 0.74% 0.54% 0.55% 0.53%
</TABLE>
- --------------------------------------------------------------------------------
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As of
such date, the existing series of shares was designated as Retail A Shares
and the Fund began issuing a second series of shares designated as Trust
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
Years ended October 31,
--------------------------------------------
1996 1995 1994(1) 1993(1) 1992(1)
------ ------ -------- -------- --------
$ 0.05 $ 0.05 $ 0.03 $ 0.03 $ 0.04
(B) Represents less than $0.01 per share for year 1992.
(C) Total return for 1994 includes the effect of the voluntary capital
contribution from the Investment Adviser (see Note 5). Without this capital
contribution, the total return would have been 3.49%.
See Notes to Financial Statements.
35
<PAGE>
[LOGO OF M.M. FUNDS Government Fund
APPEARS HERE] FINANCIAL HIGHLIGHTS
For a Trust Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
--------------------------------------
1996 1995(1)
------------ ------------
<S> <C> <C>
Net Asset Value, Beginning of Period ................... $ 1.00 $ 1.00
-------- --------
Income from Investment Operations:
Net investment income (A) ........................... 0.05 0.05
Net realized gain (loss) on investments ............. -- --
-------- --------
Total from Investment Operations: ................ 0.05 0.05
-------- --------
Less Dividends:
Dividends from net investment income ................ (0.05) (0.05)
Dividends from net realized capital gains ........... -- --
-------- --------
Total Dividends: ................................. (0.05) (0.05)
-------- --------
Net increase (decrease) in net asset value ............. -- --
-------- --------
Net Asset Value, End of Period ......................... $ 1.00 $ 1.00
======== ========
Total Return ........................................... 4.95% 5.39%
Ratio/Supplemental Data:
Net Assets, End of Period (000's) ...................... $733,759 $678,679
Ratios to average net assets:
Net investment income
including reimbursement/waiver ................... 4.85% 5.27%
Operating expenses
including reimbursement/waiver ................... 0.52% 0.53%
Operating expenses
excluding reimbursement/waiver .................. 0.53% 0.54%
</TABLE>
- --------------------------------------------------
(1) On November 1, 1994, the Fund began issuing a second series of shares
designated as Trust Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
Years ended October 31,
--------------------------
1996 1995
--------- ---------
$ 0.05 $ 0.05
See Notes to Financial Statements.
36
<PAGE>
[LOGO OF M.M. FUNDS Tax-Exempt Fund
APPEARS HERE] FINANCIAL HIGHLIGHTS
For a Retail A Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
----------------------------------------------------------------------------
1996 1995 1994(1) 1993(1) 1992(1)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A)..................... 0.03 0.03 0.02 0.02 0.03
Net realized gain (loss) on investments....... -- -- -- -- --
-------- -------- -------- -------- --------
Total from Investment Operations: 0.03 0.03 0.02 0.02 0.03
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income.......... (0.03) (0.03) (0.02) (0.02) (0.03)
Dividends from net realized capital gains..... -- -- -- -- --
-------- -------- -------- -------- --------
Total Dividends:........................... (0.03) (0.03) (0.02) (0.02) (0.03)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value....... -- -- -- -- --
-------- -------- -------- -------- --------
Net Asset Value, End of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return..................................... 2.82% 3.16% 2.24% 1.93% 2.71%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................ $117,548 $127,056 $271,050 $301,399 $223,173
Ratios to average net assets:
Net investment income
including reimbursement/waiver........... 2.78% 3.12% 2.12% 1.92% 2.64%
Operating expenses
including reimbursement/waiver........... 0.68% 0.68% 0.58% 0.59% 0.57%
Operating expenses
excluding reimbursement/waiver........... 0.69% 0.71% 0.58% 0.59% 0.57%
</TABLE>
- ----------------------------------------------
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail A
Shares and the Fund began issuing a second series of shares designated as
Trust Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
Years ended October 31,
----------------------------------------------
1996 1995 1994(1) 1993(1) 1992(1)
------ ------ ------- ------- -------
$ 0.03 $ 0.03 $ 0.02 $ 0.02 $ 0.03
See Notes to Financial Statements.
37
<PAGE>
Tax-Exempt Fund
FINANCIAL HIGHLIGHTS
THE GALAXY FUND For a Trust Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
---------------------------------
1996 1995/(1)/
--------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period........... $ 1.00 $ 1.00
--------- ---------
Income from Investment Operations:
Net investment income (A).................... 0.03 0.03
Net realized gain (loss) on investments...... -- --
--------- ---------
Total from Investment Operations:.......... 0.03 0.03
--------- ---------
Less Dividends:
Dividends from net investment income......... (0.03) (0.03)
Dividends from net realized capital gains.... -- --
--------- ---------
Total Dividends:........................... (0.03) (0.03)
--------- ---------
Net increase (decrease) in net asset value..... -- --
--------- ---------
Net Asset Value, End of Period................. $ 1.00 $ 1.00
========= =========
Total Return................................... 2.97% 3.29%
Ratios/Supplemental Data:
Net Assets, End of Period (000's).............. $184,307 $180,706
Ratios to average net assets:
Net investment income
including reimbursement/waiver.............. 2.92% 3.24%
Operating expenses
including reimbursement/waiver.............. 0.54% 0.55%
Operating expense
excluding reimbursement/waiver.............. 0.54% 0.56%
</TABLE>
- --------------------------------------------------
(1) On November 1, 1994, the Fund began issuing a second series of shares
designated as Trust Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
Years ended October 31,
---------------------------
1996 1995
-------- --------
$ 0.03 $ 0.03
See Notes to Financial Statements.
38
<PAGE>
U.S. Treasury Fund
FINANCIAL HIGHLIGHTS
THE GALAXY FUND For a Retail A Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------------------
1996 1995 1994/(1)/ 1993/(1)/ 1992/(1)/
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (A)..................... 0.05 0.05 0.03 0.03 0.04
Net realized gain (loss) on investments....... -- -- -- -- --
------- ------- ------- ------- -------
Total from Investment Operations:........... 0.05 0.05 0.03 0.03 0.04
------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income......... (0.05) (0.05) (0.03) (0.03) (0.04)
Dividends from net realized capital gains.... -- -- -- -- --
------- ------- ------- ------- -------
Total Dividends:........................... (0.05) (0.05) (0.03) (0.03) (0.04)
------- ------- ------- ------- -------
Net increase (decrease) in net asset value...... -- -- -- -- --
------- ------- ------- ------- -------
Net Asset Value, End of Period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= =======
Total Return (B)................................ 4.63% 4.99% 3.30% 2.75% 3.69%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)............... $443,230 $318,621 $466,993 $447,960 $482,416
Ratios to average net assets:
Net investment income
including reimbursement/waiver............... 4.53% 4.90% 3.24% 2.71% 3.51%
Operating expenses
including reimbursement/waiver............... 0.69% 0.73% 0.56% 0.55% 0.49%
Operating expenses
excluding reimbursement/waiver............... 0.69% 0.73% 0.56% 0.55% 0.55%
</TABLE>
- ----------------------------------------------------------
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail A
Shares and the Fund began issuing a second series of shares designated as
Trust 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,
---------------------------------------------------
1996 1995 1994/(1)/ 1993/(1)/ 1992/(1)/
------ ------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
$ 0.05 $ 0.05 $ 0.03 $ 0.03 $ 0.04
</TABLE>
(B) Total return for 1994 includes the effect of the voluntary capital
contribution from the Investment Adviser (see Note 5). Without this
capital contribution, the total return would have been 3.30%.
See Notes to Financial Statements.
39
<PAGE>
U.S. Treasury Fund
FINANCIAL HIGHLIGHTS
THE GALAXY FUND For a Trust Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
-----------------------------------
1996 1995/(1)/
--------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period........... $ 1.00 $ 1.00
--------- ---------
Income from Investment Operations:
Net investment income (A).................... 0.05 0.05
Net realized gain (loss) on investments...... -- --
--------- ---------
Total from Investment Operations:.......... 0.05 0.05
--------- ---------
Less Dividends:
Dividends from net investment income......... (0.05) (0.05)
Dividends from net realized capital gains.... -- --
--------- ---------
Total Dividends:........................... (0.05) (0.05)
Net increase (decrease) in net asset value..... -- --
--------- ---------
Net Asset Value, End of Period................. $ 1.00 $ 1.00
========= =========
Total Return................................... 4.80% 5.18%
Ratios/Supplemental Data:
Net Assets, End of Period (000's).............. $354,331 $271,036
Ratios to average net assets:
Net investment income
including reimbursement/waiver.............. 4.69% 5.06%
Operating expenses
including reimbursement/waiver.............. 0.53% 0.55%
Operating expenses
excluding reimbursement/waiver.............. 0.53% 0.55%
</TABLE>
- --------------------------------
(1) On November 1, 1994, the Fund began issuing a second series of shares
designated as Trust 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,
----------------------------
1996 1995
-------- -------
<S> <C>
$0.05 $0.05
</TABLE>
See Notes to Financial Statements.
40
<PAGE>
Connecticut Municipal Money Market Fund
FINANCIAL HIGHLIGHTS
THE GALAXY FUND For a Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------------------------
1996 1995 1994 1993
----------- ---------------------- ------------------------ ----------
Investment Trust Investment Trust Investment
Shares/(3)/ Shares Shares Shares Shares/(2)/ Shares/(1)/
----------- ---------- -------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------- -------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A)(C)................ 0.03 0.03 0.03 0.02 0.02 --
Net realized gain (loss) on investments..... -- -- -- -- -- --
--------- -------- -------- -------- -------- --------
Total from Investment Operations: (A).. 0.03 0.03 0.03 0.02 0.02 --
--------- -------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income (A).... (0.03) (0.03) (0.03) (0.02) (0.02) --
Dividends from net realized capital gains... -- -- -- -- -- --
--------- -------- -------- -------- -------- --------
Total Dividends: (A)................... (0.03) (0.03) (0.03) (0.02) (0.02) --
--------- -------- -------- -------- -------- --------
Net increase (decrease) in net asset value.... -- -- -- -- -- --
--------- -------- -------- -------- -------- --------
Net Asset Value, End of Period................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========= ======== ======== ======== ======== ========
Total Return (B).............................. 2.83% 2.94% 3.19% 1.83% 2.08%** 0.14%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)............. $ 110,544 $ 71,472 $ 31,164 $ 80,663 $ 34,354 $ 6,582
Ratios to average net assets:
Net investment income
including reimbursement/waiver............. 2.79% 2.88% 3.14% 1.99% 2.24%* 2.12%*
Operating expenses
including reimbursement/waiver............. 0.64% 0.82% 0.57% 0.78% 0.53%* 0.36%*
Operating expenses
excluding reimbursement/waiver............. 0.73% 1.29% 0.79% 1.50% 1.00%* 5.82%*
</TABLE>
- -------------------------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on October 4, 1993 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds.
(2) The Predecessor Fund began offering Trust Shares on December 16, 1993.
(3) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio
of the Trust with a single series of shares. Prior to the reorganization,
the Predecessor Fund offered two series of shares; Investment Shares and
Trust Shares. In connection with the reorganization, the shareholders of the
Predecessor Fund exchanged shares from each of the two series for a single
series of shares in the Galaxy Connecticut Municipal Money Market Fund
(Note 9).
(A) Represents less than $0.01 per share for year 1993.
(B) Calculation does not include sales charge for Investment Shares of the
Predecessor Fund.
(C) Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or other parties was as follows:
<TABLE>
<CAPTION> Periods ended October 31,
-------------------------------------
(Unaudited)
-------------------------
1996 1995 1994 1993
------- ------ ------ ------
<S> <C> <C> <C> <C>
Shares $ 0.03 $ NA $ NA $ NA
Investment Shares NA 0.03 0.01 0.00
Trust Shares NA 0.02 0.01 NA
</TABLE>
See Notes to Financial Statements.
41
<PAGE>
Massachusetts Municipal Money Market Fund
FINANCIAL HIGHLIGHTS
THE GALAXY FUND For a Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------------------
1996/(2)/ 1995 1994 1993/(1)/
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............ $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- --------- ---------- ---------
Income from Investment Operations:
Net investment income (A)(B).................. 0.03 0.03 0.02 --
Net realized gain (loss) on investments....... -- -- -- --
---------- --------- ---------- ---------
Total from Investment Operations: (A).... 0.03 0.03 0.02 --
---------- --------- ---------- ---------
Less Dividends:
Dividends from net investment income (A)...... (0.03) (0.03) (0.02) --
Dividends from net realized capital gains..... -- -- -- --
---------- --------- ---------- ---------
Total Dividends: (A)..................... (0.03) (0.03) (0.02) --
---------- --------- ---------- ---------
Net increase (decrease) in net asset value...... -- -- -- --
---------- --------- ---------- ---------
Net Asset Value, End of Period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========= ========== =========
Total Return.................................... 2.83% 3.21% 1.99% 0.12%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)............... $ 47,066 $ 40,326 $ 31,516 $ 1,237
Ratios to average net assets:
Net investment income
including reimbursement/waiver.............. 2.78% 3.16% 2.00% 2.75%*
Operating expenses
including reimbursement/waiver.............. 0.62% 0.57% 0.53% 0.11%*
Operating expenses
excluding reimbursement/waiver.............. 0.83% 1.06% 1.21% 35.42%*
</TABLE>
- -------------------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on October 5, 1993 as a separate investment
portfolio (the Predecessor Fund) of The Shawmut Funds.
(2) On December 4, 1995, the Predecessor Fund was reorganized as a new
portfolio of the Trust (Note 9).
(A) Represents less than $0.01 per share for year 1993.
(B) Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or other parties was as follows:
Periods ended October 31,
----------------------------------
(Unaudited)
-------------------------
1996 1995 1994 1993
------ ------ ------ -------
$ 0.03 $ 0.03 $ 0.01 $ (0.01)
See Notes to Financial Statements.
42
<PAGE>
[LOGO THE GALAXY FUND]
NOTES TO FINANCIAL STATEMENTS
1. Organization
The Galaxy Fund, a Massachusetts business trust (the "Trust"), is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), 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
Money Market, Government, Tax-Exempt, U.S. Treasury, Connecticut Municipal Money
Market and Massachusetts Municipal Money Market Funds (individually, a "Fund,"
collectively, the "Funds") only.
Effective November 1, 1994, the Money Market, Government, Tax-Exempt and
U.S. Treasury Funds are authorized to issue two series of shares (Trust Shares
and Retail A Shares). Shares of these Funds outstanding at November 1, 1994 were
designated as Retail A Shares. Trust Shares and Retail A Shares are
substantially the same, except that each series bears the following series
specific expenses: shareholder servicing fees and transfer agent charges. The
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds are authorized to issue one series of shares. Shares of the Connecticut
Municipal Money Market and Massachusetts Municipal Money Market Funds (including
Investment Shares, as that term was used prior to December 4, 1995 (see Note 9))
together with Retail A Shares of the Money Market, Government, Tax-Exempt and
U.S. Treasury Funds are hereinafter referred to as "Retail 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 income 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
the financial statements.
Portfolio Valuation: Securities in the Funds are valued utilizing the
amortized cost valuation method permitted in accordance with Rule 2a-7 under the
1940 Act. This method involves valuing a portfolio security initially at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Net realized gains or losses on sales of
securities are determined by the identified cost method. Interest income is
recorded on the accrual basis. Investment income and realized and unrealized
gains and losses are allocated to the separate series of a Fund based upon the
outstanding shares 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 distributions 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 or excise tax
provision is recorded.
Repurchase Agreements: Each Fund, except the U.S. Treasury 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 plus accrued interest. Each Fund requires that
the securities purchased in a repurchase agreement transaction 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, including accrued interest, equals or exceeds
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.
43
<PAGE>
[LOGO THE GALAXY FUND]
NOTES TO FINANCIAL STATEMENTS (continued)
Expenses: The Trust accounts separately for the assets, liabilities and
operations of each Fund. Expenses directly attributable 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 outstanding shares 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: The U.S. Treasury 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 Fund's commencement of
operations. In the event that any of the initial shares purchased by the Fund's
sponsor are redeemed during such period, the Fund will be reimbursed by any
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 and Other Fees
The Trust and Fleet Investment Advisors Inc. (the "Investment Adviser" or
"Fleet"), 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
following annual rates: with respect to the Money Market, Government and Tax-
Exempt Funds, 0.40% of the average daily net assets of each Fund, and with
respect to the U.S. Treasury, Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds, 0.40% of the first $750,000,000 of
net assets of each Fund plus 0.35% of net assets of each Fund in excess of
$750,000,000. The Trust has been advised by Fleet that, with respect to the
Money Market, Government and Tax-Exempt Funds, Fleet intends to waive advisory
fees payable to it by each Fund by 0.05% to the extent that a Fund's net assets
exceed $750,000,000.
Prior to December 4, 1995, Shawmut Bank, N.A. ("Shawmut Bank") provided
investment advisory services to the Shawmut Connecticut Municipal Money Market
and Shawmut Massachusetts Municipal Money Market Funds, predecessor funds of the
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds (collectively, the "Predecessor Funds", see Note 9). Shawmut Bank was paid
a fee for its services at the annual rate of 0.50% of each Predecessor Fund's
average daily net assets (see also Note 4).
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, 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 (whose financial reports are disclosed under a separate cover),
0.085% of the next $2.5 billion of combined average daily net assets and 0.075%
of combined average daily net assets over $5 billion. Prior to September 5,
1996, FDISG was entitled to receive administration fees, 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
(whose financial reports are disclosed under a separate cover) 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, Chase Manhattan Bank, N.A., for its services. Prior to March 31,
1995, the fund administration, fund accounting, custody administration and
transfer agency services described above were provided to the Funds, except the
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds, 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 March 31, 1995, FDISG acquired substantially all of the assets
of 440 Financial Group of Worcester, Inc.
Prior to December 4, 1995, Federated Administrative Services ("FAS")
provided certain administrative and other services to the Predecessor Funds. The
fee paid to FAS was based on the level of average aggregate net assets of The
Shawmut Funds. In addition, prior to December 4, 1995, Federated Services
Company ("FSC") provided transfer agency and dividend disbursing services to the
Predecessor Funds in return for fees at rates based on the size, type and number
of accounts and transactions made by shareholders. FSC also maintained
44
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
accounting records for the Predecessor Funds and was paid fees based on each
Predecessor Fund's average net assets plus out-of-pocket expenses.
440 Financial Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of FDISG and an indirect wholly-owned subsidiary of First Data
Corporation, serves 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 December 4, 1995, Federated Securities Corp. (the "Shawmut
Distributor") served as the principal distributor of the Predecessor Funds. The
Predecessor Funds had adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the terms of the Plan, the Predecessor Funds
compensated the Shawmut Distributor, from the net assets of the Predecessor
Funds, to finance activities intended to result in the sale of the Predecessor
Funds' Investment Shares. The Plan permitted the Predecessor Funds to incur
distribution expenses of up to 1/2 of 1% of the average daily net assets of the
Investment Shares for the Connecticut Municipal Money Market Fund and shares of
the Massachusetts Municipal Money Market Fund.
On November 1, 1994, the Trust adopted a shareholder services plan (the
"Services Plan") with respect to Retail Shares of the Funds. Currently, the
Services Plan has not been implemented with respect to the Funds' Trust Shares.
The Services Plan provides compensation to institutions (including and currently
limited to Fleet Bank and its affiliates) which provide administrative and
support services to their customers who beneficially own Retail Shares, at an
aggregate annual rate not to exceed 0.25% of the average daily net asset value
of the outstanding Retail Shares of each Fund beneficially owned by such
customers. The Trust, under the direction of the Board of the Trustees, is
currently limiting fees payable under the Services Plan with respect to each
Fund to an aggregate annual rate not to exceed 0.10% of the average daily net
asset value of the outstanding Retail Shares beneficially owned by such
customers.
The Retail Shares and Trust Shares of a Fund bear series specific transfer
agent charges based upon the number of shareholder accounts for each series.
Trust Shares of the Funds (except the Tax-Exempt Fund) also bear additional
transfer agency fees in order to compensate FDISG for payments made to Fleet
Bank, an affiliate of the Investment Adviser, for performing certain sub-account
and administrative functions on a per account basis with respect to Trust Shares
held by defined contribution plans. These additional fees are based on the
number of shareholder accounts. For the year ended October 31, 1996, transfer
agent charges for each series were as follows:
<TABLE>
<CAPTION>
Fund Retail Trust
- ---- --------- ---------
<S> <C> <C>
Money Market Fund .......................... $1,544,644 $ 213,133
Government Fund............................. 405,122 12,619
Tax-Exempt Fund............................. 70,614 68
U.S. Treasury Fund.......................... 248,017 7,716
Connecticut Municipal
Money Market Fund......................... 16,413 --
Massachusetts Municipal
Money Market Fund......................... 8,909 --
</TABLE>
Certain officers of the Trust may be officers of the Administrator and/or
Distributor. Such officers receive no compensation from the Trust for serving in
their respective roles. No officer, director or employee of the Investment
Adviser serves as an officer, Trustee or employee of the Trust. For the period
covered by this report, each Trustee was 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 as
well as reimbursement for expenses incurred in attending meetings. The Chairman
of the Boards of Trustees of the Trust and VIPand the President and Treasurer of
the Trust and VIP were entitled to additional annual fees for their services in
these capacities. Effective November 1, 1996, each Trustee is entitled to
receive for services as a trustee of the Trust, VIP and Galaxy Fund II ("Galaxy
II") an aggregate fee of $29,000 per annum plus certain other fees for attending
or participating in meetings as well as reimbursement for expenses incurred in
attending meetings. The Chairman of the Boards of Trustees, and the President
and Treasurer of the Trust, VIP and Galaxy II are also entitled to additional
fees for their services in these capacities. These fees are allocated among the
funds of the Trust, VIP and Galaxy II, based on their relative net assets. In
addition, effective March 1, 1996, each Trustee became eligible to participate
in the Trust's Deferred Compensation Plan (the "Plan"), an unfunded,
non-qualified 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 year ended October 31, 1996 include legal fees paid to
Drinker Biddle & Reath. A partner of that firm is Secretary of the Trust.
45
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
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 Fund. The
InvestmentAdviser, at its discretion, may revise or discontinue the voluntary
fee waivers and expense reimbursements at any time. For the year ended October
31, 1996, the Investment Adviser waived fees and/or reimbursed expenses with
respect to the Funds in the following amounts:
<TABLE>
<CAPTION>
Fees waived by
Fund Investment Adviser
---- ------------------
<S> <C>
Money Market Fund................... $ 543,180
Government Fund..................... 113,057
Expenses Reimbursed by
Fund Investment Adviser
----- -------------------
<S> <C>
Money Market Fund................... $ 85,430
Government Fund..................... 13,712
Tax-Exempt Fund..................... 16,727
U.S. Treasury Fund.................. 829
Connecticut Municipal
Money Market Fund................ 93,862
Massachusetts Municipal
Money Market Fund................ 90,548
</TABLE>
5. Capital Contributions
During the period June 20, 1994 through July 6, 1994, the Investment
Adviser voluntarily contributed capital to the Money Market Fund, Government
Fund and U.S. Treasury Fund in the amounts of approximately $1.6 million, $2.3
million and $1.0 million, respectively. These amounts were contributed to offset
losses realized on the sale of certain securities held by the Funds. The
Investment Adviser received no shares of beneficial interest or other
consideration in exchange for these contributions which maintained the net asset
value of each Fund at approximately $1.00 per share.
6. Shares of Beneficial Interest
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest in the Funds, each with a par
value of $0.001. The Trust's shares are classified into twenty-four classes of
shares, each consisting of one or more series including: Class A Shares (Retail
A Shares) and Class A - Special Series 1 Shares (Trust Shares) - Money Market
Fund; Class B Shares (Retail A Shares) and Class B - Special Series 1 Shares
(Trust Shares) Government Fund; Class E Shares (Retail A Shares) and Class E -
Special Series 1 Shares - (Trust Shares) - Tax-Exempt Fund; Class F Shares
(Retail A Shares) and Class F - Special Series 1 Shares -(Trust Shares) - U.S.
Treasury Fund; Class V Shares - Connecticut Municipal Money Market Fund; and
Class W Shares - Massachusetts Municipal Money Market Fund.
Prior to November 1, 1994, the Money Market, Government, Tax Exempt and
U.S. Treasury Funds each offered a single series of shares. As of such date, the
existing series of shares of each such Fund was designated as Retail A Shares
and each such Fund began issuing a second series of shares designated as Trust
Shares. At such time, certain eligible holders of Retail A Shares of such Funds
exchanged their shares for Trust Shares of the same Funds. Prior to December 4,
1995, the Predecessor Connecticut Municipal Money Market Fund offered two series
of shares, Investment Shares and Trust Shares. The predecessor shareholders
exchanged shares of each series for shares in the Galaxy Connecticut Municipal
Money Market Fund. The Predecessor Massachusetts Municipal Money Market Fund
sold shares without class designation.
Each share of a Fund represents an equal proportionate interest in the
Fund, bears the same fees and expenses (except that Retail Shares of the Fund
bear the expense of payments under the Services Plan and Trust Shares and Retail
Shares bear series specific transfer agent charges), and is 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.
7. Concentration of Credit
The Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds invest primarily in debt obligations issued by the State of
Connecticut and the Commonwealth of Massachusetts, respectively, and their
respective political subdivisions, agencies and public authorities to obtain
funds for various public purposes. The Funds are more susceptible to economic
and political factors adversely affecting issuers of each respective state's
specific municipal securities than are municipal funds that are not concentrated
in these issuers to the same extent.
46
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
8. Federal Tax Information
At October 31, 1996, the following Funds had capital loss carryforwards:
<TABLE>
<CAPTION>
Fund Amount Expiration
- ----- ---------- ----------
<S> <C> <C>
Money Market Fund............. $ 1,304,872 2002
5,181 2003
43,235 2004
Government Fund............... 872,504 2002
Tax-Exempt Fund............... 120,301 2002
3,772 2003
7,498 2004
U.S. Treasury Fund............ 786,774 2002
Connecticut Municipal
Money Market Fund.......... 6,619 2003
817 2004
Massachusetts Municipal
Money Market Fund.......... 133 2002
31 2003
12,416 2004
</TABLE>
9. 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 Prime Money Market Fund were
transferred to the Galaxy Money Market Fund in exchange for shares of the Galaxy
Money Market Fund. In addition, all of the assets and liabilities of the Shawmut
Connecticut Municipal Money Market Fund and the Shawmut Massachusetts Municipal
Money Market Fund were transferred to the Galaxy Connecticut Municipal Money
Market Fund and the Galaxy Massachusetts Municipal Money Market Fund,
respectively, new portfolios of the Trust, in exchange for shares of the Galaxy
Connecticut Municipal Money Market Fund and the Galaxy Massachusetts Municipal
Money Market Fund, respectively. Accordingly, the net assets attributable to
Investment Shares and Trust Shares of the Shawmut Prime Money Market Fund were
exchanged for 267,079,142 Retail A Shares and 511,462,955 Trust Shares,
respectively, of the Galaxy Money Market Fund, the net assets attributable to
Investment Shares and Trust Shares of the Shawmut Connecticut Municipal Money
Market Fund were exchanged for 99,969,877 shares of the Galaxy Connecticut
Municipal Money Market Fund and the net assets of the Shawmut Massachusetts
Municipal Money Market Fund were exchanged for 39,189,008 shares of the Galaxy
Massachusetts Municipal Money Market Fund. In related transactions, the assets
and liabilities of other Shawmut portfolios were transferred to corresponding
Galaxy portfolios in exchange for shares in such Galaxy portfolios. The
reorganization, which qualified as a tax-free reorganization for Federal income
tax purposes, was completed on December 4, 1995 following the approval of the
reorganization by The Shawmut Fund shareholders. Certain share registration fees
incurred in connection with the reorganization were borne by the Trust. The
following is a summary of the Net Assets, Shares Outstanding and Net Asset
Values per share associated with the transaction:
47
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
<TABLE>
<CAPTION>
Before Acquisition After Acquisition
-------------------------------------------------------------------- -------------------------------
Galaxy Galaxy Shawmut Shawmut Galaxy Galaxy
Money Market Money Market Prime Money Prime Money Money Market Money Market
Fund Fund Market Fund Market Fund Fund Fund
Retail A Shares Trust Shares Investment Shares Trust Shares Retail A Shares Trust Shares
--------------- ------------ ---------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets.................. $ 614,802,390 $ 318,554,689 $ 267,075,370 $ 511,455,645 $ 881,877,760 $ 830,010,334
Shares outstanding.......... 615,427,194 319,003,229 267,079,142 511,462,955 882,506,336 830,466,184
Net Asset Value, per share.. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
<CAPTION>
Before Acquisition After Acquisition
--------------------------------------------------------------------------- ------------------------
Galaxy Shawmut Shawmut Galaxy
Connecticut Municipal Connecticut Municipal Connecticut Municipal Connecticut Municipal
Money Market Fund Money Market Fund Money Market Fund Money Market Fund
Shares Investment Shares Trust Shares Shares
--------------------- -------------------- --------------------- ------------------------
<S> <C> <C> <C> <C>
Net Assets.................. $ 10.00 $ 67,149,096 $ 32,820,781 $ 99,969,887
Shares outstanding.......... 10.00 67,149,096 32,820,781 99,969,887
Net Asset Value, per share.. $ 1.00 $ 1.00 $ 1.00 $ 1.00
Before Acquisition After Acquisition
--------------------------------------------------- ------------------------
Galaxy Shawmut Galaxy
Massachusetts Municipal Massachusetts Municipal Massachusetts Municipal
Money Market Fund Money Market Fund Money Market Fund
Shares Investment Shares Shares
----------------------- ---------------------- ------------------------
<S> <C> <C> <C>
Net Assets $ 10.00 $ 39,189,008 $ 39,189,018
Shares outstanding 10.00 39,189,008 39,189,018
Net Asset Value, per share $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Tax Information (unaudited):
During the fiscal year ended October 31, 1996, the following Funds earned
income from direct obligations of the U.S Government:
U.S. Government
Fund Income
- ---- ---------------
Money Market Fund 35.92%
Government Fund 88.17%
U.S. Treasury Fund 100.00%
Appropriate tax information detailing government income percentage on a calendar
year basis will accompany your year-end tax statement. As each state's rules on
the exemption of this income differ, please consult your tax advisor regarding
specific tax treatment. 100% of the income earned by the Tax Exempt Fund, the
Connecticut Municipal Money Market Fund, and the Massachusetts Municipal Money
Market Fund will generally qualify as exempt from federal and state taxation.
48
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Shareholders and the Board of Trustees of
The Galaxy Fund:
We have audited the accompanying statements of assets and liabilities of
the Money Market Fund, Government Fund, Tax-Exempt Fund and U.S. Treasury Fund,
(four series of The Galaxy Fund), including the portfolios of investments, as of
October 31, 1996, and the related statements of operations, the statements of
changes in net assets, and financial highlights for each of the periods
indicated therein. In addition, we have audited the accompanying statements of
assets and liabilities of the Connecticut Municipal Money Market Fund and
Massachusetts Municipal Money Market Fund, (two series of The Galaxy Fund),
including the portfolios of investments, as of October 31, 1996, and the related
statements of operations, the statements of changes in net assets, and financial
highlights for the year ended October 31, 1996. These financial statements and
financial highlights are the responsibility of The Galaxy Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
The statement of changes in net assets for the year ended October 31, 1995
and the financial highlights for the period October 4, 1993 (commencement of
operations) through October 31, 1993 and for each of the two years in the period
ended October 31, 1995 for the Connecticut Municipal Money Market Fund and the
statement of changes in net assets for the year ended October 31, 1995 and the
financial highlights for the period October 5, 1993 (commencement of operations)
through October 31, 1993 and for each of the two years in the period ended
October 31, 1995 for the Massachusetts Municipal Money Market Fund, presented
herein, were audited by other auditors whose report dated November 27, 1995
expressed an unqualified opinion on such financial statements and financial
highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to in the first paragraph above present fairly, in all material respects, the
financial position of the aforementioned series of The Galaxy Fund as of October
31, 1996, the results of their operations, the changes in their net assets, and
their financial highlights for each of the periods referenced therein, in
conformity with generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
December 16, 1996
<PAGE>
--------------------
[LOGO OF GALAXY FUNDS APPEARS HERE] BULK RATE
4400 Computer Drive U. S. POSTAGE PAID
Box 5108 PERMIT NO. 105
Westborough, MA 01581-5108 NORTH READING, MA
--------------------
<PAGE>
[LOGO OF GALAXY FUNDS APPEARS HERE]
EQUITY FUNDS REPORT
Asset Allocation Fund . Equity Income Fund . Growth and Income Fund . Equity
Value Fund . Equity Growth Fund . Small Cap Value Fund . Small Company Equity
Fund . International Equity Fund
Annual
Report
For the Year Ended
October 31, 1996
<PAGE>
CHAIRMAN'S
MESSAGE
Dear Shareholder:
Enclosed is your annual report for the Galaxy Equity Funds for the 12
months ended October 31, 1996. The pages that follow include a Market Overview
which describes the major market and economic factors that affected stock
returns in the last year. You will also find Portfolio Reviews for each of the
Funds that explain how Fleet Investment Advisors Inc. managed the Funds under
these conditions.
Stocks continued to advance strongly in the past year, resulting in
returns that remain outstanding by historical standards. Although stock prices
were more volatile during 1996 than in some recent years -- as were the prices
for bonds -- on an overall basis as measured by the Standard & Poor's Composite
500 Stock Index, stock prices improved with better growth in the economy and
moderate levels of inflation. While stocks are expected to gain further in the
coming year, Fleet Investment Advisors Inc. believes a somewhat slower pace of
economic growth may cause further price fluctuations from time to time.
Such an investment environment shows why it may be important to keep your
portfolio well diversified. Because individual asset classes often move in
different directions, having a wide range of classes can help to smooth out your
returns. Whereas growth-oriented investments, like many stocks, help your
portfolio stay ahead of inflation, debt-oriented investments, like bonds and
cash, may provide a more stable income stream.
Keep in mind that when financial markets make large moves, as stocks did
in the past year, you may want to "rebalance" your portfolio to keep your asset
allocation on track. By replacing assets that have increased in value with
assets whose values have fallen or stayed the same, you can maintain your
original investment strategy and move closer to your long-term goals. Of course,
you should consider the tax implications of such rebalancing.
We hope the following report is helpful as you review your current
portfolio. If you have questions about the content of the report, or want
information on any of the Galaxy Funds, please call the Galaxy Service Center at
800-628-0414.
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>
MARKET OVERVIEW
"Although consumer spending slowed and inventories grew, investors increasingly
chose stocks over bonds. Stock prices were boosted further by large cash flows
into stock mutual funds through tax-deferred retirement plans."
EQUITY MARKET OVERVIEW
By Fleet Investment Advisors Inc.
Stock prices rose strongly again in the 12 months ended October 31, 1996,
as ongoing economic gains brought further earnings growth. The stock market was
more volatile than in recent years, however, with a temporary correction
occurring during the middle of the year.
The Galaxy Equity Funds performed competitively against their market
benchmarks and other funds with similar objectives.
INFLATION WATCH
When the period began, economic growth was slow, inflation was moderate
and interest rates were falling. After improving at an annualized rate of 3.8%
in the third quarter of 1995, the gross domestic product ("GDP"), which measures
U.S. goods and services, rose by an annualized rate of just 0.3% in the fourth
quarter of 1995.
In December, the Federal Reserve (the "Fed") reduced the short-term Fed
Funds rate from 5.75% to 5.5%. With expectations for further rate cuts and new
hope for a balanced federal budget, bond yields continued to fall. Although
consumer spending slowed and inventories grew, investors increasingly chose
stocks over bonds. Stock prices were boosted further by large cash flows into
stock mutual funds through tax-deferred retirement plans.
The flow of new money continued into 1996 as corporate earnings
strengthened and investors looked for lower interest rates. Although federal
budget negotiations soon stalled, inflation remained in check, and the Fed cut
short-term rates to 5%. With gains in the U.S. dollar, which made domestic
securities more attractive abroad, and increased corporate buybacks of stock,
which reduced share supplies, stock prices rose through most of February. Prices
ebbed briefly at the beginning of March and the beginning of April, as
unexpectedly strong employment reports renewed inflation fears. Once investors
saw that inflation remained moderate, stock prices quickly rebounded.
PERFORMANCE AT-A-GLANCE
AVERAGE ANNUAL RETURNS as of October 31, 1996
Trust Shares
ASSET ALLOCATION FUND Inception Date 12/30/91
17.19%
12.44% (BAR GRAPH APPEARS HERE)
10.81%
EQUITY INCOME FUND Inception Date 12/14/90
19.65%
14.82% (BAR GRAPH APPEARS HERE)
13.19%
13.88%
GROWTH AND INCOME FUND Inception Date 12/14/92
20.77%
16.23% (BAR GRAPH APPEARS HERE)
14.81%
EQUITY VALUE FUND Inception Date 9/1/88
22.05%
15.86% (BAR GRAPH HERE)
14.77%
13.42%
EQUITY GROWTH FUND Inception Date 12/14/90
21.03%
16.63% (BAR GRAPH HERE)
13.45%
15.06%
SMALL CAP VALUE FUND Inception Date 12/14/92
25.22%
15.73% (BAR GRAPH HERE)
15.31%
SMALL COMPANY EQUITY FUND Inception Date 12/30/91
24.69%
18.88% (BAR GRAPH HERE)
16.41%
INTERNATIONAL EQUITY FUND Inception Date 12/30/91
11.51%
6.68% (BAR GRAPH HERE)
8.48%
1 Year 5 Years
3 Years Life of Fund
1
<PAGE>
"By August, investors realized inflation was stable and economic growth was
beginning to slow. Stock and bond prices rebounded sharply, and in September
and October stock prices reached new highs."
MARKET OVERVIEW
Although ongoing strength in earnings pushed stocks higher in the second
quarter, further worries about inflation and rising bond yields slowed the
advance. After rising at an annualized rate of 2.0% in the first quarter, GDP
growth accelerated to an annualized rate of 4.7% in the second quarter. This
pushed the yield for 30-year Treasury bonds as high as 7.2%, up from 5.9% at the
end of 1995. As higher bond yields made stocks less attractive, cash flows to
stock mutual funds eased. Having reached valuations that were high by historical
measures, stock prices retreated from the end of May to the end of July. During
that time, prices corrected about 10% -- the largest decline in more than five
years.
By August, investors realized inflation was stable and economic growth was
beginning to slow. Stock and bond prices rebounded sharply, and in September and
October stock prices reached new highs.
Stocks in foreign markets improved moderately during the year as overseas
economies appeared to be in the early stages of recovery. Returns abroad were
reduced somewhat for investors here due to the continued strength of the U.S.
dollar.
GREATER FOCUS ON STABLE EARNINGS
Throughout the year we gave greater attention to stocks with proven
earnings potential. Even though corporate earnings were relatively strong,
investors worried frequently that they would falter. With a focus on quality
stocks with solid earnings outlooks and attractive prices, we maintained
well-diversified portfolios that could perform well in a changing economic
environment.
While interest rates were falling at the end of 1995, we earned solid
returns from finance stocks and other interest-sensitive issues. Stocks in the
energy sector and economically "defensive" groups also performed well. The
returns earned by portfolios among the Galaxy Equity Funds that held energy and
finance stocks were further enhanced in 1995. Also, as the economy strengthened,
there were strong gains from positions in basic materials and consumer cyclical
stocks -- as well as from technology issues bought at attractive prices.
PERFORMANCE AT-A-GLANCE
Average Annual Returns as of October 31, 1996
Retail A Shares*
ASSET ALLOCATION FUND Inception Date 12/30/91
12.53%
10.83% (BAR GRAPH HERE)
9.82%
EQUITY INCOME FUND Inception Date 12/14/90
14.57%
12.96% (BAR GRAPH HERE)
12.08%
12.93%
GROWTH AND INCOME FUND Inception Date 2/13/93
15.75%
14.38% (BAR GRAPH HERE)
13.98%
EQUITY VALUE FUND Inception Date 9/1/88
16.92%
14.04% (BAR GRAPH HERE)
13.68%
12.76%
EQUITY GROWTH FUND Inception Date 12/14/90
16.01%
14.79% (BAR GRAPH HERE)
12.37%
14.13%
SMALL CAP VALUE FUND Inception Date 2/13/93
20.13%
13.96% (BAR GRAPH HERE)
14.60%
SMALL COMPANY EQUITY FUND Inception Date 12/30/91
19.36%
16.93% (BAR GRAPH HERE)
15.21%
INTERNATIONAL EQUITY FUND Inception Date 12/30/91
6.73%
4.92% (BAR GRAPH HERE)
7.35%
1 Year 5 Years
3 Years Life of Fund
*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.
2
<PAGE>
MARKET OVERVIEW
"Later in the period, when it was clear economic growth was slowing, we
became even more selective in choosing stocks with long-term potential." We
continued to diversify our portfolios by industry sector while focusing on
companies that could produce strong fundamental results. Since we continued to
be concerned about earnings gains, we felt comfortable with a number of drug,
consumer staples, energy and health care stocks -- whose earnings are often more
stable in a slow-growth economy.
Moderate Growth and Inflation Ahead
With further evidence of reduced growth, we expect GDP to improve by an
annualized rate of 2% in the months to come. This should keep the annual rate of
inflation near 3% and allow bond yields to stabilize or edge lower.
Over time, moderate growth and inflation should benefit stocks. In the
near-term, however, slower growth may make stocks vulnerable to another
correction. As economic growth slows, corporate profits may weaken -- driving
stock prices lower again.
As in previous times of economic uncertainty, we believe stocks of high
quality companies with proven or potential industry leadership and stable
earnings growth characteristics should outperform the stock market as a whole.
We therefore expect to maintain positions in such issues while watching for new
opportunities that a weakness in stock prices may bring.
Performance At-A-Glance
Total Returns as of October 31, 1996
Retail B Shares*
Asset Allocation Fund
Inception Date 3/1/96
7.71% (BAR GRAPH HERE)
2.71%
Growth and Income Fund
Inception Date 3/1/96
6.83% (BAR GRAPH HERE)
1.83%
Equity Value Fund
Inception Date 3/1/96
8.80% (BAR GRAPH HERE)
3.80%
Equity Growth Fund
Inception Date 3/1/96
7.95% (BAR GRAPH HERE)
2.95%
Small Company Equity Fund
Inception Date 3/1/96
15.34% (BAR GRAPH HERE)
10.34%
Life 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 the sixth year,
respectively. Retail B Shares automatically convert
to Retail A Shares after six years. Total returns
are from the date of inception.
3
<PAGE>
PORTFOLIO REVIEWS
GALAXY ASSET ALLOCATION FUND
By Don Jones
Portfolio Manager
As stock investors moved among different sectors in the past year, we
traded equities in the Galaxy Asset Allocation Fund that had performed well for
others with greater potential. As interest rates changed course, we adjusted the
Fund's income investments to make the most of opportunities for higher yields
and capital gains. These strategies helped the Fund earn strong returns for the
year.
For the 12 months ended October 31, 1996, the Fund's blend of equity and
fixed-income investments helped its Trust Shares earn a total return of 17.19%.
For the same period, Retail A Shares earned a total return of 16.92%, before the
deduction of the maximum 3.75% front-end sales charge. These returns compare
with a return of 14.71% for the average flexible fund investments tracked by
Lipper Analytical Services ("Lipper"). Over the same period, the S&P 500, which
tracks the performance of stocks only, returned 24.20%. Retail B Shares of the
Fund earned a total return of 7.71%, before deduction of the contingent deferred
sales charge, between their initial public offering on March 1, 1996 and
October 31, 1996.
Improving Potential Returns
When the period began, about 60% of the Fund's portfolio was invested in
stocks, with 31% in bonds and 9% in cash. We maintained this allocation until
just before the end of the period. In the meantime, we adjusted the Fund's stock
and bond investments to take advantage of attractive market opportunities.
In the final months of 1995, we traded consumer staples and capital goods
stocks, which had done well, for stocks in those sectors with better prospects
for growth. When the economy improved at the start of 1996, we added stocks from
the basic materials, consumer cyclical and consumer staples sectors. In the
summer of 1996, we took profits in selected utilities stocks, which tend to be
especially sensitive to rising interest rates, and added shares of drug stocks
with good growth potential.
During this time we adjusted the mix of fixed-income investments for
reversals in interest rates. When it looked like rates were bottoming, we took
profits in longer-term issues, whose prices are more sensitive to interest
rates, and bought instruments with shorter maturities. In the spring of 1996,
when rates seemed to stabilize, we added longer-term Treasury issues to enhance
the Fund's yield and potential for gains. We later added corporate bonds, as we
found attractive prices and yields. By giving greater attention to bonds that
could not be called in by their issuers, we maintained a strong yield for the
Fund and added stability to the value of its shares.
After bond prices became especially attractive in the third quarter of
1996, we increased the fixed-income portion of the portfolio to 33%. In doing
so, we shifted the investment and maturity mix of investments to give greater
weight to corporate issues and shorter-term bonds. Because stock prices had
risen sharply, and were again vulnerable to a correction, we increased the
Fund's cash reserves to nearly 20% and took profits in stocks with strong
performances. At the end of the period, the Fund was overweighted in technology,
financial and capital goods stocks, versus the S&P 500 Index, and underweighted
in utility stocks.
Positioning for Moderate Growth
These changes should help the Fund benefit from the moderate economic
growth and inflation that we expect. The Fund now has slightly less exposure to
stocks, which may correct in price as corporate earnings slow, but holds shares
with good potential for long-term gains. Its fixed-income investments have a
neutral average maturity of about 10 years. With a greater emphasis on debt
issues that carry attractive yields, we
(PHOTO APPEARS HERE)
Don Jones
Galaxy Asset Allocation Fund
Distribution of Total Net Assets
as of October 31, 1996
U.S. Government &
Agency Obligations 21%
Asset-Backed Securities 2%
Corporate Bonds 10%
(PIE GRAPH APPEARS HERE)
Repurchase Agreement
& Net Other Assets &
Liabilities 12%
Common Stocks 55%
Galaxy Asset Allocation Fund
Growth of $10,000 investment*
<PAGE>
<TABLE>
<CAPTION>
Galaxy Galaxy Galaxy
Standard & Retail A Trust Retail B
Poor's 500 Shares Shares Shares
<S> <C> <C> <C> <C>
91 10,000 9,625 10,000
92 10,295 9,899 10,285
93 11,830 11,124 11,558
94 12,284 10,900 11,335
95 15,528 13,452 14,019 10,000
10/31/96 19,270 15,729 16,429 10,271
</TABLE>
[_] S&P 500
[_] Galaxy Asset Allocation- Retail A Shares
[_] Galaxy Asset Allocation-Trust Shares
[_] Galaxy Asset Allocation- Retail B Shares
*Since inception on 12/30/91 for Trust and Retail A Shares. Since inception
on 3/1/96 for Retail B Shares. 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. Performance figures for Retail B
Shares reflect the deduction of the maximum 5.00% contingent deferred sales
charge as if shares were redeemed on October 31, 1996. The S&P 500 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.
4
<PAGE>
---------------------
PORTFOLIO REVIEWS
---------------------
[PHOTO OF ED KLISIEWICZ APPEARS HERE]
[PIE CHART APPEARS HERE]
GALAXY EQUITY INCOME FUND
Distribution of Total Net Assets as of October 31, 1996
Repurchase Agreement & Net Other Assets & Liabilities 19%
U.S. Government Agency Obligations 2%
Consumer Staples 19%
Utilities 12%
Other Common Stocks 13%
Technology 8%
Finance 10%
Energy 10%
Capital Goods 7%
[GRAPH OF GALAXY EQUITY INCOME FUND APPEARS HERE]
GALAXY EQUITY INCOME FUND
Growth of $10,000 investment*
<TABLE>
<CAPTION>
Galaxy Galaxy
Standard & Retail A Trust
Poor's 500 Shares Shares
---------- ------ ------
<S> <C> <C> <C>
90 10,000 9,625 10,000
91 12,358 11,127 11,561
92 13,589 12,207 12,683
93 15,615 13,654 14,186
94 16,215 14,055 14,615
95 20,497 17,179 17,948
10/31/96 25,437 20,445 21,475
</TABLE>
[ ] S & P 500
[ ] Galaxy Equity Income-Retail A Shares
[ ] Galaxy Equity Income-Trust Shares
*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 S&P 500 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.
believe the income side of the portfolio could produce solid returns if interest
rates and bond prices become more stable.
Don Jones became manager of the Galaxy Asset Allocation Fund in April of 1995.
He has managed investment portfolios for Fleet Investment Advisors Inc. and its
predecessors since 1988.
GALAXY EQUITY INCOME FUND
By Ed Klisiewicz
Portfolio Manager
The performance of stocks frequently is tied to the direction of bond
yields. This is particularly true of dividend-paying stocks like those in the
Galaxy Equity Income Fund. When bond yields fall, these stocks tend to
outperform the market. Dividend-paying stocks often underperform, however, when
bond yields rise. In the volatile interest rate environment of the last year, we
gave added attention to stocks with exceptional dividends and potential for
growth. This helped the Fund deliver solid returns for shareholders.
For the 12 months ended October 31, 1996, the Fund's Trust Shares had a
total return of 19.65%. For the same period, Retail A Shares had a total return
of 19.01%, before the deduction of the maximum 3.75% sales charge. These returns
compare to a return of 20.65% for the average equity income fund tracked by
Lipper. For the same period, the S&P 500 returned 24.20%.
Enhancing Dividends and Growth
When economic growth was slow and bond yields were falling at the end of
1995, the average dividend for a share of stock was historically low. This
boosted returns for stocks with high dividends that comprise the bulk of the
Fund's portfolio. There were particularly strong performances from the Fund's
consumer staples stocks, which tend to do well when economic growth is slow.
During that time we traded technology stocks that had performed well for capital
goods stocks that offered good potential for earnings growth.
As the economy improved at the start of 1996, the Fund benefited from the
increased investments in capital goods stocks -- as well as from banking stocks
that advanced on continued mergers in that sector. With a rise in interest
rates, the returns from other financial stocks and from utility shares were more
disappointing. Expecting banking stocks to benefit from further industry
consolidation, we added investments there -- as well as domestic oil, consumer
cyclical and technology shares.
In the summer and fall of 1996, rising interest rates dampened returns on
shares of utility, financial and energy firms, but the Fund enjoyed good
performances from investments in leading drug and beverage firms. The Fund also
benefited from additional investments in banking stocks, which continued to gain
as a result of industry mergers.
New Opportunities
If the economy slows and interest rates stabilize or edge lower,
dividend-paying stocks could outperform once again. Now that stock prices have
rebounded, however, they could be vulnerable to a temporary correction if slower
economic growth brings disappointments in earnings.
With this in mind, we've raised the Fund's cash reserves to nearly 20%.
This should give us the flexibility to take advantage of any investment
opportunities that a correction might bring. In the meantime, we'll continue to
keep the Fund well diversified and focus on stocks whose dividends can grow even
if the economy slows.
Ed Klisiewicz has been portfolio manager of the Galaxy Equity Income Fund since
its inception in December of 1990. He has managed portfolios for Fleet
Investment Advisors Inc. and its predecessors since 1970.
GALAXY GROWTH AND INCOME FUND
By Brendan Henebry
Portfolio Manager
In the last year, individual stock sectors fell in and out of favor as
investors looked for value and strong growth prospects in a confusing economy.
By choosing investments
5
<PAGE>
---------------------
PORTFOLIO REVIEWS
---------------------
[PHOTO OF BRENDAN HENEBRY APPEARS HERE]
BRENDAN HENEBRY
Galaxy Growth
and Income Fund
Distribution of Total Net Assets
as of October 31, 1996
[PIE CHART APPEARS HERE]
Consumer Staples 21%
Technology 15%
Finance 13%
Energy 10%
Capital Goods 9%
Other Common Stocks 9%
Consumer Cyclical 8%
Repurchase Agreement & Net
Other Assets & Liabilities 8%
Utilities 7%
Galaxy Growth
and Income Fund
Growth of $10,000 investment*
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Standard & Galaxy Galaxy Galaxy
Poor's 500 Retail A Trust Retail B
Index Shares Shares Shares
---------- -------- ------------- --------
<S> <C> <C> <C> <C>
92 10,000 9,625 10,000
93 10,890 10,457 10,880
94 11,548 11,410 11,908
95 14,601 13,522 14,147 10,000
10/31/96 18,120 16,261 17,085 10,183
</TABLE>
[ ] S&P 500
[ ] Galaxy Growth and Income - Retail A Shares
[ ] Galaxy Growth and Income - Trust Shares
[ ] Galaxy Growth and Income - Retail B Shares
*Since inception on 12/14/92 for Trust Shares and 2/12/93 for Retail A Shares.
Since inception on 3/1/96 for Retail B Shares. 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. Performance figures
for Retail B Shares reflect the deduction of the maximum 5.00% contingent
deferred sales charge as if shares were redeemed on October 31, 1996. The
S&P 500 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.
that could benefit from this "rotation," while providing a good income
stream, the Galaxy Growth and Income Fund earned solid returns.
For the 12 months ended October 31, 1996, the Fund's Trust Shares had a
total return of 20.77%. Over the same period, Retail A Shares had a total return
of 20.25%, before deduction of the maximum 3.75% front-end sales charge. For the
same period, the Standard and Poor's 500 Index had a return of 24.20%, while the
average growth and income fund tracked by Lipper had a return of 21.22%. Retail
B Shares of the Fund earned a total return of 6.83%, before deduction of the
maximum 5.00% contingent deferred sales charge, between their initial public
offering on March 1, 1996 and October 31, 1996.
Top Performers
At the end of 1995, when economic growth was slowing, solid performances
from health care, airlines and financial stocks offset disappointing
performances from consumer cyclical and basic materials stocks. To maintain our
emphasis on stocks with exceptional potential for long-term gains, we sold
consumer staples and energy shares that had met our expectations and added
several technology stocks with attractive prices.
As the economy improved, there were strong returns from stocks in retail
and other consumer cyclical sectors and ongoing gains from health care and
airlines issues. Besides increasing investments further in technology firms, we
added shares of insurance and financial-services companies. We also traded some
of the Fund's banking stocks for others in the industry that we felt had greater
growth potential. Consumer cyclical issues continued to gain in the second
quarter of 1996, along with investments in airlines and utilities firms. With
additional advances by technology stocks, we took profits in that sector. We
also reduced positions in retail and banking stocks, out of concern for
increased consumer debt. The Fund's technology stocks rallied further in the
third quarter -- along with retail, financial and health care issues. During the
quarter we put the Fund's sizable cash reserves to work in shares of technology,
health care, insurance and retail firms. Once the Fund's overweighted position
in banking stocks became more fully valued, we reduced positions there and added
to shares of insurance firms.
A More Defensive Position
Now that stock prices have rebounded and the economy is slowing, there may
be disappointments in earnings that could prompt another market correction. As a
result, we've begun to take a more defensive position with the Fund's portfolio.
We recently took profits in the Fund's larger retail and transportation
positions and used the proceeds for shares of drug, food and energy firms. We
also are slowly building the Fund's cash reserves again -- which should let us
make the most of new investment opportunities that might occur from a
correction.
Brendan Henebry has managed the Galaxy Growth and Income Fund and its
predecessor since its inception. He has managed equity portfolios since 1969.
GALAXY EQUITY VALUE FUND
By G. Jay Evans, CFA
Portfolio Manager
The Galaxy Equity Value Fund enjoyed strong returns last year, largely due
to its emphasis on financial, health care and technology stocks. The Fund was
also able to take advantage of the rotation into groups such as retail and basic
materials stocks, while avoiding investments in the disappointing utility
sector.
During the 12 months ended October 31, 1996, the Fund's Trust Shares
earned a total return of 22.05%. Retail A Shares had a total return of 21.49%,
before deduction of the maximum 3.75% front-end sales charge, over the same time
period. These returns compare with returns of 21.22% for the average growth and
income fund tracked by Lipper and 24.20% for the Standard & Poor's 500
6
<PAGE>
---------------------
PORTFOLIO REVIEWS
---------------------
Index for the same 12 month period. Since their initial public offering on March
1, 1996 through October 31, 1996, Retail B Shares earned a total return of
8.80%, before deduction of the maximum 5.00% contingent deferred sales charge.
Sector Contributions
In the past year investors were surprised by the strength of the economy
and the lack of inflation. As the period began, retail sales were weak,
government spending had stalled in a budget debate and consumer bankruptcies
were on the rise. At the start of 1996, the picture changed dramatically. Both
the economy and the stock market took off, primed by cuts in the Fed Funds rate
and a shift of money into equities. Demand for computer network systems and
software soared, and consumers increased their spending out of a renewed sense
of job security. Despite this growth, inflation remained low -- due to ample
supplies of products and services.
This economic backdrop was favorable for bank stocks -- an area of
emphasis for the Galaxy Equity Value Fund throughout the year. Banking issues
were helped by falling interest rates, strong earnings reports and the potential
for dividend increases, share repurchases and cost-saving consolidations.
Computer network and software stocks also contributed strongly to the
Fund's performance. We emphasized these issues because we felt they were the
best way to ride the wave of investment in productivity. In addition, the Fund
benefited from its focus on consumer cyclicals early in 1996 and its attention
to health care issues in the fall. The Fund's success in these areas was
partially offset by an underweighting in "blue-chip" consumer-growth issues.
Greater Selectivity Ahead
Now that the pace of the economy has slowed, investors are less fearful of
inflation and the need for the economic brake of higher interest rates. We
believe the stock market has moved far ahead already, reflecting investors'
confidence in the economy. Earnings prospects should now weaken and the market
may be vulnerable to a correction.
In the absence of a triggering event, however, we would expect the market
to move sideways for several quarters -- supported by the strength of
productivity gains, rising personal incomes and the prospect of further
reductions in interest rates. As we move through this period, our valuation
system should continue to identify mispriced stocks that offer attractive
investment returns.
G. Jay Evans has managed the Galaxy Equity Value Fund since April of 1992. He
has managed value-oriented portfolios for Fleet Investment Advisors Inc. and
its predecessors since 1981.
GALAXY EQUITY GROWTH FUND
By Bob Armknecht
Portfolio Manager
As stock prices moved higher in the past year, and the economic outlook
grew less clear, the selection of specific stocks became increasingly important
to returns. By focusing on companies with proven earnings and strong potential
for long-term growth, the Galaxy Equity Growth Fund earned solid returns and
outpaced the average fund in its class.
For the 12 months ended October 31, 1996, the Fund's Trust Shares had a
total return of 21.03%. Retail A Shares had a total return of 20.51%, before the
deduction of the maximum 3.75% front-end sales charge, during the same time
period. These returns compare to an average return of 18.46% for growth funds
tracked by Lipper. Over the same period, the S&P 500 had a return of 24.20%.
Retail B Shares of the Fund earned a total return of 7.95%, before the deduction
of the maximum 5.00% contingent deferred sales charge, between their initial
public offering on March 1, 1996 and October 31, 1996.
[PHOTO OF G. JAY EVANS APPEARS HERE]
Galaxy Equity
Value Fund
Distribution of Total Net Assets
as of October 31, 1996
[PIE CHART APPEARS HERE]
Consumer Cyclical 9%
Transportation 10%
Repurchase Agreement & Net
Other Assets & Liabilities 8%
Finance 21%
Technology 16%
Other Common Stocks 5%
Capital Goods 5%
Consumer Staples 19%
Energy 7%
Galaxy Equity
Value Fund
Growth of $10,000 investment*
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Galaxy Galaxy Galaxy
Standard & Retail A Trust Retail B
Poor's 500 Shares Shares Shares
---------- ------ ------ ------
<S> <C> <C> <C> <C>
87 10,000 9,625 10,000
88 10,731 10,019 10,410
89 13,552 11,441 11,887
90 12,537 10,362 10,766
91 16,737 13,517 14,045
92 18,404 14,282 14,839
93 21,148 17,307 17,982
94 21,960 18,167 18,889
95 27,760 21,948 22,915 10,000
10/31/96 34,450 26,663 27,968 10,380
</TABLE>
[ ] S&P 500
[ ] Galaxy Equity Value-Retail A Shares
[ ] Galaxy Equity Value-Trust Shares
[ ] Galaxy Equity Value- Retail B Shares
*Since inception on 9/1/88 for Trust and Retail A Shares. Since inception on
3/1/96 for Retail B Shares. 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. Performance figures for Retail B
Shares reflect the deduction of the maximum 5.00% contingent deferred sales
charge as if shares were redeemed on October 31, 1996. The S&P 500 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.
7
<PAGE>
---------------------
PORTFOLIO REVIEWS
---------------------
[PHOTO OF BOB ARMKNECHT APPEARS HERE]
Galaxy Equity
Growth Fund
Distribution of Total Net Assets
as of October 31, 1996
[PIE CHART APPEARS HERE]
Repurchase Agreement & Net
Other Assets & Liabilities 5%
Consumer Cyclical 8%
Finance 11%
Energy 12%
Technology 22%
Consumer Staples 28%
Other Common Stocks 6%
Capital Goods 8%
Galaxy Equity
Growth Fund
Growth of $10,000 investment*
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Galaxy Galaxy Galaxy
Standard & Retail A Trust Retail B
Poor's 500 Shares Shares Shares
---------- ------ ------ ------
<S> <C> <C> <C> <C>
90 10,000 9,625 10,000
91 12,358 11,683 12,139
92 13,589 12,747 13,244
93 15,615 13,840 14,380
94 16,215 14,494 15,070
95 20,497 18,051 18,849 10,000
10/31/96 23,319 21,753 22,813 10,295
</TABLE>
[ ] S&P 500
[ ] Galaxy Equity Growth-Retail A Shares
[ ] Galaxy Equity Growth-Trust Shares
[ ] Galaxy Equity Growth-Retail B Shares
*Since inception on 12/14/90 for Trust and Retail A Shares. Since inception on
3/1/96 for Retail B Shares. 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. Performance figures for Retail B
Shares reflect the deduction of the maximum 5.00% contingent deferred sales
charge as if shares were redeemed on October 31, 1996. The S&P 500 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.
Focus on Industry Leaders
Throughout the year, we kept the Fund well diversified and focused on
growth-oriented companies that are leaders in their industries. Early in the
period, when economic growth was slow, the Fund benefited from its selection of
investments in noncyclical sectors like health care and finance, in addition to
certain consumer stocks. At this point we took profits in several technology
stocks that had rallied strongly in 1995, added shares of new software and
specialty computer hardware companies, and broadened the Fund's health care
holdings to include leading hospital and biotech firms.
When the economy suddenly accelerated at the start of 1996, the Fund
enjoyed strong performances from its choice of airlines, technology, and
chemical stocks. There were also good returns from shares of selected drug
firms. At times of near-term market weakness, we added attractive stocks of
agricultural and health care firms -- and introduced positions in energy and
gaming stocks.
The gaming stocks we added performed well in the second quarter, as did
the Fund's drug and technology stocks. During that quarter, we took profits in
certain technology positions and added to shares of health care firms. With
share buybacks and mergers in the banking industry, the Fund's holdings there
performed strongly in the third quarter and helped offset weaker returns
elsewhere. Because we feel the technology sector offers some of the best
potential for long-term growth, we used market weakness to add selectively to
positions there and kept the Fund overweighted in that sector compared to the
S&P 500 Index.
Growth Independent
of the Economy
We believe a selective approach toward the Fund's investment mix should
provide continued benefits in the months to come. As the economy slows,
investors will give even greater attention to companies with proven earnings and
growth potential.
Within that context, we expect to focus on: 1) energy firms, which should
benefit from increased exploration and firmer prices, 2) financial companies,
which should perform well with lower interest rates and further restructuring,
3) consumer firms, including health care, drug, biotech and health services
firms, and 4) technology companies, with an emphasis on selected information
services and hardware concerns. We believe these sectors, combined with other
investments should help the Fund perform well despite a slower-growing economy.
Bob Armknecht has managed the Galaxy Equity Growth Fund since its inception in
December of 1990. He has managed equity portfolios for Fleet Investment Advisors
Inc. since 1988.
GALAXY SMALL CAP VALUE FUND
By Peter Larson
Portfolio Manager
When economic growth improves, stocks of small companies often outperform
the stock market as a whole. This was the case for much of the 12 months ended
October 31, 1996. By choosing stocks of companies that performed especially well
in this environment, and by redeeming technology positions in favor of holdings
in energy companies and other firms with long-term potential, we helped the
Galaxy Small Cap Value Fund deliver exceptional returns that surpassed those for
its market benchmark and the average fund in its class.
During the 12-month period ended October 31, 1996, the Fund's Trust Shares
had a total return of 25.22%. For the same period, Retail A Shares had a total
return of 24.77%, before the deduction of the maximum 3.75% front-end sales
charge. For the same period, the average small company growth fund tracked by
Lipper had a return of 20.44%, and the Russell 2000 Index had a return of
16.60%.
8
<PAGE>
- -----------------
PORTFOLIO REVIEWS
- -----------------
[PHOTO APPEARS HERE]
Peter Larson
Galaxy Small Cap Value Fund
Distribution of Total Net Assets as of
October 31, 1996
Corporate Bond, Repurchase Agreement
& Net Other Assets & Liabilities 8%
[PIE GRAPH APPEARS HERE]
Other Common Stocks 15%
Building and Construction 5%
Health Care 5%
Energy 13%
Finance 16%
Technology 23%
Consumer Cyclical 15%
Galaxy Small Cap
Value Fund
Growth of $10,000 investment*
[GRAPH APPEARS HERE]
. Russell 2000
. Galaxy Small Cap Value - Retail A Shares
. Galaxy Small Cap Value - Trust Shares
<TABLE>
<CAPTION>
Russell Galaxy Galaxy
2000 Retail A Institutional
Index Shares Shares
------- -------- -------------
<S> <C> <C> <C>
92 10000 9625 10000
93 10890 10789 11212
94 11548 10967 11420
95 14601 13299 13878
10/31/96 17025 16593 17378
</TABLE>
* Since inception on 12/14/92 for Trust Shares and 2/12/93 for Retail A Shares.
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 Russell 2000 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.
Looking for Value
When the period began, small cap stocks were lagging as investors worried
that slow economic growth would harm the earnings of smaller companies. During
this time, the Fund performed relatively well -- enjoying good returns from
positions in energy, banking, insurance and home-building firms. We took profits
in technology issues, which had been strong performers for most of 1995 and
bought technology issues with greater potential. We also added selectively to
stocks of food, health care and energy companies.
Small-company stocks assumed market leadership at the start of 1996, on
signs that the economy was improving. Besides continued gains from its energy
positions, the Fund enjoyed solid performances from certain technology stocks,
as well as from shares of several companies in the portfolio that were acquired
during this time. Early on, there were also further gains for technology issues.
After selling technology stocks when their prices were strong, we purchased
additional shares when prices weakened in July. We took further profits in
technology stocks during this time, while adding shares of insurance, banking
and energy stocks offering good value.
Many of the Fund's energy and finance stocks performed well in the months
that followed. We also purchased shares of manufactured housing firms, which
added to the Fund's returns.
Further Long-Term Potential
Now that the economy seems to be slowing again, there may be downward
pressure on corporate earnings. This makes the stocks of small companies, like
the rest of the market, vulnerable to another correction. As a result, we will
probably keep some cash on reserve to make the most of new investment
opportunities that might arise. Our conservative valuation approach toward stock
selection should also help the Fund in this environment.
Longer-term, we believe the environment for small company stocks is quite
positive. If economic growth continues, as we expect, and inflation remains in
check, small-company stocks should have room for further gains. According to
historical cycles for small-cap issues, which move somewhat differently from the
market as whole, the advance of this sector could continue for some time.
Peter Larson has managed the Galaxy Small Cap Value Fund and its predecessor
since 1992. He has managed small company portfolios since 1981.
GALAXY SMALL COMPANY EQUITY FUND
By Steve Barbaro
Portfolio Manager
Small-company stocks enjoyed strong returns during the last year. Besides
increased strength in the economy, small-company stocks benefited from higher
bond yields -- which made stock dividends less attractive and added value to
stocks with good potential for long-term growth. Because we were quite selective
in purchasing stocks that could do well in this environment, the Galaxy Small
Company Equity Fund earned exceptional returns during this time.
For the 12 months ended October 31, 1996, the Fund's Trust Shares earned a
total return of 24.69%. During the same time period, Retail A Shares earned a
total return of 23.97%, before deduction of the maximum 3.75% front-end sales
charge. These returns compared well to the average return of 20.44% for small
company growth funds tracked by Lipper as well as the return of 16.60% for the
Russell 2000 Index for the same 12 month time period. Retail B Shares of the
Fund earned a total return of 15.34% between their initial public offering on
March 1, 1996 and October 31, 1996, before deduction of the maximum 5.00%
contingent deferred sales charge.
9
<PAGE>
PORTFOLIO REVIEWS
[PHOTO APPEARS HERE]
Steve Barbaro
GALAXY SMALL COMPANY
EQUITY FUND
Distribution of Total Net Assets
as of October 31, 1996
[PIE GRAPH APPEARS HERE]
Finance 5%
Other Common Stocks 23%
Technology 27%
Consumer Cyclicals 7%
Durable Goods 6%
Energy 13%
Consumer Staples 11%
Repurchase Agreement & Net
Other Assets & Liabilities 8%
GALAXY SMALL COMPANY
EQUITY FUND
Growth of $10,000 investment*
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Russell Galaxy Galaxy Galaxy
2000 Retail A Trust Retail B
Index Shares Shares Shares
<S> <C> <C> <C> <C>
91 10,000 9,625 10,000
92 10,650 8,460 8,790
93 14,101 11,944 12,410
94 14,058 11,937 12,413
95 16,638 15,997 16,723 10,000
10/31/96 19,400 19,832 20,852 11,034
</TABLE>
. Russell 2000
. Galaxy Small Company Equity-Retail A Shares
. Galaxy Small Company Equity-Trust Shares
. Galaxy Small Company Equity-Retail B Shares
*Since inception on 12/30/91 for Trust and Retail A Shares. Since inception on
3/1/96 for Retail B Shares. 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. Performance figures for Retail B
Shares reflect the deduction of the maximum 5.00% contingent deferred sales
charge as if shares were redeemed on October 31, 1996. The Russell 2000 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.
Focus on Earnings Visibility
Early in 1996, small-company stocks lagged stocks as a whole. At the time,
the economy was growing slowly. Concerned about the earnings of small firms,
investors tended to favor larger companies -- believing their earnings might be
more dependable. In this environment, we used a more defensive approach with the
Fund's portfolio. We took profits in technology stocks that had led the market
for most of the year and increased shares of food, health care and energy firms.
Prices of health care and food stocks improved with investor interest in
predictable earnings. Prices of energy stocks rose as strong demand for natural
gas exceeded industry supplies.
At the start of 1996, when stronger economic growth improved the earnings
outlook for smaller companies, investors quickly returned to this sector. The
Fund performed well during this time, with significant gains from its energy and
technology stocks. As we found attractive prices, we added to shares of energy
and health care firms -- believing investors would continue to favor companies
with dependable earnings growth. As before, we emphasized solution-oriented
health care companies that served specific market niches.
As the year wore on and economic growth seemed to slow, this proved to be
the right strategy. As we found further opportunities to do so, we added shares
of energy and health care firms. In the technology sector we continued to reduce
shares of hardware firms and increase shares of software companies -- whose
earnings are more visible and less dependent on economic growth.
Growing Outside the Economy
In the months ahead, we expect to continue searching for stocks with
potential for above-average earnings. If economic growth slows further,
investors will become increasingly concerned about earnings and should favor
companies whose earnings can grow independent of the economy. We believe there
will still be many opportunities to invest in companies whose earnings can grow
faster than the economy as a whole. We still feel many of these opportunities
will come from health care, energy and technology firms that serve rapidly
growing niche markets.
Steve Barbaro has managed the Galaxy Small Company Equity Fund since its
inception in December of 1991. He has managed small company portfolios for Fleet
Investment Advisors Inc. and its predecessors since 1977.
GALAXY INTERNATIONAL EQUITY FUND
By David von Hemert
Portfolio Manager, Fleet Investment Advisors Inc.
and Oechsle International Advisors, L.P.
Sub-Advisor
In the past 12 months, foreign economies continued to recover -- boosting
the prices of their stocks after a slump of several years. By focusing on
markets that performed especially well during this time and finding special
investment opportunities, the Galaxy International Equity Fund earned a solid
return competitive with its benchmark and other funds in its class.
For the 12 months ended October 31, 1996, the Fund's Trust Shares earned a
total return of 11.51%. Retail A Shares earned a total return of 10.86%, before
the deduction of the maximum 3.75% front-end sales charge during the same time
period. Those returns compare with 11.03% for the average international fund
tracked by Lipper and 10.80% for the Morgan Stanley Europe, Australia, Far East
(EAFE) Index for the same 12 month period.
10
<PAGE>
- -----------------
PORTFOLIO REVIEWS
- -----------------
David von Hemert
Galaxy International
Equity Fund
Distribution of Total Net Assets
as of October 31, 1996
[PIE GRAPH APPEARS HERE]
U.S. Government Backed Bond &
Net Other Assets & Liabilities 3%
North America 4%
Australia, Far East 36%
United Kingdom 12%
Europe 42%
South America 3%
Galaxy International
Equity Fund
Growth of $10,000 investment*
[GRAPH APPEARS HERE]
GALAXY INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
Morgan
Stanley
Europe
Australia Galaxy Galaxy
Far East Retail A Trust
Index Shares Shares
<S> <C> <C> <C>
91 10,000 9,625 10,000
92 8,680 9,297 9,660
93 11,970 11,748 12,207
94 13,134 12,795 13,294
95 13,125 12,713 13,291
10/31/96 14,499 14,093 14,820
</TABLE>
. Morgan Stanley Europe, Australia & Far East Index
. Galaxy International Equity-Retail A Shares
. Galaxy International Equity-Trust Shares
*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 Morgan Stanley Europe,
Australia & Far East Index (EAFE) 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.
Special Opportunities
Although economic growth abroad was weak compared to growth in the U.S.,
foreign recoveries have continued to gather steam. At the end of 1995, low
interest rates in Japan combined with stimulative fiscal and monetary policies
to push stock prices higher. This raised stock prices in other Pacific Basin
markets. There were also positive performances by stocks in Europe--although
local economies were generally weaker there. Believing much of Japan's recovery
would hinge on domestic consumption, we concentrated on companies with a strong
presence in Japanese markets. In Europe, we took advantage of short-term trading
opportunities.
Ongoing economic improvement helped Japanese stocks rally further at the
start of 1996. Stocks in Pacific Basin countries advanced as well due to
continued profit growth and improving market liquidity. We continued to focus on
economically sensitive stocks in Japan. Believing a slowdown in Europe was
ending, we added cyclical issues from that area. In Latin America, where the
economies of Argentina and Mexico had already turned the corner toward recovery,
we continued to make the most of selected investment opportunities.
Foreign markets advanced further in the second quarter of 1996, although
returns for investors here remained muted by a strong U.S. dollar. We continued
to focus on the core markets of Europe and Japan. We added stocks from Sweden
and the United Kingdom during a temporary weakness there. Believing that
corporate profits would recover further in Japan, we increased exposure to
cyclical sectors of the Japanese market. We also added shares from Singapore,
South Korea and Argentina, as we found appealing investments there.
Foreign stock prices were more mixed in the third quarter. Economic growth
in Europe was generally weaker than expected. In Japan, investors vacillated
between concern about too much growth and new signs of economic weakness.
Continued Recovery Ahead
We remain confident that foreign stocks will advance further in the months
to come. Recent setbacks in global economic recovery could make the recovery
stronger and last longer than expected. With rising earnings, reasonable
valuations and favorable monetary policies, stock prices should continue to
strengthen.
Given the fragile condition of European economies, we expect further cuts
in interest rates there that should stimulate economic growth. European stocks
should also benefit from corporate restructuring.
In Japan, many institutions are now shifting pension assets from bonds to
equities. Although most individual investors still prefer the greater safety of
bonds, we expect this to change over time. As in the U.S., individuals could
eventually provide a huge stimulus for the advance of Japanese stocks.
David von Hemert became manager of the Galaxy International Fund in August of
1994 and has managed money for Fleet Investment Advisors Inc. since 1980.
Effective August 12, 1996, Oechsle International Advisors, L.P., serves as
sub-advisor for the Fund. Prior to August 12, 1996, Wellington Management
Company served as the Fund's Sub-Advisor.
- --------------------------------------------------------------------------------
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 and may revise or discontinue such practice at any time.
Without such waivers and/or reimbursements, performance would be lower. Past
performance is no guarantee of future results. Unless otherwise indicated, total
return figures in this report include changes in share price, the effect of
sales charges, where applicable, and reinvestment of dividends and capital gains
distributions, if any.
11
<PAGE>
"A well-balanced asset allocation plan may help to control your risk while
pursuing your goals."
- ---------------
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
FIS Securities, Inc., member NASD, Fleet Enterprises, Inc., member NASD and
SIPC, or MDS Securities Inc., member NASD and SIPC.
12
<PAGE>
Asset Allocation Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
- -------- ----------
COMMON STOCKS - 55.40%
Consumer Staples - 16.55%
<C> <S> <C>
35,000 American Home Products Corp. .......... $ 2,143,747
15,000 Coca-Cola Co. ......................... 757,500
35,000 Coca-Cola Enterprises, Inc. ........... 1,491,875
55,000 CPC International, Inc. ............... 4,338,125
60,000 Gillette Co............................ 4,485,000
50,000 Johnson & Johnson...................... 2,462,500
50,000 Lilly (Eli) & Co. ..................... 3,525,000
90,000 McDonald's Corp. ..................... 3,993,750
55,000 Merck & Co., Inc. ..................... 4,076,875
50,000 Nike, Inc., Class B.................... 2,943,750
120,000 PepsiCo, Inc. ......................... 3,555,000
50,000 Pfizer, Inc. .......................... 4,137,500
25,000 Procter & Gamble Co. .................. 2,475,000
----------------
40,385,622
----------------
Technology - 9.74%
40,000 American Telephone &
Telegraph Corp. ....................... 1,395,000
30,000 AMP, Inc. ............................. 1,016,250
60,000 Automatic Data Processing, Inc. ....... 2,497,500
50,000 Cisco Systems, Inc.* .................. 3,093,750
60,000 Corning, Inc. ......................... 2,325,000
50,000 Hewlett-Packard Co. ................... 2,206,250
40,000 Intel Corp. ........................... 4,395,000
12,963 Lucent Technologies, Inc. ............. 609,261
25,000 Microsoft Corp.* ...................... 3,431,250
60,000 Xerox Corp. ........................... 2,782,500
----------------
23,751,761
----------------
Finance - 7.26%
32,000 American International Group, Inc. .... 3,476,000
20,000 Banc One Corp. ........................ 847,500
24,000 Barnett Banks, Inc. ................... 915,000
40,000 Citicorp............................... 3,960,000
12,000 Crestar Financial Corp. ............... 738,000
110,000 Federal National
Mortgage Association................... 4,303,750
60,000 Hibernia Corp., Class A................ 667,500
21,000 Old Kent Financial Corp. .............. 947,625
40,000 Suntrust Banks, Inc. .................. 1,865,000
----------------
17,720,375
----------------
Capital Goods - 5.44%
40,000 Boeing Co. ............................ 3,815,000
35,000 Deere & Co. ........................... 1,461,250
45,000 General Electric Co. .................. 4,353,750
100,000 Thermo Electron Corp. ................. 3,650,000
----------------
13,280,000
----------------
Energy - 4.94%
42,000 Amoco Corp. ........................... 3,181,500
50,000 Halliburton Co. ....................... 2,831,250
32,000 Mobil Corp. ........................... 3,736,000
15,000 Schlumberger, Ltd. .................... 1,486,875
29,643 Union Pacific Resources Group, Inc. ... 815,183
----------------
12,050,808
----------------
Utilities - 3.51%
30,000 Ameritech Corp. ....................... 1,642,500
25,000 GTE Corp. ............................. 1,053,125
60,000 SBC Communications, Inc. .............. 2,917,500
60,000 Sonat, Inc. ........................... 2,955,000
----------------
8,568,125
----------------
Consumer Cyclical - 3.18%
35,000 Circuit City Stores, Inc. ............. 1,146,250
75,000 Home Depot, Inc. ...................... 4,106,250
50,000 Sherwin-Williams Co. .................. 2,506,250
----------------
7,758,750
----------------
Basic Materials - 2.57%
30,000 Minnesota Mining &
Manufacturing Co. ..................... 2,298,750
100,000 Monsanto Co. .......................... 3,962,500
----------------
6,261,250
----------------
Transportation - 2.21%
110,000 Ford Motor Co. ........................ 3,437,500
35,000 Union Pacific Corp. ................... 1,964,375
----------------
5,401,875
----------------
Total Common Stocks.................... 135,178,566
----------------
(Cost $98,882,120)
</TABLE>
<TABLE>
<CAPTION>
Par
Value
- -------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 20.95%
U.S. Treasury Notes - 9.32%
<C> <S> <C>
$ 2,000,000 6.13%, 03/31/98........................ 2,013,718
1,500,000 7.88%, 04/15/98........................ 1,546,575
750,000 6.25%, 07/31/98........................ 756,818
1,500,000 7.00%, 04/15/99........................ 1,540,245
1,250,000 6.88%, 07/31/99........................ 1,280,674
500,000 6.00%, 08/15/99........................ 501,465
1,000,000 6.88%, 08/31/99........................ 1,025,249
1,500,000 6.00%, 10/15/99........................ 1,505,969
1,000,000 6.25%, 05/31/00........................ 1,008,519
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Asset Allocation Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ----------- ----------
<C> <S> <C>
U.S. Treasury Notes (continued)
$ 500,000 5.75%, 10/31/00........................ $ 495,260
750,000 6.50%, 05/31/01........................ 762,682
1,500,000 6.50%, 08/31/01........................ 1,525,245
2,000,000 7.50%, 11/15/01........................ 2,119,820
3,000,000 7.50%, 05/15/02........................ 3,194,790
2,000,000 6.38%, 08/15/02........................ 2,024,300
1,500,000 5.88%, 11/15/05........................ 1,452,510
--------------
22,753,839
--------------
U.S. Treasury Bonds - 7.39%
2,000,000 7.63%, 02/15/07........................ 2,110,918
3,250,000 7.50%, 11/15/16........................ 3,526,738
1,000,000 8.13%, 08/15/19........................ 1,158,660
750,000 8.50%, 02/15/20........................ 902,879
500,000 8.13%, 08/15/21........................ 582,120
3,000,000 7.25%, 08/15/22........................ 3,181,647
1,250,000 7.63%, 11/15/22........................ 1,383,213
3,000,000 7.13%, 02/15/23........................ 3,140,907
1,000,000 6.25%, 08/15/23........................ 939,480
1,000,000 7.50%, 11/15/24........................ 1,097,829
--------------
18,024,391
--------------
Federal National Mortgage
Association - 2.03%
1,000,000 6.74%, 09/19/01........................ 1,020,669
1,000,000 6.49%, 01/19/06........................ 971,579
2,000,000 8.18%, 04/15/24........................ 2,022,758
326,904 6.50%, 01/01/26........................ 312,908
653,428 6.50%, 01/01/26........................ 625,452
--------------
4,953,366
--------------
Federal Home Loan
Mortgage Corporation - 0.83%
1,000,000 7.74%, 06/01/04........................ 1,022,549
1,000,000 7.05%, 06/08/05........................ 1,003,039
--------------
2,025,588
--------------
Federal Home Loan Bank - 0.82%
1,000,000 7.00%, 06/12/00........................ 1,000,179
1,000,000 7.56%, 06/14/05........................ 1,000,009
--------------
2,000,188
--------------
Government National
Mortgage Association - 0.42%
959,266 9.00%, 12/15/17........................ 1,018,621
--------------
Federal Farm Credit Bank - 0.14%
250,000 6.40%, 12/11/00........................ 249,087
100,000 8.25%, 05/01/07........................ 100,288
--------------
349,375
--------------
Total U.S. Government
and Agency Obligations................. 51,125,368
--------------
(Cost $50,432,966)
CORPORATE BONDS - 10.18%
200,000 American Telephone
& Telegraph Corp.
7.00%, 05/15/05........................ 203,250
1,000,000 Aristar, Inc.
8.13%, 12/01/97........................ 1,025,219
1,000,000 Associates Corp. N.A.
6.00%, 03/15/99........................ 1,000,000
1,000,000 Bank One Milwaukee, MTN
6.35%, 03/19/01........................ 998,750
1,080,000 Carolina Power & Light Co., MTN
5.06%, 09/13/98........................ 1,062,450
1,000,000 Caterpillar Financial
Services Corp., MTN
6.84%, 09/15/99........................ 1,016,250
1,000,000 CIT Group Holdings, Inc., MTN
6.20%, 04/15/98........................ 1,005,000
1,200,000 Citicorp, MTN
8.63%, 11/01/04........................ 1,255,500
1,000,000 Columbia/HCA
Healthcare Corp., MTN
6.88%, 07/15/01........................ 1,016,250
1,000,000 Crown Cork & Seal Co., Inc.
5.88%, 04/15/98........................ 997,500
1,000,000 Ford Motor Credit Co.
8.00%, 01/15/99........................ 1,038,750
1,000,000 General Motors
Acceptance Corp., MTN
7.65%, 01/16/98........................ 1,020,000
1,000,000 Household Finance Corp., MTN
5.80%, 03/09/98........................ 998,750
1,000,000 International Business Machines Corp.
7.50%, 06/15/13........................ 1,040,000
500,000 International Lease
Finance Corp., MTN
5.55%, 02/16/98........................ 497,978
1,000,000 National City Bank of Kentucky
6.30%, 02/15/11........................ 920,000
1,000,000 National Rural Utilities
Cooperative Finance Corp.
7.30%, 09/15/06........................ 1,030,000
1,000,000 NationsBank Corp.
7.00%, 09/15/01........................ 1,022,500
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
Asset Allocation Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Par Value
Value (Note 2)
- ------- ----------
<C> <S> <C>
CORPORATE BONDS (continued)
$ 1,000,000 Norwest Corp., MTN
6.25%, 04/15/99........................ $ 1,004,880
1,000,000 Pitney Bowes Credit Corp., MTN
6.54%, 07/15/99........................ 1,010,000
1,000,000 Sears Roebuck & Co., MTN
7.82%, 02/23/98........................ 1,023,750
1,000,000 Sysco Corp.
7.00%, 05/01/06........................ 1,018,750
500,000 Texas Utilities Electric Co.
7.38%, 11/01/99........................ 515,000
500,000 Union Pacific Resources Group, Inc.
7.00%, 10/15/06........................ 505,625
2,000,000 Wachovia Bank
6.30%, 03/15/01........................ 1,985,000
500,000 WMX Technologies, Inc.
7.13%, 06/15/01........................ 513,125
100,000 Xerox Corp.
8.13%, 04/15/02........................ 107,625
-------------
Total Corporate Bonds.................. 24,831,902
(Cost $24,467,778) -------------
ASSET-BACKED SECURITIES - 1.68%
1,000,000 Chemical Master Credit Card
Trust I, Class A
5.55%, 09/15/03........................ 973,925
1,000,000 Ford Credit Owner Trust, Class A3
6.50%, 11/15/99........................ 1,010,653
1,000,000 NationsBank Auto Owner Trust, Class A3
6.38%, 07/15/00........................ 1,006,563
1,100,000 Premier Auto Trust, Class A3
6.50%, 03/06/00........................ 1,110,007
-------------
Total Asset-Backed Securities.......... 4,101,148
(Cost $4,061,541) ------------
REPURCHASE AGREEMENT - 11.66%
$ 28,461,013 Chase Securities, Inc.
5.45%, 11/01/96, Dated 10/31/96
Repurchase Price $28,465,322
(Collateralized by
U.S. Treasury Bond 7.25%, Due 2016;
Total Par Value 26,725,000;
Total Market Value $29,206,871)........ $ 28,461,013
-------------
Total Repurchase Agreement............. 28,461,013
(Cost $28,461,013) -------------
Total Investments - 99.87%................................. 243,697,997
(Cost $206,305,418) -------------
Net Other Assets and Liabilities - 0.13%................... 313,981
-------------
Net Assets - 100.00%....................................... $ 244,011,978
=============
</TABLE>
- ------------------------------------------
* Non-income producing security
MTN Medium Term Note
See Notes to Financial Statements.
15
<PAGE>
Equity Income Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<C> <S> <C>
COMMON STOCKS - 79.49%
Consumer Staples - 19.19%
63,000 American Home Products Corp............ $ 3,858,749
30,000 Bristol-Myers Squibb Co................ 3,172,500
70,000 CPC International, Inc................. 5,521,250
35,000 Gillette Co............................ 2,616,250
85,000 Johnson & Johnson...................... 4,186,250
125,000 McDonald's Corp........................ 5,546,875
55,000 Merck & Co., Inc....................... 4,076,875
170,000 PepsiCo, Inc........................... 5,036,250
45,000 Pfizer, Inc............................ 3,723,750
40,000 Procter & Gamble Co.................... 3,960,000
25,000 Rite Aid Corp.......................... 850,000
34,000 Warner-Lambert Co...................... 2,163,250
------------
44,711,999
------------
Utilities - 12.17%
200,000 Baltimore Gas & Electric Co............ 5,450,000
160,000 GTE Corp............................... 6,740,000
101,000 SBC Communications, Inc................ 4,911,125
67,755 Union Pacific Resources Group, Inc..... 1,863,263
238,000 Washington Gas Light Co................ 5,325,250
150,000 Wisconsin Energy Corp.................. 4,068,750
------------
28,358,388
------------
Finance - 10.11%
15,000 American International Group, Inc...... 1,629,375
90,000 Banc One Corp.......................... 3,813,750
60,000 Barnett Banks, Inc..................... 2,287,500
20,000 Corestates Financial Corp.............. 972,500
30,000 Crestar Financial Corp................. 1,845,000
110,000 Federal National
Mortgage Association................... 4,303,750
60,000 Hibernia Corp., Class A................ 667,500
90,000 ITT Hartford Group, Inc................ 5,670,000
52,500 Old Kent Financial Corp................ 2,369,063
------------
23,558,438
------------
Energy - 9.82%
75,000 Amoco Corp............................. 5,681,250
50,000 Atlantic Richfield Co.................. 6,625,000
60,000 Exxon Corp............................. 5,317,500
45,000 Mobil Corp............................. 5,253,750
------------
22,877,500
------------
Technology - 8.16%
94,000 American Telephone &
Telegraph Corp......................... 3,278,250
147,000 AMP, Inc............................... 4,979,625
85,000 Automatic Data Processing, Inc......... 3,538,125
37,000 Electronic Data Systems Corp........... 1,665,000
120,000 Xerox Corp............................. 5,565,000
------------
19,026,000
------------
Capital Goods - 6.92%
44,000 Boeing Co.............................. 4,196,500
45,000 Deere & Co............................. 1,878,750
68,000 General Electric Co.................... 6,579,000
42,000 Thermo Electron Corp................... 1,533,000
15,000 United Technologies Corp............... 1,931,250
------------
16,118,500
------------
Transportation - 5.81%
290,000 Ford Motor Co.......................... 9,062,500
80,000 Union Pacific Corp..................... 4,490,000
------------
13,552,500
------------
Basic Materials - 5.26%
40,000 Crown Cork & Seal Co., Inc............. 1,920,000
60,000 Minnesota Mining &
Manufacturing Co...................... 4,597,500
125,000 Weyerhaeuser Co........................ 5,734,375
------------
12,251,875
------------
Consumer Cyclical - 2.05%
40,000 Dayton Hudson Corp..................... 1,385,000
90,000 Walgreen Co............................ 3,397,500
------------
4,782,500
------------
Total Common Stocks.................... 185,237,700
(Cost $145,684,575) ------------
Par Value
---------
U.S. GOVERNMENT OBLIGATIONS - 2.49%
U.S. Treasury Notes - 1.70%
$ 2,000,000 5.13%, 03/31/98........................ 1,987,118
2,000,000 5.50%, 04/15/00........................ 1,972,178
------------
3,959,296
------------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Equity Income Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS(continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<C> <S> <C>
U.S. Treasury Bond - 0.79%
$ 1,700,000 7.50%, 11/15/16........................ $ 1,844,755
-------------
Total U.S. Government Obligations...... 5,804,051
(Cost $5,662,781) -------------
REPURCHASE AGREEMENT - 17.70%
41,255,979 Chase Securities, Inc.
5.45%, 11/01/96, Dated 10/31/96
Repurchase Price $41,262,225
(Collateralized by
U.S. Treasury Note 7.25%, Due 2016;
Total Par Value 38,740,000;
Market Value $42,337,668).............. 41,255,979
-------------
Total Repurchase Agreement............. 41,255,979
(Cost $41,255,979) -------------
Total Investments - 99.68%................................. 232,297,730
(Cost $192,603,335) -------------
Net Other Assets and Liabilities - 0.32%................... 748,078
-------------
Total Net Assets - 100.00%................................. $ 233,045,808
=============
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
Growth and Income Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<C> <S> <C>
COMMON STOCKS - 92.05%
Consumer Staples - 20.85%
112,000 American Home Products Corp............ $ 6,860,000
62,000 Anheuser-Busch Cos., Inc............... 2,387,000
68,000 Baxter International, Inc.............. 2,830,500
200,000 Elan Corp. Plc, ADR*................... 5,550,000
87,000 Heinz (H. J.) Co....................... 3,088,500
84,000 Humana, Inc.*.......................... 1,533,000
68,000 Lilly (Eli) & Co....................... 4,794,000
65,000 McDonald's Corp........................ 2,884,375
67,000 Merck & Co., Inc....................... 4,966,375
93,000 PepsiCo, Inc........................... 2,755,125
32,000 Pfizer, Inc............................ 2,648,000
86,000 Pharmacia & Upjohn, Inc................ 3,096,000
27,000 Philip Morris Cos., Inc................ 2,500,875
25,000 Procter & Gamble Co.................... 2,475,000
92,000 Supervalu, Inc......................... 2,737,000
16,000 Unilever............................... 2,446,000
40,000 Warner-Lambert Co...................... 2,545,000
------------
56,096,750
------------
Technology - 15.36%
72,000 American Telephone
& Telegraph Corp....................... 2,511,000
78,000 AMP, Inc............................... 2,642,250
55,000 Avnet, Inc............................. 2,770,625
77,000 Century Telephone Enterprises, Inc..... 2,473,625
30,000 Computer Sciences Corp.*............... 2,227,500
75,000 Corning, Inc........................... 2,906,250
38,000 Dow Chemical Co........................ 2,954,500
68,000 Electronic Data Systems Corp........... 3,060,000
48,000 Harris Corp............................ 3,006,000
62,000 Hewlett-Packard Co..................... 2,735,750
32,000 International Business
Machines Corp.......................... 4,128,000
46,000 Motorola, Inc.......................... 2,116,000
44,000 Pitney Bowes, Inc...................... 2,458,500
56,000 Texas Instruments, Inc................. 2,695,000
57,000 Xerox Corp............................. 2,643,375
------------
41,328,375
------------
Finance - 13.05%
88,000 Banc One Corp.......................... 3,729,000
76,000 Chubb Corp............................. 3,800,000
68,000 Corestates Financial Corp.............. 3,306,500
68,000 Exel, Ltd.............................. 2,584,000
72,000 Federal National
Mortgage Association................... 2,817,000
62,000 First Chicago NBD Corp................. 3,162,000
43,000 ITT Hartford Group, Inc................ 2,709,000
88,000 Lincoln National Corp.................. 4,268,000
40,000 Morgan (J.P.) & Co., Inc............... 3,455,000
58,000 National City Corp..................... 2,515,750
76,000 PNC Bank Corp.......................... 2,755,000
------------
35,101,250
------------
Energy - 10.08%
96,000 Amoco Corp............................. $ 7,272,000
21,000 Atlantic Richfield Co.................. 2,782,500
41,000 Chevron Corp........................... 2,695,750
28,000 Halliburton Co......................... 1,585,500
58,000 Mobil Corp............................. 6,771,500
144,000 Occidental Petroleum Corp.............. 3,528,000
25,000 Schlumberger, Ltd...................... 2,478,125
------------
27,113,375
------------
Capital Goods - 8.54%
26,000 Boeing Co.............................. 2,479,750
78,000 GATX Corp.............................. 3,724,500
35,000 General Electric Co.................... 3,386,250
160,000 Hubbell, Inc., Class A................. 5,840,000
50,000 Raytheon Co............................ 2,462,500
64,000 Thermo Electron Corp................... 2,336,000
80,000 WMX Technologies, Inc.................. 2,750,000
------------
22,979,000
------------
Consumer Cyclical - 8.42%
70,000 Circuit City Stores, Inc............... 2,292,500
76,000 Donnelley (R.R.) & Sons Co............. 2,308,500
41,000 Dun & Bradstreet Corp.................. 2,372,875
39,000 Eastman Kodak Co....................... 3,110,250
78,000 Masco Corp............................. 2,447,250
46,000 Penney (J.C.) Co., Inc................. 2,415,000
74,000 Pep Boys-Manny, Moe & Jack............. 2,590,000
85,000 PHH Corp............................... 2,528,750
97,000 Wal-Mart Stores, Inc................... 2,582,625
------------
22,647,750
------------
Utilities - 6.57%
98,000 Entergy Corp........................... 2,744,000
83,000 GTE Corp............................... 3,496,375
62,000 SBC Communications, Inc................ 3,014,750
68,000 Southern New England
Telecommunication...................... 2,533,000
82,000 U.S. West, Inc.,
Communications Group................... 2,490,750
88,000 Vodafone Group Plc, ADR................ 3,399,000
------------
17,677,875
------------
Transportation - 4.63%
29,000 British Airways, Plc, ADR.............. 2,617,250
40,000 Burlington Northern Santa Fe Corp...... 3,295,000
35,000 Delta Air Lines, Inc................... 2,480,625
130,000 Ford Motor Co.......................... 4,062,500
------------
12,455,375
------------
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
Growth and Income Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<C> <S> <C>
Basic Materials - 3.22%
83,000 Dexter Corp............................ $ 2,573,000
118,100 Ethyl Corp............................. 974,325
34,000 Minnesota Mining
& Manufacturing Co.................... 2,605,250
55,000 Weyerhaeuser Co........................ 2,523,125
-------------
8,675,700
-------------
Chemicals and Drugs - 1.33%
120,000 Lubrizol Corp.......................... 3,570,000
-------------
Total Common Stocks.................... 247,645,450
(Cost $201,612,856) -------------
<CAPTION>
Par
Value
-----
<C> <S> <C>
REPURCHASE AGREEMENT - 8.17%
$ 21,980,581 Chase Securities, Inc.
5.45%, 11/01/96, Dated 10/31/96
Repurchase Price $ 21,983,909
(Collateralized by
U.S. Treasury Bond 7.25%,Due 2016;
Total Par Value 20,640,000;
Total Market Value $22,556,775)........ 21,980,581
-------------
Total Repurchase Agreement............. 21,980,581
(Cost $21,980,581) -------------
Total Investments - 100.22%................................ 269,626,031
(Cost $223,593,437) -------------
Net Other Assets and Liabilities - (0.22)%................. (580,019)
-------------
Net Assets - 100.00%....................................... $ 269,046,012
=============
</TABLE>
- ---------------------------------------
* Non-income producing security
ADR American Depositary Receipt
See Notes to Financial Statements.
19
<PAGE>
Equity Value Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<C> <S> <C>
COMMON STOCKS - 91.65%
Finance - 20.91%
124,250 AFLAC, Inc. ........................... $ 4,985,531
16,700 American International Group, Inc. .... 1,814,038
110,000 Banc One Corp. ........................ 4,661,250
50,000 Bank of Boston Corp. .................. 3,200,000
100,800 Beneficial Corp. ...................... 5,896,800
59,600 Chase Manhattan Corp. ................. 5,110,700
20,500 Citicorp............................... 2,029,500
54,500 Edwards (A.G.), Inc. .................. 1,628,188
198,400 Federal National
Mortgage Association................... 7,762,400
50,000 First Union Corp. ..................... 3,637,500
117,700 Firstar Corp. ......................... 5,767,300
60,000 MBIA, Inc. ............................ 5,317,500
100,000 Mellon Bank Corp. ..................... 6,512,500
70,000 National City Corp. ................... 3,036,250
23,500 Progessive Corp. ...................... 1,615,625
76,000 Standard Federal Bancorp., Inc. ....... 4,066,000
40,000 Washington Mutual, Inc. ............... 1,690,000
------------
68,731,082
------------
Consumer Staples - 18.73%
36,900 Abbott Laboratories.................... 1,868,063
100,000 American Home Products Corp. .......... 6,125,000
82,200 Becton Dickinson & Co. ................ 3,575,700
195,900 Bergen Brunswig Corp., Class A......... 6,146,363
242,000 Biomet, Inc. .......................... 3,902,244
17,400 Bristol-Myers Squibb Co. .............. 1,840,050
26,800 Cardinal Health, Inc. ................. 2,103,800
57,700 Colgate Palmolive Co. ................. 5,308,400
59,400 Elan Corp. Plc, ADR*................... 1,648,350
138,100 Family Dollar Stores, Inc. ............ 2,347,700
189,500 IBP, Inc. ............................. 4,737,500
62,500 Kimberly-Clark Corp. .................. 5,828,125
120,200 PepsiCo, Inc. ......................... 3,560,925
66,600 Philip Morris Cos., Inc. .............. 6,168,825
100,000 Schering-Plough Corp. ................. 6,400,000
------------
61,561,045
------------
Technology - 15.58%
141,800 Analog Devices, Inc.*.................. 3,686,800
45,000 Autodesk, Inc. ........................ 1,029,375
101,500 Cabletron Systems, Inc.*............... 6,331,063
54,000 Cisco Systems, Inc.*................... 3,341,250
76,100 Compaq Computer Corp.*................. 5,298,463
105,000 Computer Associates
International, Inc. ................... 6,208,125
124,600 Hewlett-Packard Co. ................... 5,497,975
80,000 Intel Corp. ........................... 8,790,000
51,900 International Business
Machines Corp. ........................ 6,695,100
50,000 International Rectifier Corp.*......... 618,750
108,500 Nellcor Puritan Bennett, Inc.*......... 2,115,750
34,700 Xerox Corp. ........................... 1,609,213
------------
51,221,864
------------
Transportation - 9.74%
30,700 AMR Corp.*............................. 2,578,800
23,000 British Airways Plc, ADR............... 2,075,750
170,000 Carnival Corp., Class A................ 5,121,250
197,200 Chrysler Corp. ........................ 6,630,850
34,400 Delta Air Lines, Inc. ................. 2,438,100
58,000 Ford Motor Co. ........................ 1,812,500
163,000 Illinois Central Corp. ................ 5,277,125
67,800 Lockheed Martin Corp. ................. 6,076,575
------------
32,010,950
------------
Consumer Cyclical - 8.88%
88,000 Armstrong World Industries, Inc. ...... 5,874,000
89,200 Circuit City Stores, Inc. ............. 2,921,300
63,500 Dillard Department Stores, Inc.,
Class A................................ 2,016,125
193,400 Echlin, Inc. .......................... 6,309,675
12,300 Gannett Co., Inc. ..................... 933,263
48,600 Gap, Inc. ............................. 1,409,400
196,100 Kaufman & Broad Home Corp. ............ 2,353,200
104,700 Manpower, Inc. ........................ 2,970,863
153,100 Mattel, Inc. .......................... 4,420,763
------------
29,208,589
------------
Energy - 7.47%
65,700 Amoco Corp. ........................... 4,976,775
14,016 British Petroleum Co. Plc, ADR......... 1,802,808
140,900 Coastal Corp. ......................... 6,058,700
164,900 Phillips Petroleum Co. ................ 6,760,900
232,200 Union Texas Petroleum
Holdings, Inc. ........................ 4,963,275
------------
24,562,458
------------
Capital Goods - 4.96%
27,700 Emerson Electric Co. .................. 2,465,300
34,900 General Electric Co. .................. 3,376,575
48,800 Illinois Tool Works, Inc. ............. 3,428,200
98,800 Ingersoll-Rand Co. .................... 4,112,550
40,000 Johnson Controls, Inc. ................ 2,920,000
------------
16,302,625
------------
Utilities - 3.45%
49,700 NYNEX Corp. ........................... 2,211,650
191,100 Pacific Gas & Electric Co. ............ 4,490,850
172,600 Public Service Enterprise
Group, Inc. ........................... 4,638,625
------------
11,341,125
------------
Durable Goods - 1.28%
114,600 Beckman Instruments, Inc. ............. 4,211,550
------------
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
Equity Value Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS(continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<C> <S> <C>
Basic Materials - 0.65%
28,500 Nalco Chemical Co...................... $ 1,036,688
17,500 Phelps Dodge Corp...................... 1,100,313
------------
2,137,001
------------
Total Common Stocks.................... 301,288,289
(Cost $255,474,654) ------------
<CAPTION>
Par
Value
-------
REPURCHASE AGREEMENT - 8.68%
$ 28,541,624 Chase Securities, Inc.
5.45%, 11/01/96, Dated 10/31/96
Repurchase Price $28,545,945
(Collateralized by
U.S. Treasury Note 7.25%, Due 2016;
Total Par Value $26,800,000;
Market Value $29,288,8363)............. 28,541,624
------------
Total Repurchase Agreement............. 28,541,624
(Cost $28,541,624) ------------
Total Investments - 100.33%................................ 329,829,913
(Cost $284,016,278) ------------
Net Other Assets and Liabilities - (0.33)%................. (1,089,615)
------------
Net Assets - 100.00%....................................... $ 328,740,298
============
</TABLE>
- ------------------------------------------
* Non-income producing security
ADR American Depositary Receipt
See Notes to Financial Statements.
21
<PAGE>
Equity Growth Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<C> <S> <C>
COMMON STOCKS - 94.94%
Consumer Staples - 28.26%
276,000 Abbott Laboratories.................... $ 13,972,500
120,000 American Home Products Corp............ 7,350,000
150,000 Amgen, Inc.*........................... 9,196,875
69,500 Bristol-Myers Squibb Co................ 7,349,625
187,500 Columbia/HCA Healthcare Corp........... 6,703,123
100,000 Conagra, Inc........................... 4,987,500
50,000 CPC International, Inc................. 3,943,750
230,000 Elan Corp. Plc, ADR*................... 6,382,500
240,000 Genzyme Corp.*......................... 5,520,000
200,000 Gillette Co............................ 14,950,000
200,000 Johnson & Johnson...................... 9,850,000
150,000 Lilly (Eli) & Co....................... 10,575,000
300,000 McDonald's Corp........................ 13,312,500
240,000 Merck & Co., Inc....................... 17,790,000
221,000 Mirage Resorts, Inc.*.................. 4,862,000
300,000 Monsanto Co............................ 11,887,500
500,000 PepsiCo, Inc........................... 14,812,500
200,000 Pfizer, Inc............................ 16,550,000
150,000 Pharmacia & Upjohn, Inc................ 5,400,000
135,000 Procter & Gamble Co.................... 13,365,000
140,000 Sears Roebuck & Co..................... 6,772,500
------------
205,532,873
------------
Technology - 21.55%
147,000 AMP, Inc............................... 4,979,625
350,000 Automatic Data Processing, Inc......... 14,568,750
250,000 CISCO Systems, Inc..................... 15,468,750
100,000 Compaq Computer Corp.*................. 6,962,500
75,000 Dell Computer Corp.*................... 6,103,125
156,125 Dow Chemical Co........................ 12,138,719
150,000 Electronic Data Systems Corp........... 6,750,000
150,000 Guidant Corp........................... 6,918,750
124,700 Hewlett-Packard Co..................... 5,502,388
200,000 IMC Global, Inc........................ 7,500,000
158 Information Resources, Inc............. 1,995
175,000 Intel Corp............................. 19,228,125
75,000 International Business
Machines Corp.......................... 9,675,000
153,473 Lucent Technologies, Inc............... 7,213,231
75,000 Microsoft Corp.*....................... 10,293,750
180,000 Oracle Corp.*.......................... 7,616,250
100,000 3Com Corp.*............................ 6,762,500
195,300 Xerox Corp............................. 9,057,038
------------
156,740,496
------------
Energy - 12.24%
156,700 Amoco Corp............................. $ 11,870,025
200,000 Anadarko Petroleum Corp................ 12,725,000
130,000 Cooper Cameron Corp.*.................. 8,303,750
125,000 Mobil Corp............................. 14,593,750
200,000 Schlumberger, Ltd...................... 19,825,000
225,000 Sonat, Inc............................. 11,081,250
150,000 Transocean Offshore, Inc............... 9,487,500
42,347 Union Pacific Resources Group, Inc..... 1,164,543
------------
89,050,818
------------
Finance - 11.01%
163,725 American International Group, Inc...... 17,784,628
300,000 Barnett Banks, Inc..................... 11,437,500
125,000 Chase Manhattan Corp................... 10,718,750
207,400 Citicorp............................... 20,532,600
500,000 Federal National
Mortgage Association................... 19,562,500
------------
80,035,978
------------
Capital Goods - 8.44%
155,000 Boeing Co.............................. 14,783,125
175,000 Deere & Co............................. 7,306,250
157,200 General Electric Co.................... 15,209,100
150,000 Ingersoll-Rand Co...................... 6,243,750
488,475 Thermo Electron Corp................... 17,829,338
------------
61,371,563
------------
Consumer Cyclical - 8.31%
165,000 Circus Circus Enterprises, Inc.*....... 5,692,500
150,000 Disney (Walt) Co....................... 9,881,250
160,000 Hilton Hotels Corp..................... 4,860,000
300,000 Home Depot, Inc........................ 16,425,000
65,300 Mattel, Inc............................ 1,885,538
150,000 Sherwin-Williams Co.................... 7,518,750
195,000 Thrifty Payless
Holdings, Inc., Class B*............... 4,168,125
250,000 TJX Cos., Inc.......................... 10,000,000
------------
60,431,163
------------
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
Equity Growth Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS(continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
-------- --------
<C> <S> <C>
Transportation - 4.46%
106,300 AMR Corp.*............................. $ 8,929,200
311,428 Ford Motor Co.......................... 9,732,125
250,000 Tidewater, Inc......................... 10,937,500
50,000 Union Pacific Corp..................... 2,806,250
------------
32,405,075
------------
Utilities - 0.67%
200,000 Worldcom, Inc.*........................ 4,875,000
------------
Total Common Stocks.................... 690,442,966
(Cost $474,242,624) ------------
<CAPTION>
Par
Value
-------
REPURCHASE AGREEMENT - 4.64%
$ 33,749,231 Chase Securities, Inc.
5.45%, 11/01/96, Dated 10/31/96
Repurchase Price 33,754,341
(Collateralized by
U.S. Treasury Note 7.25%, Due 2016;
Total Par Value $31,690,000;
Market Value $34,632,955).............. 33,749,231
------------
Total Repurchase Agreement............. 33,749,231
(Cost $33,749,231) ------------
Total Investments - 99.58%................................. 724,192,197
(Cost $507,991,855) ------------
Net Other Assets and Liabilities - 0.42%................... 3,022,276
------------
Net Assets - 100.00%....................................... $ 727,214,473
============
</TABLE>
- -------------------------------------------
* Non-income producing security
ADR American Depositary Receipt
See Notes to Financial Statements.
23
<PAGE>
Small Cap Value Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
COMMON STOCKS - 92.44%
Technology - 22.76%
<C> <S> <C>
93,200 Aeroflex, Inc.*........................... $ 419,400
56,200 Analogic Corp............................. 1,531,450
20,000 Apache Medical Systems, Inc.*............. 217,500
20,000 Award Software International, Inc.*....... 140,000
50,000 Benchmark Electronics, Inc.*.............. 1,481,250
32,400 Berg Electronics Corp.*................... 915,300
34,500 BGS Systems, Inc.......................... 1,535,250
129,875 Boole & Babbage, Inc.*.................... 3,993,656
30,000 Brown & Sharpe Manufacturing Co.,
Class A*.................................. 360,000
47,000 Burr-Brown Corp.*......................... 998,750
30,000 Cardiac Pathways Corp.*................... 330,000
35,000 CEM Corp.*................................ 343,438
44,500 CFM Technologies, Inc.*................... 372,688
22,600 CN Biosciences, Inc.*..................... 341,825
55,200 Comptek Research, Inc.*................... 303,600
28,400 Computer Horizons Corp.*.................. 880,400
91,600 Computer Task Group, Inc.................. 3,457,900
43,100 Comshare, Inc.*........................... 592,625
10,000 Cymer, Inc.*.............................. 235,000
26,000 Data General Corp.*....................... 386,750
5,000 Dawson Geophysical Co.*................... 43,750
18,360 Detection Systems, Inc.*.................. 380,970
20,000 EIS International, Inc.*.................. 170,000
77,000 Evans & Sutherland Computer Corp.*........ 1,617,000
41,000 Flextronics International, Ltd.*.......... 953,250
15,000 Fluke Corp................................ 600,000
27,500 Fusion Medical Technologies, Inc.*........ 244,063
2,000 General Surgical Innovations, Inc.*....... 14,500
73,700 Giga-Tronics, Inc.*....................... 617,238
20,000 Gilbert Associates, Inc., Class A......... 260,000
36,000 Gish Biomedical, Inc.*.................... 238,500
44,000 Global Industrial Technologies, Inc.*..... 819,500
20,000 Healthdyne Technologies, Inc.*............ 177,500
39,400 Information Resources, Inc.*.............. 497,425
30,000 Intercargo Corp........................... 262,500
33,333 International Cabletel, Inc.*............. 791,659
18,700 Interphase Corp.*......................... 247,775
26,700 INTERSOLV, Inc.*.......................... 216,938
37,700 K-Tron International, Inc.*............... 372,288
46,600 Keithley Instruments, Inc................. 361,150
34,600 Key Technology, Inc.*..................... 830,400
84,300 Lifecore Biomedical, Inc.*................ 1,422,596
57,600 MacNeal-Schwendler Corp................... 482,400
47,500 Mapinfo Corp.*............................ 516,563
40,000 Mentor Graphics Corp.*.................... 340,000
64,875 Minntech Corp............................. 810,938
38,500 Nashua Corp.*............................. 529,375
24,000 National Computer Systems, Inc............ 516,000
15,000 Osmonics, Inc.*........................... 318,750
70,000 Peerless Group, Inc.*..................... 498,750
42,900 Perceptron, Inc.*......................... 1,061,775
35,000 Performance Technologies, Inc.*........... 428,750
23,500 Phoenix Technologies, Ltd.*............... 405,375
8,700 Praegitzer Industries, Inc.*.............. 82,650
915 Ross Systems, Inc......................... 5,604
25,000 Summa Four, Inc.*......................... 258,594
29,400 Symix Systems, Inc.*...................... 227,850
25,000 U.S. Bioscience, Inc.*.................... 287,500
88,500 Unitrode Corp.*........................... 2,124,000
24,000 VMark Software, Inc.*..................... 219,000
------------
39,089,658
------------
Finance - 15.72%
24,600 ACC Consumer Finance Corp.*............... 221,400
58,000 American Annuity Group, Inc............... 790,250
5,700 American Eagle Group, Inc................. 19,950
28,500 American Federal Bank..................... 523,688
37,500 Amvestors Financial Corp.................. 548,438
24,800 BancFirst Corp............................ 616,900
33,750 BSB Bancorp, Inc.......................... 869,063
79,300 Cash America International, Inc........... 574,925
21,650 CENFED Financial Corp..................... 573,725
20,100 Coast Savings Financial, Inc.*............ 660,788
17,000 Coastal Bancorp, Inc...................... 382,500
24,000 Consumer Portfolio Services, Inc.*........ 294,000
87,000 D & N Financial Corp.*.................... 1,239,750
29,700 D & N Financial Corp. (Warrants)*......... 178,200
77,500 Dignity Partners, Inc.*................... 208,281
32,200 First Colorado Bancorp, Inc............... 503,125
10,000 First Industrial Realty Trust, Inc........ 258,750
11,500 GBC Bancorp............................... 320,563
12,200 Hanmi Bank*............................... 140,300
39,800 Home State Holdings, Inc.*................ 298,500
77,500 Innkeepers USA Trust...................... 910,625
51,180 Integon Corp.............................. 966,023
2,198 Investors Financial Services Corp......... 56,873
807 Investors Financial Services Corp.
Class A................................... 20,881
12,200 Kansas City Life Insurance Co............. 683,200
20,000 LaSalle Re Holdings, Ltd.................. 580,000
11,000 Mechanics Savings Bank*................... 171,875
35,000 Medallion Financial Corp.*................ 503,125
13,400 Mountain Parks Financial Corp.*........... 408,700
21,395 North Side Savings Bank................... 1,032,309
6,360 Oriental Bank & Trust of San Juan
Puerto Rico............................... 119,250
37,400 Payco American Corp.*..................... 517,756
22,700 PennCorp Financial Group, Inc............. 785,988
41,500 Poe & Brown, Inc.......................... 1,071,219
24,400 RedFed Bancorp, Inc.*..................... 286,700
37,400 Resource Bancshares
Mortgage Group, Inc....................... 558,663
55,000 Roosevelt Financial Group, Inc............ 955,625
42,000 Security Connecticut Corp................. 1,344,000
106,700 SEI Corp.................................. 2,160,675
40,000 Selective Insurance Group, Inc............ 1,370,000
36,750 Southwest Securities Group, Inc........... 459,375
25,000 Terra Nova (Bermuda) Holdings, Ltd.
Class A................................... 531,250
8,000 Tidelands Royalty Trust, Class B.......... 50,000
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
Small Cap Value Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
-------- --------
<C> <S> <C>
Finance (continued)
20,570 UMB Financial Corp..................... $ 812,515
12,000 UnionBancorp, Inc...................... 147,000
32,500 USBANCORP, Inc......................... 1,267,500
------------
26,994,223
------------
Consumer Cyclical - 15.44%
102,450 ADVO, Inc.............................. 1,447,106
33,500 American Business Information, Inc.*... 644,875
42,100 Applied Graphics Technologies, Inc.*... 663,075
25,000 Cooker Restaurant Corp................. 275,000
5,000 Dominick's Supermarkets Inc.*.......... 99,375
58,600 El Chico Restaurants, Inc.*............ 461,475
24,650 Falcon Products, Inc................... 348,181
71,000 Fieldcrest Cannon, Inc.*............... 1,011,750
75,000 Fine Host Corp.*....................... 1,087,500
36,500 Goody's Family Clothing, Inc.*......... 524,688
17,000 Greif Brothers Corp., Class A.......... 471,750
26,500 Houghton Mifflin Co.................... 1,315,063
36,500 K2, Inc................................ 839,500
48,000 Monaco Coach Corp.*.................... 672,000
5,687 Morrison Fresh Cooking, Inc............ 29,857
17,600 Mothers Work, Inc.*.................... 190,300
133,700 Northland Cranberries, Inc., Class A... 2,573,725
22,000 PCA International, Inc................. 331,375
25,000 Platinum Entertainment, Inc.*.......... 256,250
70,400 Protection One, Inc.*.................. 792,000
70,500 R & B, Inc.*........................... 572,813
120,000 Richfood Holdings, Inc................. 2,895,000
61,800 Rival Co............................... 1,452,300
11,375 Ruby Tuesday, Inc...................... 184,844
83,500 Ryan's Family Steak Houses, Inc.*...... 615,813
56,500 Rykoff-Sexton, Inc..................... 805,125
61,000 Sagebrush, Inc.*....................... 381,250
65,500 Spaghetti Warehouse, Inc.*............. 352,063
31,300 SOS Staffing Services, Inc.*........... 367,775
44,500 Thomas Group, Inc.*.................... 545,125
108,750 Unitog Co.............................. 2,936,250
32,000 Western Staff Services, Inc.*.......... 440,000
10,000 Westwood One, Inc.*.................... 153,750
6,000 Willis Lease Finance Corp.*............ 63,750
89,900 Worldtex, Inc.*........................ 707,963
------------
26,508,666
------------
Energy - 13.31%
75,000 Alamco, Inc.*.......................... 909,375
20,000 American Exploration Co.*.............. 260,000
20,400 Atmos Energy Corp...................... 484,500
23,100 Barrett Resources Corp.*............... 886,463
41,000 Belden & Blake Corp.*.................. 1,086,500
75,000 Bellwether Exploration Co.*............ 506,250
44,200 Berry Petroleum Co., Class A........... 541,450
30,000 Cairn Energy USA, Inc.*................ 318,750
2,500 Carbide/Graphite Group, Inc.*.......... 40,781
21,300 Cascade Natural Gas Corp............... 343,463
38,000 Cross Timbers Oil Co................... 897,750
32,200 Devon Energy Corp...................... 1,122,975
20,500 Fuller (H.B.) Co....................... 855,875
198,000 Gulf Canada Resources, Ltd.*........... 1,361,250
31,000 Gulfmark International, Inc.*.......... 1,720,500
54,500 Layne Christensen, Inc.*............... 728,938
40,500 Newpark Resources, Inc.*............... 1,518,750
28,800 Oceaneering International, Inc.*....... 518,400
78,000 Parker & Parsley Petroleum Co.......... 2,242,500
61,700 Pogo Producing Co...................... 2,737,966
30,200 Pride Petroleum Services, Inc.*........ 528,500
11,962 Tejas Gas Corp.*....................... 485,956
18,000 United Meridian Corp.*................. 848,250
65,000 Vintage Petroleum, Inc................. 1,917,500
------------
22,862,642
------------
Building and Construction - 5.43%
11,700 American Homestar Corp.*............... 248,625
41,000 Analysis & Technology, Inc............. 594,500
20,000 Atchison Casting Corp.*................ 320,000
66,900 Beazer Homes USA, Inc.*................ 919,875
14,600 Centex Construction Products, Inc...... 228,125
91,388 Champion Enterprises, Inc.*............ 1,804,913
48,200 Clare (C.P.) Corp.*.................... 397,650
81,625 Horton (D.R.), Inc.*................... 744,828
10,000 Lexmark International Group, Inc.,
Class A*............................... 236,250
3,700 NCI Building Systems, Inc.*............ 121,175
50,000 NHP, Inc.*............................. 825,000
49,600 Toro Co................................ 1,556,200
62,600 Triangle Pacific Corp.*................ 1,324,381
------------
9,321,522
------------
Health Care - 5.21%
7,000 Alpharma, Inc., Class A................ 87,500
40,000 Amylin Pharmaceuticals, Inc.*.......... 450,000
84,800 Ballard Medical Products............... 1,494,600
50,000 Community Care of America, Inc.*....... 206,250
10,000 Community Psychiatric Centers*......... 88,750
85,151 ICN Pharmaceuticals, Inc............... 1,617,869
7,583 Morrison Health Care, Inc.............. 91,944
58,000 Noven Pharmaceuticals, Inc.*........... 790,250
25,000 Paracelsus Healthcare Corp.*........... 109,375
41,200 Pharmaceutical Marketing
Services, Inc.*........................ 406,850
60,000 Physicians Corp. of America*........... 663,750
76,600 Readicare, Inc.*....................... 670,250
58,150 Res-Care, Inc.*........................ 988,550
15,900 Respironics, Inc.*..................... 238,500
22,081 Teva Pharmaceutical Industries, Ltd.... 924,642
20,000 United American Healthcare Corp.*...... 125,000
------------
8,954,080
------------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
Small Cap Value Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
-------- --------
<C> <S> <C>
Basic Materials - 4.49%
20,328 Chemi-Trol Chemical Co. ............... $ 259,182
50,700 Dexter Corp. .......................... 1,571,700
20,000 Elcor Corp. ........................... 385,000
41,700 Petrolite Corp. ....................... 1,344,825
30,300 Rexel, Inc.* .......................... 439,350
64,000 Sealright Co., Inc. ................... 736,000
21,200 SEDA Specialty Packaging Corp.* ....... 394,850
26,700 Steel of West Virginia, Inc.* ......... 166,875
49,500 Sybron Chemicals, Inc.* ............... 816,750
40,000 Westpoint Stevens, Inc.* .............. 1,065,000
24,299 Varlen Corp. .......................... 536,097
------------
7,715,629
------------
Consumer Staples - 3.63%
15,000 Avalon Properties, Inc., REIT.......... 346,859
43,900 Bindley Western Industries, Inc. ...... 751,788
85,000 Kinetic Concepts, Inc. ................ 1,115,625
26,000 Michaels Stores, Inc.* ................ 263,250
41,100 Paragon Trade Brands, Inc.* ........... 1,078,875
23,500 Sanfilippo (John B.) & Son, Inc.* ..... 141,000
20,000 Toll Brothers, Inc.* .................. 342,500
39,000 Unifirst Corp. ........................ 784,875
130,500 Unilab Corp.* ......................... 81,563
17,000 Valmont Industries, Inc. .............. 586,500
29,600 Wolverine World Wide, Inc. ............ 732,600
------------
6,225,435
------------
Utilities - 2.19%
47,000 American Portable Telecom, Inc.* ...... 358,375
32,242 Harte-Hanks Communications, Inc. ...... 834,262
20,000 Markwest Hydrocarbon, Inc.* ........... 207,500
20,000 Middlesex Water Co. ................... 360,000
25,000 P.T. PasifikSatelit Nusantara, ADR*.... 337,500
43,300 Southwest Gas Corp. ................... 828,113
31,400 TCA Cable TV, Inc. .................... 839,950
------------
3,765,700
------------
Transportation - 2.06%
30,000 Airnet Systems, Inc.* ................. 390,000
20,000 Arnold Industries, Inc. ............... 317,500
19,300 Builders Transport, Inc.* ............. 91,675
28,875 Cannon Express, Inc., Class A*......... 297,773
25,000 Consolidated Delivery & Logistics, Inc.* 118,750
12,500 Offshore Logistics, Inc.* ............. 207,813
67,000 Simon Transportation Services, Inc.* .. 1,072,000
56,000 Team Rental Group, Inc.* .............. 1,050,000
------------
3,545,511
------------
Capital Goods - 1.30%
47,000 BancTec, Inc.* ........................ 957,625
20,300 Duriron Co., Inc. ..................... 543,025
58,600 Instron Corp. ......................... 732,500
------------
2,233,150
------------
Durable Goods - 0.90%
11,500 Farr Co.* ............................. 199,813
94,300 LSI Industries, Inc. .................. 943,000
44,900 Wood's (T.B.), Inc. ................... 409,713
------------
1,552,526
------------
Total Common Stocks.................... 158,768,742
(Cost $129,823,236) ------------
<CAPTION>
PAR
Value
-------
<C> <S> <C>
CORPORATE BOND - 0.20%
$ 369,900 MacNeal-Schwendler Corp.
Convertible Subordinate Debenture
7.88%, 08/18/04........................ 336,609
------------
Total Corporate Bond................... 336,609
(Cost $369,900) ------------
REPURCHASE AGREEMENT - 8.13%
13,959,202 Chase Securities, Inc.
5.45%, 11/01/96, Dated 10/31/96;
Repurchase Price $13,961,315
(Collateralized by U.S. Treasury Note 7.25%,
Due 2016; Total Par Value $13,110,000;
Total Market Value $14,327,486)........ 13,959,202
------------
Total Repurchase Agreement............. 13,959,202
(Cost $13,959,202) ------------
Total Investments - 100.77%................................ 173,064,553
(Cost $144,152,338) ------------
Net Other Assets and Liabilities - (0.77)%................. (1,320,811)
------------
Net Assets - 100.00%....................................... $ 171,743,742
============
</TABLE>
- ----------------------------------------------
* Non-income producing security
REIT Real Estate Investment Trust
ADR American Depositary Receipt
See Notes to Financial Statements.
26
<PAGE>
Small Company Equity Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
-------- --------
<C> <S> <C>
COMMON STOCKS - 92.50%
Technology - 27.25%
32,746 Alternative Resources Corp.*........... $ 659,013
37,300 Applix, Inc.*.......................... 904,525
34,250 Arbor Software Corp.*.................. 1,241,562
47,458 Ascend Communications, Inc.*........... 3,102,567
23,891 Aspen Technology, Inc.*................ 1,606,670
16,850 Aware, Inc.*........................... 206,412
14,960 Bell & Howell Co.*..................... 400,180
54,300 Berg Electronics Corp.*................ 1,533,975
58,005 BISYS Group, Inc.*..................... 2,160,686
20,350 Broadband Technologies, Inc.*.......... 363,756
35,800 Cardiac Pathways Corp.*................ 393,800
46,388 Cascade Communications Corp.*.......... 3,368,928
34,247 CDW Computer Centers, Inc.*............ 2,155,420
24,119 Comverse Technology, Inc.*............. 844,165
124,031 Concord EFS, Inc.*..................... 3,596,899
53,716 Cree Research, Inc.*................... 617,734
38,950 Cytyc Corp.*........................... 501,481
65,422 DSP Communications, Inc.*.............. 2,486,036
39,300 Dynatech Corp.*........................ 1,942,894
64,200 FORE Systems, Inc.*.................... 2,551,950
33,100 Harman International Industries, Inc... 1,700,512
50,700 Heartport, Inc.*....................... 1,337,212
40,600 Hexcel Corp.*.......................... 739,240
112,900 Highwaymaster Communications, Inc.*.... 1,989,862
66,500 HPR, Inc.*............................. 931,000
25,945 ICC Technologies, Inc.*................ 171,886
63,692 INSO Corp.*............................ 3,136,831
112,300 Interface, Inc......................... 1,895,062
18,888 Ionics, Inc.*.......................... 868,848
18,850 I2 Technologies, Inc.*................. 716,300
42,250 JDA Software Group, Inc.*.............. 1,452,344
52,950 Lanvision Systems, Inc.*............... 456,694
12,950 Lightbridge, Inc.*..................... 124,644
49,821 McAfee Associates, Inc.*............... 2,266,855
71,700 NeoPath, Inc.*......................... 1,169,606
27,100 Objective Systems Integrators, Inc.*... 582,650
55,850 Ortel Corp.*........................... 1,158,887
34,952 Parametric Technology Corp.*........... 1,708,279
140,200 PCD, Inc.*............................. 1,542,200
36,900 P-Com, Inc.*........................... 811,800
102,150 Planning Sciences
International Plc, ADR*................ 1,302,413
183,200 Polycom, Inc.*......................... 1,167,900
61,050 Rational Software Corp.*............... 2,342,794
185,100 SRS Labs, Inc.*........................ 2,915,325
25,794 SunGard Data Systems, Inc.*............ 1,102,693
76,476 Systemsoft Corp.*...................... 2,160,447
15,734 Tellabs, Inc.*......................... 1,339,357
65,100 Tel-Save Holdings, Inc.*............... 1,627,500
31,151 TESSCO Technologies, Inc.*............. 1,230,464
73,318 TETRA Technologies, Inc.*.............. 1,530,513
32,400 Tollgrade Communications, Inc.*........ 842,400
148,300 Vmark Software, Inc.*.................. 1,353,237
90,500 Voice Control Systems, Inc.*........... 576,937
64,600 Voxware, Inc. *........................ 532,950
74,400 Whittman-Hart, Inc.*................... 3,534,000
------------
78,958,295
------------
<CAPTION>
Value
Shares (Note 2)
-------- --------
<C> <S> <C>
Energy - 13.05%
101,222 Alamco, Inc.*.......................... $ 1,227,317
57,050 ANADIGICS, Inc.*....................... 1,797,075
33,150 Belco Oil & Gas Corp.*................. 824,606
51,562 Bellwether Exploration Co.*............ 348,044
33,121 BJ Services Co.*....................... 1,486,305
30,400 Chieftain International, Inc.*......... 710,600
114,250 COHO Energy, Inc.*..................... 799,750
216,320 Comstock Resources, Inc.*.............. 2,785,120
158,150 Dawson Production Services, Inc.*...... 1,917,569
91,874 Devon Energy Corp...................... 3,204,106
51,324 Dreco Energy Services, Ltd., Class A*.. 1,347,255
26,400 Flores & Rucks, Inc.*.................. 1,247,400
144,100 Harcor Energy, Inc.*................... 738,513
647,500 Magin Energy, Inc.*.................... 772,468
448,400 Mercantile International Petroleum, Inc.* 807,120
16,050 National-Oilwell, Inc.*................ 373,163
61,400 Nuevo Energy Co.*...................... 3,062,325
71,471 PetroCorp, Inc.*....................... 643,239
71,200 Pool Energy Services Co.*.............. 1,050,200
176,863 Pride Petroleum Services, Inc.*........ 3,095,103
21,050 Production Operators Corp.............. 836,738
3,800 Ranger Oil, Ltd........................ 28,500
70,500 Stone Energy Corp.*.................... 1,480,500
107,107 Swift Energy Co.*...................... 2,624,122
179,376 Texas Meridian Resources Corp.*........ 3,228,768
46,100 Vintage Petroleum, Inc................. 1,359,950
------------
37,795,856
------------
Consumer Staples - 11.44%
36,758 Brown (Tom), Inc.*..................... 693,807
117,497 Chad Therapeutics, Inc.*............... 1,938,700
43,050 Clintrials Research, Inc.*............. 1,598,231
71,450 Equity Marketing, Inc.*................ 1,491,519
36,950 G & K Services, Inc., Class A.......... 1,071,550
101,354 Hologic, Inc.*......................... 2,305,803
51,227 Lunar Corp.*........................... 1,594,440
45,500 Medicis Pharmaceutical Corp., Class A*. 2,286,375
84,550 Michaels Stores, Inc.*................. 856,069
20,600 MSC Industrial Direct Co., Inc.,Class A* 762,200
284,400 Nature's Sunshine Products, Inc........ 6,292,350
82,050 Opta Food Ingredients, Inc.*........... 687,169
25,700 Redwood Inc............................ 848,100
123,980 Rexall Sundown, Inc.*.................. 3,362,957
54,350 Safety 1st, Inc.*...................... 658,994
66,592 Sofamor/Danek Group, Inc.*............. 1,831,280
109,100 Tecnol Medical Products, Inc.*......... 1,391,025
63,030 Theratech, Inc.*....................... 697,269
50,382 Thermedics, Inc.*...................... 1,045,426
8,200 Wholesome & Hearty Foods, Inc.*........ 55,350
67,877 Wolverine World Wide, Inc.............. 1,679,956
------------
33,148,570
------------
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
Small Company Equity Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
-------- --------
<C> <S> <C>
Consumer Cyclical - 6.53%
126,250 Applied Graphics Technologies, Inc.*.... $ 1,988,437
76,650 Barnett, Inc.*.......................... 1,810,856
62,978 Career Horizons, Inc.*.................. 2,558,481
58,577 Casey's General Stores, Inc. ........... 1,054,386
27,750 Cybercash, Inc.*........................ 797,812
117,565 Durakon Industries, Inc.*............... 1,410,780
54,066 Men's Wearhouse, Inc.*.................. 1,115,111
22,565 Modine Manufacturing Co. ............... 558,484
73,900 Oacis Healthcare Holdings Corp.*........ 683,575
81,760 Robert Half International, Inc.*........ 3,280,620
48,050 Rockshox, Inc.*......................... 612,637
88,500 Stein Mart, Inc.*....................... 1,581,938
135,800 Travis Boats & Motors, Inc.*............ 1,459,850
------------
18,912,967
------------
Durable Goods - 6.39%
6,350 Advanced Fibre Communications*.......... 362,744
6,450 Biofield Corp.*......................... 61,275
26,000 Cybermedia, Inc.*....................... 578,500
89,500 Davel Communications Group, Inc.*....... 1,633,375
22,050 Dura Automotive Systems, Inc.*.......... 529,200
16,600 Eclipse Surgical Technologies, Inc.*.... 159,775
22,100 Factset Research Systems, Inc.*......... 530,400
19,600 Greenfield Industries, Inc. ............ 519,400
68,650 Hyperion Software Corp.*................ 1,398,744
19,200 Infinity Financial Technology, Inc.*.... 314,400
70,700 Keystone Automotive Industries, Inc.*... 954,450
47,950 LCC International, Inc., Class A*....... 701,269
63,140 LSI Industries, Inc. ................... 631,400
123,300 Norstan, Inc.*.......................... 2,173,163
54,600 Open Market, Inc.*...................... 1,269,450
34,250 Patterson Dental Co.*................... 959,000
51,539 Pure Atria Corp.*....................... 1,404,438
130,150 Restrac, Inc.*.......................... 1,008,663
36,600 Summit Design, Inc.*.................... 388,875
61,689 The Learning Company, Inc.*............. 1,253,058
116,200 White Pine Software, Inc.*.............. 1,045,800
51,400 Xionics Document Technologies, Inc.*.... 655,350
------------
18,532,729
------------
Finance - 4.60%
57,064 ABR Information Services, Inc.*......... 3,951,682
54,200 ACC Consumer Finance Corp.*............. 487,800
22,650 Consumer Portfolio Services, Inc.*...... 277,463
36,200 CRA Managed Care, Inc.*................. 1,837,150
85,822 Credit Acceptance Corp.*................ 2,317,194
26,700 Enhance Financial Services Group, Inc. . 891,113
140,522 General Acceptance Corp.*............... 456,697
99,385 HCC Insurance Holdings, Inc. ........... 2,534,318
32,200 Imperial Credit Industries, Inc.*....... 583,625
------------
13,337,042
------------
Health Care - 3.75%
43,950 Amrion, Inc.*........................... 1,005,356
20,213 Bone Care International, Inc.*.......... 131,385
80,750 Boston Biomedica, Inc.*................. 694,450
43,048 Genesis Health Ventures, Inc.*.......... 984,723
94,862 Horizon Mental Health
Management, Inc.*....................... 2,537,558
126,450 Medcath, Inc.*.......................... 1,643,850
54,450 National Surgery Centers, Inc.*......... 1,470,150
10,650 Pediatrix Medical Group, Inc.*.......... 419,344
89,250 Rotech Medical Corp.*................... 1,428,000
32,200 Sano Corp.*............................. 555,450
------------
10,870,266
------------
Transportation - 3.38%
88,200 Airnet Systems, Inc.*................... 1,146,600
45,600 Alaska Air Group, Inc.*................. 1,003,200
19,700 Atlas Air, Inc.*........................ 726,437
110,900 Dynamex, Inc.*.......................... 1,206,037
98,969 Lo-Jack Corp.*.......................... 1,026,803
35,850 Midwest Express Holdings, Inc.*......... 1,218,900
107,900 Offshore Logistics, Inc.*............... 1,793,837
46,210 Rural/Metro Corp.*...................... 1,686,665
------------
9,808,479
------------
Business Services - 2.97%
67,300 Desktop Data, Inc.*..................... 1,598,375
21,500 Eagle River Interactive, Inc.*.......... 201,563
38,700 International Telecommunication
Data Systems, Inc.*..................... 628,876
202,600 OncorMed, Inc.*......................... 835,725
34,450 Pharmaceutical Product
Development, Inc.*...................... 658,856
117,620 Pre-Paid Legal Services, Inc.*.......... 1,382,035
94,900 Prime Medical Services, Inc.*........... 1,162,525
25,600 Profit Recovery Group
International, Inc.*.................... 390,400
11,000 Registry, Inc.*......................... 471,625
43,982 Romac International, Inc.*.............. 1,264,483
------------
8,594,463
------------
Basic Materials - 2.89%
1 BHA Group, Inc., Class A................ 17
25,400 Brady (W.H.) Co., Class A............... 600,075
15,594 OM Group, Inc. ......................... 639,354
44,999 PRI Automation, Inc.*................... 1,597,464
63,538 QLT Phototherapeutics, Inc.*............ 1,135,742
101,519 RTW, Inc.*.............................. 1,573,544
70,666 Sealed Air Corp.*....................... 2,747,141
3,975 Wausau Paper Mills Co. ................. 76,519
------------
8,369,856
------------
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
Small Company Equity Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
-------- ----------
<S> <C> <C>
Capital Goods - 2.63%
14,100 ADC Telecommunications, Inc.*............. $ 964,087
53,739 AFC Cable Systems, Inc.*.................. 953,867
12,000 Aptargroup, Inc. ......................... 387,000
34,532 Helix Technology Corp .................... 919,414
31,756 On Assignment, Inc.*...................... 976,497
54,616 Recovery Engineering, Inc.*............... 505,198
72,970 Safeguard Scientifics, Inc. .............. 2,900,558
700 Sturm Ruger & Co., Inc. .................. 13,125
------------
7,619,746
------------
Computer Services - 2.09%
15,150 Affiliated Computer
Services, Inc., Class A*.................. 833,250
59,100 Dendrite International, Inc.*............. 1,573,538
84,100 IDT Corp.*................................ 935,613
58,850 May & Speh, Inc.*......................... 978,381
55,495 SPSS, Inc.*............................... 1,727,282
------------
6,048,064
------------
Utilities - 0.92%
12,315 Gilat Satellite Networks, Ltd.*........... 240,143
56,400 Saville Systems Ireland Plc, ADR*......... 2,432,250
------------
2,672,393
------------
Medical Supplies - 0.82%
36,950 Arterial Vascular Engineering, Inc.*...... 572,725
114,050 Urologix, Inc.*........................... 1,796,288
------------
2,369,013
------------
Communications - 0.74%
30,800 RMH Teleservices, Inc.*................... 227,150
127,150 Smartalk Teleservices, Inc.*.............. 1,907,250
------------
2,134,400
------------
Metals and Mining - 0.70%
66,100 Titanium Metals Corp.*.................... 2,032,575
1 Varlen Corp .............................. 22
------------
2,032,597
------------
Retail - 0.64%
80,500 Funco, Inc.*.............................. 714,438
53,400 Wilmar Industries, Inc.*.................. 1,148,100
------------
1,862,538
------------
Building and Construction - 0.61%
113,950 First Years, Inc. ........................ 1,766,225
------------
Entertainment - 0.54%
139,300 West Coast Entertainment Corp.*........... 1,549,713
------------
Telephone - 0.32%
34,914 Accustaff, Inc.*.......................... 933,950
------------
Food Services - 0.24%
68,500 Manhattan Bagel Co., Inc.*................ 702,125
------------
Total Common Stocks ...................... 268,019,287
------------
(Cost $219,074,978)
<CAPTION>
Par
Value
---------
REPURCHASE AGREEMENT - 4.25%
<S> <C> <C>
$12,320,320 Chase Securities Inc.
5.45%, 11/01/96, Dated 10/31/1996
Repurchase Price $12,322,185
(Collateralized by U.S. Treasury Bond
7.25%, Due 2016;
Total Par Value $11,570,000;
Total Market Value $12,644,471)........... 12,320,320
------------
Total Repurchase Agreement................ 12,320,320
------------
(Cost $12,320,320)
Total Investments - 96.75%.................................... 280,339,607
------------
(Cost $231,395,298)
Net Other Assets and Liabilities - 3.25%...................... 9,492,642
------------
Net Assets - 100.00%.......................................... $289,749,249
============
</TABLE>
- ----------------------------------------
* Non-income producing security
ADR American Depositary Receipt
See Notes to Financial Statements.
29
<PAGE>
International Equity Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
-------- ----------
<S> <C> <C>
Common Stocks - 96.74%
Australia - 5.85%
510,884 Australia & New Zealand Banking........... $ 2,986,133
303,975 Coca-Cola Amatil, Ltd..................... 4,182,700
573,535 News Corp., Ltd........................... 3,265,906
272,207 Western Mining Corp., Ltd................. 1,711,953
------------
12,146,692
------------
Brazil - 2.86%
50,778 Cia Vale Do Rio Doce, ADR................. 1,071,924
65,348 Telebras, ADR............................. 4,868,426
------------
5,940,350
------------
Czech Republic - 0.33%
53,000 Ceska Sporitelna, GDR *................... 680,244
------------
France - 6.87%
37,950 Alcatel Alsthom........................... 3,239,145
2,589 Carrefour Supermarche S.A................. 1,437,883
314 Havas, S.A................................ 20,642
69,817 Michelin, Class B......................... 3,369,071
40,246 Total S.A., Class B....................... 3,150,694
51,011 Valeo..................................... 3,063,736
------------
14,281,171
------------
Germany - 5.03%
88,169 Hoechst AG................................ 3,321,196
10,235 Mannesmann AG............................. 3,990,649
7,896 Volkswagen AG............................. 3,128,240
------------
10,440,085
------------
Hong Kong - 4.71%
603,000 Hutchison Whampoa, Ltd.................... 4,211,166
585,000 New World Development Co., Ltd............ 3,404,550
190,000 Sun Hung Kai Properties, Ltd.............. 2,162,358
------------
9,778,074
------------
India - 1.16%
32,400 Hindalco Industries, Ltd, GDR *........... 564,408
151,800 India Cements, Ltd, GDR................... 417,450
39,600 Reliance Industries, Ltd, GDR *........... 405,900
84,800 Tata Engineering &
Locomotive Co., GDR....................... 1,027,776
------------
2,415,534
------------
Indonesia - 1.25%
59,000 Pt Astra International.................... $ 121,623
180,000 Pt Hanjaya Mandala Sampoerna.............. 1,673,610
27,100 Pt Telekomunik Indonesia, ADR............. 813,000
------------
2,608,233
------------
Italy - 7.17%
735,000 Fiat SPA.................................. 1,965,525
2,123,600 Istituto Nazionale Delle Assicuraz........ 2,933,981
2,217,900 Pirelli SPA............................... 3,934,548
952,500 Stet - Societa Finanziaria
Telefonica SPA............................ 3,291,522
1,333,600 Telecom Italia Mobile..................... 2,757,170
------------
14,882,746
------------
Japan - 18.83%
438 DDI Corp.................................. 3,292,509
48,000 Ito-Yokado Co., Ltd....................... 2,397,046
292,000 Kawasaki Heavy Industries................. 1,337,542
45,000 Kyocera Corp.............................. 2,971,250
77,000 Matsuzakaya............................... 812,379
113,000 Mitsubishi Trust & Banking Corp........... 1,669,070
82,000 Murata Manufacturing Co., Ltd............. 2,638,649
1,056,000 Nippon Steel Co........................... 3,082,398
365 Nippon Telegraph
& Telephone Corp.......................... 2,551,213
464,000 Nissan Motor Co., Ltd..................... 3,512,432
94 NTT Data Corp............................. 2,785,124
280,000 Sharp Corp................................ 4,258,836
44,900 Sony Corp................................. 2,696,210
137,000 Sumitomo Bank............................. 2,409,003
371,000 Sumitomo Realty
& Development Co., Ltd.................... 2,700,791
------------
39,114,452
------------
Luxembourg - 0.08%
15,500 Reliance Industries Ltd, GDR (A).......... 158,875
------------
Malaysia - 1.21%
1,592,000 Renong Berhad............................. 2,507,780
------------
Mexico - 3.63%
22,000 Acer Computec Latino, GDR *............... 379,403
207,800 Carso Global Telecom, Series A-1 *........ 502,748
211,100 Grupo Carso S.A., Series A1............... 955,986
55,200 Grupo Televisa S.A., ADR *................ 1,449,000
83,000 Kimberly-Clark
de Mexico S.A., Class A................... 1,596,174
87,168 Telefonos de Mexico S.A.,
Class L, ADR.............................. 2,658,624
------------
7,541,935
------------
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
International Equity Fund
[LOGO OF THE GALAXY PORTFOLIO OF INVESTMENTS (continued)
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Shares (Note 2)
-------- ----------
<S> <C> <C>
Netherlands - 5.80%
126,870 Ing Groep NV.............................. $ 3,957,674
241,820 Vnu-Verenigd Bezit........................ 4,392,060
28,730 Wolters Kluwer NV......................... 3,695,019
------------
12,044,753
------------
Philippines - 0.60%
3,685,000 Filinvest Land, Inc. *.................... 1,247,966
------------
Singapore - 1.98%
284,000 City Developments, Ltd.................... 2,237,490
155,750 Development Bank of Singpore, Ltd......... 1,868,248
------------
4,105,738
------------
Spain - 4.67%
39,470 Banco de Santander S.A.................... 2,028,072
52,060 Empresa Nacional
de Electricidad S.A....................... 3,189,556
223,700 Telefonica de Espana S.A.................. 4,492,426
------------
9,710,054
------------
Sweden - 7.50%
145,050 Astra AB, Class A......................... 6,673,029
24,290 Hennes & Mauritz AB, Class B.............. 3,148,875
108,600 Skandia Forsakrings AB.................... 3,052,281
122,570 Skf AB, Class B........................... 2,716,724
------------
15,590,909
------------
Switzerland - 4.57%
2,430 Ciba-Geigy AG, Registered................. 3,005,887
347 Roche Holdings AG......................... 2,635,513
3,315 Sandoz AG Registered...................... 3,847,791
------------
9,489,191
------------
Thailand - 0.55%
105,100 Bangkok Bank Public Co., Ltd.............. 1,145,572
------------
United Kingdom - 12.09%
269,966 British Aerospace, Plc.................... $ 5,122,319
358,761 British Petroleum, Plc.................... 3,862,232
442,459 Cadbury Schweppes, Plc.................... 3,682,354
221,113 Glaxo Wellcome, Plc....................... 3,471,546
349,403 Orange, Plc............................... 1,055,607
1 Powergen, Plc............................. 8
565,239 Safeway, Plc.............................. 3,355,531
4,574 Sainsbury (J.), Plc....................... 27,116
1,170,661 Vodafone Group, Plc....................... 4,528,208
------------
25,104,921
------------
Total Common Stocks....................... 200,935,275
------------
(Cost $194,964,067)
Par
Value
---------
U.S. Government Backed Bond (B) - 2.48%
Federal Home Loan Bank - 2.48%
$ 5,155,000 5.53%, 11/01/96........................... 5,155,000
------------
Total U.S. Government Backed Bond......... 5,155,000
------------
(Cost $5,155,000)
Total Investments - 99.22%.................................... 206,090,275
------------
(Cost $200,119,067)
Net Other Assets and Liabilities - 0.78%...................... 1,614,401
------------
Net Assets - 100.00%.......................................... $207,704,676
============
</TABLE>
- --------------------------------------
* Non-income producing security
(A) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold, in transactions exempt from
registration, to qualified institutional buyers. At 10/31/96, these
securities amounted to $158,875, or 0.08% of net assets.
(B) Annualized yield at time of purchase.
ADR American Depositary Receipt
GDR Global Depositary Receipt
See Notes to Financial Statements.
31
<PAGE>
-------------------
THE GALAXY FUND STATEMENTS OF ASSETS AND LIABILITIES
------------------- October 31, 1996
<TABLE>
<CAPTION>
Asset Allocation Equity Income Growth and Income
Fund Fund Fund
---------------- ------------- -----------------
<S> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost......................................... $ 177,844,405 $ 151,347,356 $ 201,612,856
Repurchase agreements....................................... 28,461,013 41,255,979 21,980,581
Net unrealized appreciation................................. 37,392,579 39,694,395 46,032,594
------------- ------------- -------------
Total investments at value............................. 243,697,997 232,297,730 269,626,031
Cash ....................................................... 75,849 -- --
Receivable for foreign currency sold............................ -- -- --
Receivable for investments sold................................. -- -- 3,622,285
Receivable for shares sold...................................... 664,136 443,338 653,306
Interest and dividend receivable................................ 1,552,640 571,003 348,638
Tax reclaim receivable.......................................... -- -- --
Receivable from investment adviser (Note 4)..................... 2,904 2,315 24,762
Deferred organizational expenses and other assets (Note 2)...... 576 -- --
------------- ------------- -------------
Total Assets........................................... 245,994,102 233,314,386 274,275,022
------------- ------------- -------------
LIABILITIES:
Foreign currency at value (Cost $804,260)...................... -- -- --
Payable for foreign currency purchased.......................... -- -- --
Payable for investments purchased............................... 1,003,310 -- 4,604,584
Payable to Custodian............................................ -- -- --
Payable for shares repurchased.................................. 692,125 46,602 353,957
Advisory fee payable (Note 3)................................... 152,785 146,997 170,368
Payable to Fleet and affiliates (Note 3)........................ 39,416 36,051 6,808
Payable to FDISG (Note 3)....................................... 30,172 22,588 25,827
Trustees' fees and expenses payable (Note 3).................... 2,906 3,104 3,255
Accrued expenses and other payables............................. 61,410 13,236 64,211
------------- -------------- -------------
Total Liabilities...................................... 1,982,124 268,578 5,229,010
------------- ------------- -------------
NET ASSETS............................................................ $ 244,011,978 $ 233,045,808 $ 269,046,012
============= ============= =============
NET ASSETS consists of:
Par value (Note 5).............................................. $ 16,800 $ 13,774 $ 19,508
Paid in capital in excess of par value.......................... 197,253,562 173,001,649 199,651,253
Undistributed (overdistributed) net investment income (loss).... 622,447 425,338 607,040
Accumulated net realized gain on investments sold............... 8,726,590 19,910,652 22,735,617
Net unrealized appreciation of investments,
foreign currency and forward foreign currency contracts......... 37,392,579 39,694,395 46,032,594
------------- ------------- -------------
TOTAL NET ASSETS...................................................... $ 244,011,978 $ 233,045,808 $ 269,046,012
============= ============= =============
Retail A Shares:
Net Assets...................................................... $ 116,851,805 $ 126,951,595 $ 77,776,362
Shares of beneficial interest outstanding....................... 8,046,520 7,506,038 5,643,469
NET ASSET VALUE and redemption
price per share............................................... $ 14.52 $ 16.91 $ 13.78
Sales charge - 3.75% of offering price.......................... 0.57 0.66 0.54
------------- ------------- -------------
Maximum offering price per share................................ $ 15.09 $ 17.57 $ 14.32
============= ============= =============
Retail B Shares:
Net Assets...................................................... $ 3,556,801 N/A $ 4,562,132
Shares of beneficial interest outstanding....................... 245,172 N/A 331,354
NET ASSET VALUE and offering ------------- ------------- -------------
price per share*.............................................. $ 14.51 N/A $ 13.77
============= ============= =============
Trust Shares:
Net Assets...................................................... $ 123,603,372 $ 106,094,213 $ 186,707,518
Shares of beneficial interest outstanding....................... 8,508,470 6,268,275 13,533,483
NET ASSET VALUE, offering and redemption ------------- ------------- -------------
price per share............................................... $ 14.53 $ 16.93 $ 13.80
============= ============= =============
- -----------------------------------------------------------------------------------------------------------------------------------
* Redemption price per share is equal to the Net Asset Value per share less any applicable contingent deferred sales charge.
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
<TABLE>
<CAPTION>
Equity Value Equity Growth Small Cap
Fund Fund Value Fund
------------ ------------- ----------
<S> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost......................................... $ 255,474,654 $ 474,242,624 $ 130,193,136
Repurchase agreements....................................... 28,541,624 33,749,231 13,959,202
Net unrealized appreciation................................. 45,813,635 216,200,342 28,912,215
------------- ------------- -------------
Total investments at value............................. 329,829,913 724,192,197 173,064,553
Cash ....................................................... -- -- --
Receivable for foreign currency sold............................ -- -- --
Receivable for investments sold................................. 192,723 3,506,303 213,444
Receivable for shares sold...................................... 363,705 746,525 70,686
Interest and dividend receivable................................ 467,656 758,404 51,801
Tax reclaim receivable.......................................... -- -- --
Receivable from investment adviser (Note 4)..................... 686 477 20,173
Deferred organizational expenses and other assets (Note 2)...... -- -- --
------------- ------------- -------------
Total Assets........................................... 330,854,683 729,203,906 173,420,657
------------- ------------- -------------
LIABILITIES:
Foreign currency at value (Cost $804,260)...................... -- -- --
Payable for foreign currency purchased.......................... -- -- --
Payable for investments purchased............................... 1,467,270 -- 1,201,702
Payable to Custodian............................................ 105,582 -- 16,750
Payable for shares repurchased.................................. 174,127 1,295,587 260,933
Advisory fee payable (Note 3)................................... 207,351 459,734 108,372
Payable to Fleet and affiliates (Note 3)........................ 56,478 79,455 3,218
Payable to FDISG (Note 3)....................................... 46,601 73,076 32,701
Trustees' fees and expenses payable (Note 3).................... 3,724 7,297 2,650
Accrued expenses and other payables............................. 53,252 74,284 50,589
------------- ------------- -------------
Total Liabilities...................................... 2,114,385 1,989,433 1,676,915
------------- ------------- -------------
NET ASSETS............................................................ $ 328,740,298 $ 727,214,473 $ 171,743,742
============= ============= =============
NET ASSETS consists of:
Par value (Note 5).............................................. $ 20,596 $ 35,671 $ 11,637
Paid in capital in excess of par value.......................... 243,728,454 464,901,871 117,244,018
Undistributed (overdistributed) net investment income (loss).... 288,324 395,041 --
Accumulated net realized gain on investments sold............... 38,889,289 45,681,548 25,575,872
Net unrealized appreciation of investments,
foreign currency and forward foreign currency contracts......... 45,813,635 216,200,342 28,912,215
------------- ------------- -------------
TOTAL NET ASSETS...................................................... $ 328,740,298 $ 727,214,473 $ 171,743,742
============= ============= =============
Retail A Shares: $ 131,997,695 $ 160,800,425 $ 34,402,292
Net Assets...................................................... 8,269,298 7,893,497 2,332,328
Shares of beneficial interest outstanding.......................
NET ASSET VALUE and redemption $ 15.96 $ 20.37 $ 14.75
price per share............................................... 0.62 0.79 0.57
Sales charge - 3.75% of offering price.......................... ------------- ------------- -------------
$ 16.58 $ 21.16 $ 15.32
Maximum offering price per share................................ ============= ============= =============
Retail B Shares:
Net Assets...................................................... $ 1,915,750 $ 3,995,190 N/A
Shares of beneficial interest outstanding....................... 119,776 197,185 N/A
NET ASSET VALUE and offering
price per share*.............................................. $ 15.99 $ 20.26 N/A
============= ============= =============
Trust Shares:
Net Assets...................................................... $ 194,826,853 $ 562,418,858 $ 137,341,450
Shares of beneficial interest outstanding....................... 12,206,996 27,580,152 9,304,295
NET ASSET VALUE, offering and redemption
price per share............................................... $ 15.96 $ 20.39 $ 14.76
============= ============= =============
<CAPTION>
Small Company International
Equity Fund Equity Fund
------------- -------------
<S> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost......................................... $ 219,074,978 $ 200,119,067
Repurchase agreements....................................... 12,320,320 --
Net unrealized appreciation................................. 48,944,309 5,971,208
------------- -------------
Total investments at value............................. 280,339,607 206,090,275
Cash ....................................................... 26,954 10,358
Receivable for foreign currency sold............................ -- 890,395
Receivable for investments sold................................. 5,527,989 890,329
Receivable for shares sold...................................... 9,630,693 660,558
Interest and dividend receivable................................ 19,901 159,848
Tax reclaim receivable.......................................... -- 198,031
Receivable from investment adviser (Note 4)..................... 3,424 328
Deferred organizational expenses and other assets (Note 2)...... 457 586
------------- -------------
Total Assets........................................... 295,549,025 208,900,708
------------- -------------
LIABILITIES:
Foreign currency at value (Cost $804,260)...................... -- 804,479
Payable for foreign currency purchased.......................... -- 73,791
Payable for investments purchased............................... 5,197,686 74,399
Payable to Custodian............................................ -- --
Payable for shares repurchased.................................. 231,469 40,506
Advisory fee payable (Note 3)................................... 180,491 151,958
Payable to Fleet and affiliates (Note 3)........................ 79,625 20,899
Payable to FDISG (Note 3)....................................... 65,191 22,741
Trustees' fees and expenses payable (Note 3).................... 1,629 1,470
Accrued expenses and other payables............................. 43,685 5,789
------------- -------------
Total Liabilities...................................... 5,799,776 1,196,032
------------- -------------
NET ASSETS............................................................ $ 289,749,249 $ 207,704,676
============= =============
NET ASSETS consists of:
Par value (Note 5).............................................. $ 14,414 $ 14,835
Paid in capital in excess of par value.......................... 206,027,933 188,681,747
Undistributed (overdistributed) net investment income (loss).... -- 2,497,207
Accumulated net realized gain on investments sold............... 34,762,593 10,541,488
Net unrealized appreciation of investments,
foreign currency and forward foreign currency contracts......... 48,944,309 5,969,399
------------- -------------
TOTAL NET ASSETS...................................................... $ 289,749,249 $ 207,704,676
============= =============
Retail A Shares:
Net Assets...................................................... $ 111,100,513 $ 35,143,798
Shares of beneficial interest outstanding....................... 5,567,469 2,521,956
NET ASSET VALUE and redemption
price per share............................................... $ 19.96 $ 13.94
Sales charge - 3.75% of offering price.......................... 0.78 0.54
------------- -------------
Maximum offering price per share................................ $ 20.74 $ 14.48
============= =============
Retail B Shares:
Net Assets...................................................... $ 3,658,688 N/A
Shares of beneficial interest outstanding....................... 183,748 N/A
NET ASSET VALUE and offering
price per share*.............................................. $ 19.91 N/A
============= =============
Trust Shares:
Net Assets...................................................... $ 174,990,048 $ 172,560,878
Shares of beneficial interest outstanding....................... 8,662,903 12,313,125
NET ASSET VALUE, offering and redemption
price per share............................................... $ 20.20 $ 14.01
============= =============
</TABLE>
33
<PAGE>
-------------------
LOGO OF STATEMENTS OF OPERATIONS
THE GALAXY FUND For the year ended October 31, 1996
APPEARS HERE
-------------------
<TABLE>
<CAPTION>
Asset Allocation Equity Income Growth and Income
Fund Fund Fund
---------------- ------------- -----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend (Note 2).................................... $ 2,226,994 $ 5,013,456 $ 6,656,930
Interest (Note 2).................................... 5,007,670 1,648,110 1,166,633
Less: net foreign taxes withheld (Note 2)............ -- -- --
------------ ------------ ------------
Total Investment Income........................... 7,234,664 6,661,566 7,823,563
------------ ------------ ------------
EXPENSES:
Investment advisory fee (Note 3):
Shawmut Bank, N.A.................................. -- -- 207,833
Fleet Investment Advisors Inc...................... 1,459,822 1,533,644 1,790,255
Administration fee (Note 3):
Federated Administrative Services.................. -- -- 31,175
FDISG.............................................. 165,070 174,406 203,187
Custodian fee........................................ 23,025 19,237 27,908
Fund accounting fee (Note 3)......................... 51,386 49,191 54,480
Legal fee (Note 3)................................... 7,880 8,700 11,222
Audit fee............................................ 19,534 20,030 10,278
Transfer agent fee (Note 3).......................... 455,315 212,654 246,461
12b-1 fee (Note 3)................................... 6,389 -- 7,070
Shareholder servicing fee (Note 3)................... 270,644 309,334 158,101
Trustees' fees and expenses (Note 3)................. 5,536 5,969 7,793
Amortization of organization cost (Note 2)........... 3,649 776 --
Reports to shareholders.............................. 59,090 51,367 67,264
Registration fee..................................... 41,773 13,937 72,236
Insurance............................................ 2,686 2,813 4,043
Miscellaneous........................................ 1,607 5,017 54,710
------------ ------------ ------------
Total expenses before reimbursement/waiver........ 2,573,406 2,407,075 2,954,016
Less:reimbursement/waiver (Note 4)................ (14,522) -- (101,216)
------------ ------------ ------------
Total expenses net of reimbursement/waiver........ 2,558,884 2,407,075 2,852,800
------------ ------------ ------------
NET INVESTMENT INCOME (LOSS)............................ 4,675,780 4,254,491 4,970,763
------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS (Notes 2 &6):
Net realized gain on investments sold................. 8,828,444 19,910,652 25,439,278
Net realized gain on forward foreign currency
contracts and foreign currency.................... -- -- --
Net change in unrealized appreciation on
investments, foreign currency and forward foreign
currency contracts................................ 17,143,392 10,612,766 17,120,059
------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS.................................. 25,971,836 30,523,418 42,559,337
------------ ------------ ------------
NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS..................... $ 30,647,616 $ 34,777,909 $ 47,530,100
============ ============ ============
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
<TABLE>
<CAPTION>
Equity Value Equity Growth Small Cap
Fund Fund Value Fund
------------ ------------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividend (Note 2).................................... $ 6,254,544 $ 8,637,619 $ 1,841,762
Interest (Note 2).................................... 1,022,747 3,394,171 627,829
Less: net foreign taxes withheld (Note 2)............ -- -- --
------------ ------------- ------------
Total Investment Income........................... 7,277,291 12,031,790 2,469,591
------------ ------------- ------------
EXPENSES:
Investment advisory fee (Note 3):
Shawmut Bank, N.A.................................. -- -- 128,152
Fleet Investment Advisors Inc...................... 2,220,230 4,746,270 1,143,059
Administration fee (Note 3):
Federated Administrative Services.................. -- -- 19,223
FDISG.............................................. 251,209 536,874 129,101
Custodian fee........................................ 21,228 26,922 24,640
Fund accounting fee (Note 3)......................... 64,756 101,409 55,280
Legal fee (Note 3)................................... 14,969 39,537 7,099
Audit fee............................................ 20,030 20,030 10,170
Transfer agent fee (Note 3).......................... 459,636 723,020 162,553
12b-1 fee (Note 3)................................... 3,518 7,613 --
Shareholder servicing fee (Note 3)................... 333,294 360,156 79,503
Trustees' fees and expenses (Note 3)................. 9,316 23,214 4,939
Amortization of organization cost (Note 2)........... -- 762 --
Reports to shareholders.............................. 87,391 114,750 45,953
Registration fee..................................... 45,450 64,463 56,213
Insurance............................................ 6,812 8,497 2,814
Miscellaneous........................................ 4,431 3,756 32,744
------------ ------------- ------------
Total expenses before reimbursement/waiver........ 3,542,270 6,777,273 1,901,443
Less:reimbursement/waiver (Note 4)................ (1,640) (4,360) (63,394)
------------ ------------- ------------
Total expenses net of reimbursement/waiver........ 3,540,630 6,772,913 1,838,049
------------ ------------- ------------
NET INVESTMENT INCOME (LOSS)............................ 3,736,661 5,258,877 631,542
------------ ------------- ------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS (Notes 2 &6):
Net realized gain on investments sold................. 38,931,940 48,132,075 25,576,246
Net realized gain on forward foreign currency
contracts and foreign currency.................... -- -- --
Net change in unrealized appreciation on
investments, foreign currency and forward foreign
currency contracts................................ 15,119,614 69,078,894 9,455,938
------------ ------------- ------------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS.................................. 54,051,554 117,210,969 35,032,184
------------ ------------- ------------
NET INCREASE IN NET
ASSETS RESULTING FROM OPERATIONS..................... $ 57,788,215 $ 122,469,846 $ 35,663,726
============ ============= ============
<CAPTION>
Small Company International
Equity Fund Equity Fund
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividend (Note 2).................................... $ 417,135 $ 4,151,079
Interest (Note 2).................................... 702,310 599,389
Less: net foreign taxes withheld (Note 2)............ -- (615,354)
------------ ------------
Total Investment Income........................... 1,119,445 4,135,114
------------ ------------
EXPENSES:
Investment advisory fee (Note 3):
Shawmut Bank, N.A.................................. -- --
Fleet Investment Advisors Inc...................... 1,562,812 1,619,241
Administration fee (Note 3):
Federated Administrative Services.................. -- --
FDISG.............................................. 176,590 141,571
Custodian fee........................................ 52,743 226,800
Fund accounting fee (Note 3)......................... 57,369 79,971
Legal fee (Note 3)................................... 7,177 6,222
Audit fee............................................ 20,115 15,244
Transfer agent fee (Note 3).......................... 526,778 241,709
12b-1 fee (Note 3)................................... 7,282 --
Shareholder servicing fee (Note 3)................... 176,248 79,239
Trustees' fees and expenses (Note 3)................. 4,065 3,045
Amortization of organization cost (Note 2)........... 3,649 3,689
Reports to shareholders.............................. 85,904 36,371
Registration fee..................................... 30,248 7,980
Insurance............................................ 3,202 2,906
Miscellaneous........................................ 3,708 2,818
------------ ------------
Total expenses before reimbursement/waiver........ 2,717,890 2,466,806
Less:reimbursement/waiver (Note 4)................ (4,901) (464,938)
------------ ------------
Total expenses net of reimbursement/waiver........ 2,712,989 2,001,868
------------ ------------
NET INVESTMENT INCOME (LOSS)............................ (1,593,544) 2,133,246
------------ ------------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS (Notes 2 &6): 36,017,542 10,933,936
Net realized gain on investments sold.................
Net realized gain on forward foreign currency -- 477,968
contracts and foreign currency....................
Net change in unrealized appreciation on
investments, foreign currency and forward foreign 5,841,537 1,358,635
currency contracts................................ ------------ ------------
NET REALIZED AND UNREALIZED 41,859,079 12,770,539
GAIN ON INVESTMENTS.................................. ------------ ------------
NET INCREASE IN NET $ 40,265,535 $ 14,903,785
ASSETS RESULTING FROM OPERATIONS..................... ============ ============
</TABLE>
35
<PAGE>
-------------------
THE GALAXY FUND STATEMENTS OF CHANGES IN NET ASSETS
-------------------
<TABLE>
<CAPTION>
Asset Allocation Fund
---------------------------------
Years ended October 31,
---------------------------------
1996 1995
------------- -------------
<S> <C> <C>
NET ASSETS at beginning of the period....................... $ 153,138,605 $ 139,037,560
------------- -------------
Increase in Net Assets resulting from operations:
Net investment income.................................... 4,675,780 3,577,623
Net realized gain on investments sold.................... 8,828,444 4,918,260
Net change in unrealized appreciation on investments..... 17,143,392 19,892,751
------------- -------------
Net increase in net assets resulting from operations.. 30,647,616 28,388,634
------------- -------------
Dividends to shareholders from:
Retail A Shares:
Net investment income.................................... (2,124,795) (1,835,264)
Net realized gain on investments......................... (805,180) --
------------- -------------
Total Dividends....................................... (2,929,975) (1,835,264)
------------- -------------
Retail B Shares:
Net investment income.................................... (15,152) --
------------- -------------
Total Dividends....................................... (15,152) --
------------- -------------
Trust Shares:
Net investment income.................................... (2,323,359) (1,945,032)
Net realized gain on investments......................... (791,001) --
------------- -------------
Total Dividends....................................... (3,114,360) (1,945,032)
------------- -------------
Total Dividends to shareholders....................... (6,059,487) (3,780,296)
------------- -------------
Net increase (decrease) from share transactions/(1)/........ 66,285,244 (10,507,293)
------------- -------------
Net increase in net assets............................ 90,873,373 14,101,045
------------- -------------
NET ASSETS at end of the period (including line A).......... $ 244,011,978 $ 153,138,605
============= =============
(A) Undistributed net investment income..................... $ 622,447 $ 406,096
============= =============
</TABLE>
- -------------------------------------------------------------------------------
(1) For detail on share transactions by series, see Statements of Changes in
Net Assets - Capital Stock Activity on pages 42-43.
See Notes to Financial Statements.
36
<PAGE>
<TABLE>
<CAPTION>
Equity Income Fund Growth and Income Fund
-------------------------------- -----------------------------
Years ended October 31, Years ended October 31,
-------------------------------- -----------------------------
1996 1995 1996 1995
-------------- -------------- ------------ -------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of the period....................... $ 169,620,776 $ 142,412,226 $ 240,089,195 $ 179,071,132
------------- ------------- ------------- -------------
Increase in Net Assets resulting from operations:
Net investment income.................................... 4,254,491 3,544,552 4,970,763 4,903,318
Net realized gain on investments sold.................... 19,910,652 6,248,042 25,439,278 11,589,259
Net change in unrealized appreciation on investments..... 10,612,766 20,830,652 17,120,059 19,333,241
------------- ------------- ------------- -------------
Net increase in net assets resulting from operations.. 34,777,909 30,623,246 47,530,100 35,825,818
------------- ------------- ------------- -------------
Dividends to shareholders from:
Retail A Shares:
Net investment income.................................... (1,939,416) (1,469,498) (1,026,722) (699,536)
Net realized gain on investments......................... (3,071,779) (1,020,247) (3,122,453) (1,009,651)
------------- ------------- ------------- -------------
Total Dividends....................................... (5,011,195) (2,489,745) (4,149,175) (1,709,187)
------------- ------------- ------------- -------------
Retail B Shares:
Net investment income.................................... -- -- (12,819) --
------------- ------------- ------------- -------------
Total Dividends....................................... -- -- (12,819) --
------------- ------------- ------------- -------------
Trust Shares:
Net investment income.................................... (2,274,333) (2,187,618) (3,688,324) (4,129,453)
Net realized gain on investments......................... (3,159,136) (1,269,894) (10,955,643) (6,867,309)
------------- ------------- ------------- -------------
Total Dividends....................................... (5,433,469) (3,457,512) (14,643,967) (10,996,762)
------------- ------------- ------------- -------------
Total Dividends to shareholders....................... (10,444,664) (5,947,257) (18,805,961) (12,705,949)
------------- ------------- ------------- -------------
Net increase (decrease) from share transactions/(1)/........ 39,091,787 2,532,561 232,678 37,898,194
------------- ------------- ------------- -------------
Net increase in net assets............................ 63,425,032 27,208,550 28,956,817 61,018,063
------------- ------------- ------------- -------------
NET ASSETS at end of the period (including line A).......... $ 233,045,808 $ 169,620,776 $ 269,046,012 240,089,195
============= ============= ============= =============
(A) Undistributed net investment income..................... $ 425,338 $ 384,596 $ 607,040 382,474
============= ============= ============= =============
</TABLE>
37
<PAGE>
[LOGO OF THE GALAXY FUND
APPEARS HERE] STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Equity Value Fund
-------------------------------------------
Years ended October 31,
-------------------------------------------
1996 1995
--------------- -------------
<S> <C> <C>
NET ASSETS at beginning of the period...................... $ 261,884,877 $ 228,403,407
--------------- -------------
Increase in Net Assets resulting from operations:
Net investment income.................................... 3,736,661 4,649,379
Net realized gain on investments sold.................... 38,931,940 21,838,283
Net change in unrealized appreciation on investments..... 15,119,614 19,810,450
--------------- -------------
Net increase in net assets resulting from operations... 57,788,215 46,298,112
--------------- -------------
Dividends to shareholders from:
Retail A Shares:
Net investment income.................................... (1,097,197) (1,403,785)
Dividends in excess of net investment income............. -- --
Net realized gain on investments......................... (7,667,373) (6,772,276)
--------------- -------------
Total Dividends........................................ (8,764,570) (8,176,061)
--------------- -------------
Retail B Shares:
Net investment income.................................... (1,799) --
--------------- -------------
Total Dividends........................................ (1,799) --
--------------- -------------
Trust Shares:
Net investment income.................................... (2,569,302) (3,500,026)
Dividends in excess of net investment income............. -- --
Net realized gain on investments......................... (12,767,986) (13,521,337)
--------------- -------------
Total Dividends........................................ (15,337,288) (17,021,363)
--------------- -------------
Total Dividends to shareholders........................ (24,103,657) (25,197,424)
--------------- -------------
Net increase (decrease) from share transactions/(1)/....... 33,170,863 12,380,782
--------------- -------------
Net increase in net assets............................... 66,855,421 33,481,470
--------------- -------------
NET ASSETS at end of the period (including line A)........ $ 328,740,298 $ 261,884,877
=============== =============
(A) Undistributed net investment income (loss)............. $ 288,324 $ 219,961
=============== =============
</TABLE>
- -----------------------------------------------
(1) For detail on share transactions by series, see Statements of Changes in
Net Assets - Capital Stock Activity on pages 43-44.
See Notes to Financial Statements.
38
<PAGE>
[LOGO OF THE GALAXY FUND
APPEARS HERE] STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Equity Growth Fund
-------------------------------------------
Years ended October 31,
-------------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
NET ASSETS at beginning of the period........................ $ 518,927,133 $ 432,431,952
---------------- ----------------
Increase in Net Assets resulting from operations:
Net investment income...................................... 5,258,877 5,610,922
Net realized gain on investments sold...................... 48,132,075 6,701,851
Net change in unrealized appreciation on investments....... 69,078,894 89,989,658
---------------- ----------------
Net increase in net assets resulting from operations..... 122,469,846 102,302,431
---------------- ----------------
Dividends to shareholders from:
Retail A Shares:
Net investment income...................................... (745,079) (698,829)
Dividends in excess of net investment income............... -- --
Net realized gain on investments........................... (1,757,610) (824,582)
---------------- ----------------
Total Dividends.......................................... (2,502,689) (1,523,411)
---------------- ----------------
Retail B Shares:
Net investment income...................................... -- --
---------------- ----------------
Total Dividends.......................................... -- --
---------------- ----------------
Trust Shares:
Net investment income...................................... (4,784,442) (5,037,392)
Dividends in excess of net investment income............... -- --
Net realized gain on investments........................... (7,280,310) (4,184,120)
---------------- ----------------
Total Dividends.......................................... (12,064,752) (9,221,512)
---------------- ----------------
Total Dividends to shareholders.......................... (14,567,441) (10,744,923)
---------------- ----------------
Net increase (decrease) from share transactions/(1)/......... 100,384,935 (5,062,327)
---------------- ----------------
Net increase in net assets................................. 208,287,340 86,495,181
---------------- ----------------
NET ASSETS at end of the period (including line A).......... $ 727,214,473 $ 518,927,133
================ ================
(A) Undistributed net investment income (loss)............... $ 395,041 $ 665,685
================ ================
</TABLE>
<TABLE>
<CAPTION> Small Cap Value Fund
---------------------------------------
Years ended October 31,
---------------------------------------
1996 1995
--------------- ---------------
<S> <C> <C>
NET ASSETS at beginning of the period........................ $ 148,910,020 $ 121,668,818
--------------- ---------------
Increase in Net Assets resulting from operations:
Net investment income...................................... 631,542 29,876
Net realized gain on investments sold...................... 25,576,246 10,568,906
Net change in unrealized appreciation on investments....... 9,455,938 15,032,081
--------------- ---------------
Net increase in net assets resulting from operations..... 35,663,726 25,630,863
--------------- ---------------
Dividends to shareholders from:
Retail A Shares:
Net investment income...................................... (48,278) --
Dividends in excess of net investment income............... (8,276) --
Net realized gain on investments........................... (1,894,554) (1,030,219)
--------------- ---------------
Total Dividends.......................................... (1,951,108) (1,030,219)
--------------- ---------------
Retail B Shares:
Net investment income...................................... -- --
--------------- ---------------
Total Dividends.......................................... -- --
--------------- ---------------
Trust Shares:
Net investment income...................................... (564,833) (65,165)
Dividends in excess of net investment income............... (96,746) --
Net realized gain on investments........................... (8,656,766) (5,187,651)
--------------- ---------------
Total Dividends.......................................... (9,318,345) (5,252,816)
--------------- ---------------
Total Dividends to shareholders.......................... (11,269,453) (6,283,035)
--------------- ---------------
Net increase (decrease) from share transactions/(1)/......... (1,560,551) 7,893,374
--------------- ---------------
Net increase in net assets................................. 22,833,722 27,241,202
--------------- ---------------
NET ASSETS at end of the period (including line A).......... $ 171,743,742 $ 148,910,020
=============== ===============
(A) Undistributed net investment income (loss)............... $ -- $ (18,431)
=============== ===============
</TABLE>
- -----------------------------------------------
(1) For detail on share transactions by series, see Statements of Changes in
Net Assets - Capital Stock Activity on pages 43-44.
39
<PAGE>
[LOGO OF THE GALAXY FUND
APPEARS HERE] STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Small Company Equity Fund
-------------------------------------------
Years ended October 31,
-------------------------------------------
1996 1995
--------------- -------------
<S> <C> <C>
NET ASSETS at beginning of the period.......................... $ 140,499,013 $ 97,306,732
--------------- -------------
Increase (Decrease) in Net Assets resulting from operations:
Net investment income (loss)............................. (1,593,544) (566,457)
Net realized gain on investments sold.................... 36,017,542 2,082,179
Net realized gain (loss) on forward foreign currency
contracts and foreign currency.......................... -- --
Net change in unrealized appreciation (depreciation)
on investments.......................................... 5,841,537 32,453,750
--------------- -------------
Net increase (decrease) in net assets resulting
from operations....................................... 40,265,535 33,969,472
--------------- -------------
Dividends to shareholders from:
Retail A Shares:
Net investment income.................................... -- --
Net realized capital gains (losses)...................... (513,596) (494,152)
--------------- -------------
Total Dividends......................................... (513,596) (494,152)
--------------- -------------
Trust Shares:
Net investment income.................................... -- --
Net realized capital gains (losses)...................... (1,014,801) (1,038,168)
--------------- -------------
Total Dividends......................................... (1,014,801) (1,038,168)
--------------- -------------
Total Dividends to shareholders......................... (1,528,397) (1,532,320)
--------------- -------------
Net increase from share transactions/(1)/...................... 110,513,098 10,755,129
--------------- -------------
Net increase in net assets............................... 149,250,236 43,192,281
--------------- -------------
NET ASSETS at end of the period (including line A)............. $ 289,749,249 $ 140,499,013
=============== =============
(A) Undistributed net investment income (loss)................. $ -- $ --
=============== =============
</TABLE>
- --------------------------------
(1) For detail on share transactions by series, see Statements of Changes in
Net Assets - Capital Stock Activity on page 45.
See Notes to Financial Statements.
40
<PAGE>
[LOGO OF THE GALAXY FUND
APPEARS HERE] STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
International Equity Fund
----------------------------------------------
Years ended October 31,
----------------------------------------------
1996 1995
---------------- ----------------
<S> <C> <C>
NET ASSETS at beginning of the period.......................... $ 119,717,837 $ 115,237,460
---------------- ----------------
Increase (Decrease) in Net Assets resulting from operations:
Net investment income (loss)............................. 2,133,246 1,350,158
Net realized gain on investments sold.................... 10,933,936 2,395,864
Net realized gain (loss) on forward foreign currency
contracts and foreign currency.......................... 477,968 (4,537)
Net change in unrealized appreciation (depreciation)
on investments.......................................... 1,358,635 (4,508,285)
---------------- ----------------
Net increase (decrease) in net assets resulting
from operations....................................... 14,903,785 (766,800)
---------------- ----------------
Dividends to shareholders from:
Retail A Shares:
Net investment income.................................... (271,437) (63,100)
Net realized capital gains (losses)...................... (538,170) (415,622)
---------------- ----------------
Total Dividends.......................................... (809,607) (478,722)
---------------- ----------------
Trust Shares:
Net investment income.................................... (1,437,075) (275,728)
Net realized capital gains (losses)...................... (1,766,390) (1,005,745)
---------------- ----------------
Total Dividends........................................ (3,203,465) (1,281,473)
---------------- ----------------
Total Dividends to shareholders........................ (4,013,072) (1,760,195)
---------------- ----------------
Net increase from share transactions/(1)/...................... 77,096,126 7,007,372
---------------- ----------------
Net increase in net assets............................... 87,986,839 4,480,377
---------------- ----------------
NET ASSETS at end of the period (including line A)............. $ 207,704,676 $ 119,717,837
================ ================
(A) Undistributed net investment income (loss)................. $ 2,497,207 $ 1,200,199
================ ================
</TABLE>
- --------------------------------
(1) For detail on share transactions by series, see Statements of Changes in
Net Assets - Capital Stock Activity on page 45.
41
<PAGE>
[LOGO OF THE GALAXY FUND STATEMENTS OF CHANGES IN NET ASSETS -
APPEARS HERE] Capital Stock Activity
<TABLE>
<CAPTION>
Asset Allocation Fund Equity Income Fund
---------------------------------------- -------------------------------
Years ended October 31, Years ended October 31,
---------------------------------------- -------------------------------
1996 1995 1996 1995
---------------- --------------- ------------- --------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold..................................... $ 41,468,535 $ 10,902,135 $ 43,450,662 $ 21,450,453
Issued to shareholders in
reinvestment of dividends.............. 2,837,001 1,750,071 4,801,918 2,352,531
Repurchased.............................. (15,903,019) (22,106,650) (15,665,697) (16,699,932)
---------------- --------------- ------------- --------------
Net increase (decrease) in
shares outstanding..................... $ 28,402,517 $ (9,454,444) $ 32,586,883 $ 7,103,052
================ =============== ============= ==============
Retail B Shares:
Sold..................................... $ 3,509,640 $ -- N/A N/A
Issued to shareholders in
reinvestment of dividends.............. 14,490 -- N/A N/A
Repurchased.............................. (121,309) -- N/A N/A
---------------- --------------- ------------- --------------
Net increase in
shares outstanding..................... $ 3,402,821 $ -- N/A N/A
================ =============== ============= ==============
Trust Shares:
Sold..................................... $ 67,329,259 $ 27,929,468 $ 15,153,962 $ 9,236,146
Issued to shareholders in
reinvestment of dividends.............. 2,461,350 1,416,611 2,551,413 1,218,932
Repurchased.............................. (35,310,703) (30,398,928) (11,200,471) (15,025,569)
---------------- --------------- ------------- --------------
Net increase (decrease) in
shares outstanding..................... $ 34,479,906 $ (1,052,849) $ 6,504,904 $ (4,570,491)
================ =============== ============= ==============
SHARE ACTIVITY
Retail A Shares:
Sold..................................... 3,042,746 892,958 2,714,966 1,541,985
Issued to shareholders in
reinvestment of dividends.............. 210,404 153,524 308,813 182,704
Repurchased.............................. (1,161,408) (1,983,918) (976,982) (1,251,098)
---------------- --------------- ------------- --------------
Net increase (decrease) in
shares outstanding..................... 2,091,742 (937,436) 2,046,797 473,591
================ =============== ============= ==============
Retail B Shares:
Sold..................................... 252,898 -- N/A N/A
Issued to shareholders in
reinvestment of dividends.............. 1,036 -- N/A N/A
Repurchased.............................. (8,762) -- N/A N/A
---------------- --------------- ------------- --------------
Net increase in
shares outstanding..................... 245,172 -- N/A N/A
================ =============== ============= ==============
Trust Shares:
Sold..................................... 4,908,780 2,366,202 942,247 680,800
Issued to shareholders in
reinvestment of dividends.............. 182,572 123,395 166,080 97,608
Repurchased.............................. (2,565,189) (2,637,556) (696,629) (1,109,312)
---------------- --------------- ------------- --------------
Net increase (decrease) in
shares outstanding..................... 2,526,163 (147,959) 411,698 (330,904)
================ =============== ============= ==============
</TABLE>
See Notes to Financial Statements.
42
<PAGE>
[LOGO OF THE GALAXY FUND STATEMENTS OF CHANGES IN NET ASSETS -
APPEARS HERE] Capital Stock Activity (continued)
<TABLE>
<CAPTION>
Growth and Income Fund* Equity Value Fund
----------------------------------- ----------------------------------
Years ended October 31, Years ended October 31,
----------------------------------- ----------------------------------
1996 1995 1996 1995
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold............................................ $ 26,575,675 $ 27,593,626 $ 30,226,307 $ 24,372,234
Issued to shareholders in
reinvestment of dividends..................... 4,114,650 1,687,032 8,656,906 8,063,657
Repurchased..................................... (11,113,016) (4,307,509) (16,887,461) (17,257,086)
-------------- ------------- ------------- -------------
Net increase in
shares outstanding............................ $ 19,577,309 $ 24,973,149 $ 21,995,752 $ 15,178,805
============== ============= ============= =============
Retail B Shares:
Sold............................................ $ 4,475,967 $ -- $ 1,841,623 $ --
Issued to shareholders in
reinvestment of dividends..................... 12,313 -- 1,761 --
Repurchased..................................... (63,831) -- (32,058) --
-------------- ------------- ------------- -------------
Net increase in
shares outstanding............................ $ 4,424,449 $ -- $ 1,811,326 $ --
============== ============= ============= =============
Trust Shares:
Sold............................................ $ 45,240,851 $ 45,663,174 $ 46,072,552 $ 47,132,201
Issued to shareholders in
reinvestment of dividends..................... 11,235,662 6,867,312 12,028,475 13,789,856
Repurchased..................................... (80,245,593) (39,605,441) (48,737,242) (63,720,080)
-------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding............................ $ (23,769,080) $ 12,925,045 $ 9,363,785 $ (2,798,023)
============== ============= ============= =============
SHARE ACTIVITY
Retail A Shares:
Sold............................................ 2,022,637 2,358,286 2,045,357 1,833,878
Issued to shareholders in
reinvestment of dividends..................... 333,718 156,717 624,668 672,772
Repurchased..................................... (849,811) (372,665) (1,139,827) (1,327,538)
-------------- ------------- ------------- -------------
Net increase in
shares outstanding............................ 1,506,544 2,142,338 1,530,198 1,179,112
============== ============= ============= =============
Retail B Shares:
Sold............................................ 334,965 -- 121,818 --
Issued to shareholders in
reinvestment of dividends..................... 913 -- 114 --
Repurchased..................................... (4,524) -- (2,156) --
-------------- ------------- ------------- -------------
Net increase in
shares outstanding............................ 331,354 -- 119,776 --
============== ============= ============= =============
Trust Shares:
Sold............................................ 3,456,356 3,945,263 3,112,141 3,593,154
Issued to shareholders in
reinvestment of dividends..................... 924,527 667,376 866,812 1,147,783
Repurchased..................................... (6,147,255) (3,375,055) (3,306,476) (4,802,094)
-------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding............................ (1,766,372) 1,237,584 672,477 (61,157)
============== ============= ============= =============
</TABLE>
- -------------------------------------------------------------------------------
* Includes 337,796 shares (valued at $4,095,890) issued in connection with the
acquisition of Shawmut Quantitative Equity Fund by Shawmut Growth and Income
Equity Fund on August 11, 1995.
See Notes to Financial Statements.
43
<PAGE>
[LOGO OF THE GALAXY FUND STATEMENTS OF CHANGES IN NET ASSETS -
APPEARS HERE] Capital Stock Activity (continued)
<TABLE>
<CAPTION>
Equity Growth Fund Small Cap Value Fund
---------------------------------- ----------------------------------
Years ended October 31, Years ended October 31,
---------------------------------- ----------------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold........................................... $ 47,189,209 $ 25,867,538 $ 5,161,336 $ 6,848,499
Issued in connection with
acquisition (Note 8)......................... 10,225,316 -- -- --
Issued to shareholders in
reinvestment of dividends.................... 2,454,356 1,499,263 1,944,464 1,025,295
Repurchased.................................... (20,716,176) (14,888,011) (5,148,767) (3,392,091)
------------- ------------- ------------- -------------
Net increase in
shares outstanding........................... $ 39,152,705 $ 12,478,790 $ 1,957,033 $ 4,481,703
============= ============= ============= =============
Retail B Shares:
Sold............................................ $ 3,960,553 $ -- N/A N/A
Issued to shareholders in
reinvestment of dividends..................... -- -- N/A N/A
Repurchased..................................... (173,837) -- N/A N/A
------------- ------------- ------------- -------------
Net increase in
shares outstanding............................ $ 3,786,716 $ -- N/A N/A
============= ============= ============= =============
Trust Shares:
Sold........................................... $ 131,387,247 $ 81,678,083 $ 28,375,657 $ 16,891,602
Issued in connection with
acquisition (Note 8)......................... 19,288,050 -- -- --
Issued to shareholders in
reinvestment of dividends.................... 7,869,807 6,181,564 8,667,254 5,187,643
Repurchased.................................... (101,099,590) (105,400,764) (40,560,495) (18,667,574)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding........................... $ 57,445,514 $ (17,541,117) $ (3,517,584) $ 3,411,671
============= ============= ============= =============
SHARE ACTIVITY
Retail A Shares:
Sold........................................... 2,555,583 1,650,493 380,571 582,289
Issued in connection with
acquisition (Note 8)......................... 578,307 -- -- --
Issued to shareholders in
reinvestment of dividends.................... 136,463 105,064 157,870 103,356
Repurchased.................................... (1,097,610) (993,540) (379,218) (300,307)
------------- ------------- ------------- -------------
Net increase in
shares outstanding........................... 2,172,743 762,017 159,223 385,338
============= ============= ============= =============
Retail B Shares:
Sold............................................ 206,085 -- N/A N/A
Issued to shareholders in
reinvestment of dividends..................... -- -- N/A N/A
Repurchased..................................... (8,900) -- N/A N/A
------------- ------------- ------------- -------------
Net increase in
shares outstanding............................ 197,185 -- N/A N/A
============= ============= ============= =============
Trust Shares:
Sold........................................... 7,179,412 5,231,552 2,090,020 1,484,558
Issued in connection with
acquisition (Note 8)......................... 1,090,562 -- -- --
Issued to shareholders in
reinvestment of dividends.................... 436,189 430,902 705,170 522,421
Repurchased.................................... (5,400,445) (6,902,825) (3,036,094) (1,668,792)
------------- ------------- ------------- -------------
Net increase (decrease) in
shares outstanding........................... 3,305,718 (1,240,371) (240,904) 338,187
============= ============= ============= =============
</TABLE>
See Notes to Financial Statements.
44
<PAGE>
[LOGO OF THE
GALAXY FUND
APPEARS HERE] STATEMENTS OF CHANGES IN NET ASSETS -
Capital Stock Activity (continued)
<TABLE>
<CAPTION>
Small Company Equity Fund
---------------------------------------
Years ended October 31,
---------------------------------------
1996 1995
--------------- ------------------
<S> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold............................................ $ 397,053,745 $ 223,987,809
Issued to shareholders in
reinvestment of dividends.................... 502,766 462,339
Repurchased..................................... (346,365,223) (220,438,570)
----------------- -----------------
Net increase (decrease) in
shares outstanding........................... $ 51,191,288 $ 4,011,578
================= =================
Retail B Shares:
Sold........................................... $ 3,690,344 $ --
Issued to shareholders in
reinvestment of dividends.................... -- --
Repurchased.................................... (92,260) --
------------------ -----------------
Net increase in
shares outstanding........................... $ 3,598,084 $ --
================== =================
Trust Shares:
Sold........................................... $ 140,211,402 $ 28,252,879
Issued to shareholders in
reinvestment of dividends.................... 652,265 652,934
Repurchased.................................... (85,139,941) (22,162,262)
------------------ ----------------
Net increase in
shares outstanding........................... $ 55,723,726 $ 6,743,551
================== ================
<CAPTION>
<S> <C> <C>
SHARE ACTIVITY
Retail A Shares:
Sold........................................... 21,317,981 16,120,515
Issued to shareholders in
reinvestment of dividends.................... 30,882 39,516
Repurchased.................................... (18,586,441) (15,852,473)
---------------- -------------
Net increase (decrease) in
shares outstanding........................... 2,762,422 307,558
================ =============
Retail B Shares:
Sold........................................... 187,682 --
Issued to shareholders in
reinvestment of dividends.................... -- --
Repurchased.................................... (3,934) --
---------------- --------------
Net increase in
shares outstanding........................... 183,748 --
================ ==============
Trust Shares:
Sold........................................... 7,215,898 1,940,466
Issued to shareholders in
reinvestment of dividends.................... 39,743 55,759
Repurchased.................................... (4,383,755) (1,584,128)
---------------- --------------
Net increase in
shares outstanding........................... 2,871,886 412,097
================ ==============
</TABLE>
<TABLE>
<CAPTION>
International Equity Fund
-------------------------------------------
Years ended October 31,
-------------------------------------------
1996 1995
------------------ -------------------
<S> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold........................................... $ 13,188,755 $ 10,661,106
Issued to shareholders in
reinvestment of dividends.................... 774,929 452,252
Repurchased.................................... (11,262,073) (13,114,155)
---------- ----------
Net increase (decrease) in
shares outstanding........................... $ 2,701,611 $ (2,000,797)
============= ===============
Retail B Shares:
Sold........................................... N/A N/A
Issued to shareholders in
reinvestment of dividends.................... N/A N/A
Repurchased.................................... N/A N/A
------------- ---------------
Net increase in
shares outstanding........................... N/A N/A
============= ===============
Trust Shares:
Sold........................................... $ 114,166,862 $ 33,867,277
Issued to shareholders in
reinvestment of dividends.................... 1,580,379 556,311
Repurchased.................................... (41,352,726) (25,415,419)
------------- ---------------
Net increase in
shares outstanding........................... $ 74,394,515 $ 9,008,169
============= ===============
SHARE ACTIVITY
Retail A Shares:
Sold........................................... 957,795 847,691
Issued to shareholders in
reinvestment of dividends.................... 58,885 37,192
Repurchased.................................... (825,685) (1,046,098)
------------- ---------------
Net increase (decrease) in
shares outstanding........................... 190,995 (161,215)
============= ===============
Retail B Shares:
Sold........................................... N/A N/A
Issued to shareholders in
reinvestment of dividends.................... N/A N/A
Repurchased.................................... N/A N/A
------------- ---------------
Net increase in shares outstanding............. N/A N/A
============= ===============
Trust Shares:
Sold........................................... 8,260,799 2,665,037
Issued to shareholders in
reinvestment of dividends.................... 120,090 45,749
Repurchased.................................... (2,973,379) (2,042,035)
------------- ---------------
Net increase in
shares outstanding........................... 5,407,510 668,751
============= ===============
</TABLE>
45
<PAGE>
[LOGO OF THE Asset Allocation Fund
GALAXY FUND FINANCIAL HIGHLIGHTS
APPEARS HERE] For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
---------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(1)/(2)/
--------- -------- -------- --------- -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........................ $ 12.82 $ 10.67 $ 11.15 $ 10.16 $ 10.00
--------- -------- -------- --------- -------------
Income from Investment Operations:
Net investment income (C)............................. 0.30 0.30 0.27 0.25 0.15
Net realized and unrealized gain (loss)
on investments...................................... 1.83 2.16 (0.49) 0.99 0.13
--------- -------- -------- --------- -------------
Total from Investment Operations:................... 2.13 2.46 (0.22) 1.24 0.28
--------- -------- -------- --------- -------------
Less Dividends:
Dividends from net investment income.................. (0.30) (0.31) (0.26) (0.25) (0.12)
Dividends from net realized capital gains............. (0.13) -- -- -- --
--------- -------- -------- --------- -------------
Total Dividends:.................................... (0.43) (0.31) (0.26) (0.25) (0.12)
--------- -------- -------- --------- -------------
Net increase (decrease) in net asset value.................. 1.70 2.15 (0.48) 0.99 0.16
--------- -------- -------- --------- -------------
Net Asset Value, End of Period.............................. $ 14.52 $ 12.82 $ 10.67 $ 11.15 $ 10.16
========= ======== ======== ========= =============
Total Return (B)............................................ 16.92% 23.42% (2.02)% 12.37% 2.85%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........................... $ 116,852 $ 76,368 $ 73,574 $ 92,348 $ 11,555
Ratios to average net assets:
Net investment income including reimbursement/waiver.. 2.29% 2.52% 2.66% 2.59% 2.80%*
Operating expenses including reimbursement/waiver..... 1.42% 1.48% 1.21% 1.14% 1.11%*
Operating expenses excluding reimbursement/waiver..... 1.42% 1.50% 1.22% 1.25% 2.39%*
Portfolio Turnover Rate..................................... 48% 41% 23% 7% 2%**
Average Commission Rate Paid (A)............................ $ 0.0635 N/A N/A N/A N/A
</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 issuing Retail B Shares on March 1, 1996.
(A) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for which
commissions are charged.
(B) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(C) 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,
-------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(2)/
-------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Retail A Shares $ 0.30 $ 0.30 $ 0.27 $ 0.24 $ 0.08
Trust Shares 0.33 0.32 0.28 0.24 0.08
Retail B Shares 0.12 N/A N/A N/A N/A
</TABLE>
See Notes to Financial Statements.
46
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31,
---------------------------------------------------------- Period ended
1996 1995 1994 1993/(2)/ 1992/(1)/(2)/ October 31, 1996/(3)/
---------- --------- ---------- ----------- ------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 12.83 $ 10.68 $ 11.15 $ 10.16 $ 10.00 $ 13.59
---------- --------- ---------- ----------- ---------- -----------
Income from Investment Operations:
Net investment income (C)............... 0.33 0.32 0.28 0.25 0.15 0.13
Net realized and unrealized gain (loss)
on investments........................ 1.83 2.16 (0.49) 0.99 0.13 0.91
---------- --------- ---------- ----------- ---------- -----------
Total from Investment Operations:..... 2.16 2.48 (0.21) 1.24 0.28 1.04
---------- --------- ---------- ----------- ---------- -----------
Less Dividends:
Dividends from net investment income.... (0.33) (0.33) (0.26) (0.25) (0.12) (0.12)
Dividends from net realized capital
gains................................. (0.13) -- -- -- -- --
---------- --------- ---------- ----------- ---------- -----------
Total Dividends:........................ (0.46) (0.33) (0.26) (0.25) (0.12) (0.12)
---------- --------- ---------- ----------- ---------- -----------
Net increase (decrease) in net asset value.... 1.70 2.15 (0.47) 0.99 0.16 0.92
---------- --------- ---------- ----------- ---------- -----------
Net Asset Value, End of Period................ $ 14.53 $ 12.83 $ 10.68 $ 11.15 $ 10.16 $ 14.51
========== ========= ========== =========== ========== ===========
Total Return (B).............................. 17.19% 23.68% (1.93)% 12.37% 2.85%** 7.71%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)............. $ 123,603 $ 76,771 $ 65,464 $ 92,348 $ 11,555 $ 3,557
Ratios to average net assets:
Net investment income including
reimbursement/waiver.................. 2.52% 2.74% 2.70% 2.59% 2.80%* 1.73%*
Operating expenses including
reimbursement/waiver.................. 1.19% 1.26% 1.18% 1.14% 1.11%* 1.95%*
Operating expenses excluding
reimbursement/waiver.................. 1.21% 1.30% 1.18% 1.25% 2.39%* 2.15%*
Portfolio Turnover Rate....................... 48% 41% 23% 7% 2%** 48%
Average Commission Rate Paid (A).............. $ 0.0635 N/A N/A N/A N/A $ 0.0635
</TABLE>
47
<PAGE>
[LOGO OF Equity Income Fund
THE GALAXY FUND FINANCIAL HIGHLIGHTS
APPEARS HERE] For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
---------------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period...................$ 14.98 $ 12.74 $ 12.85 $ 11.85 $ 11.29
--------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (C)........................... 0.30 0.28 0.30 0.30 0.30
Net realized and unrealized gain
on investments................................... 2.47 2.47 0.07 1.09 0.76
--------- -------- -------- -------- --------
Total from Investment Operations:............. 2.77 2.75 0.37 1.39 1.06
--------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income................ (0.30) (0.30) (0.29) (0.28) (0.30)
Dividends from net realized capital gains........... (0.54) (0.21) (0.19) (0.11) (0.20)
--------- -------- -------- -------- --------
Total Dividends:.............................. (0.84) (0.51) (0.48) (0.39) (0.50)
--------- -------- -------- -------- --------
Net increase (decrease) in net asset value............. 1.93 2.24 (0.11) 1.00 0.56
--------- -------- -------- -------- --------
Net Asset Value, End of Period.........................$ 16.91 $ 14.98 $ 12.74 $ 12.85 $ 11.85
========= ======== ======== ======== ========
Total Return (B)....................................... 19.01% 22.23% 2.94% 11.85% 9.71%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)......................$ 126,952 $ 81,802 $ 63,532 $ 123,970 $ 21,778
Ratios to average net assets:
Net investment income
including reimbursement/waiver.................. 1.86% 2.08% 2.45% 2.34% 2.84%
Operating expenses including reimbursement/waiver 1.40% 1.49% 1.11% 1.16% 1.03%
Operating expenses excluding reimbursement/waiver 1.40% 1.51% 1.12% 1.22% 1.54%
Portfolio Turnover Rate................................ 45% 21% 31% 27% 18%
Average Commission Rate Paid (A).......................$ 0.0620 N/A N/A N/A N/A
</TABLE>
- -----------------------------------------------------
(1) For the 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 (See Note 5).
(A) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for which
commissions are charged.
(B) Calculation does not include sales charge for Retail A Shares.
(C) 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,
--------------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
----------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Retail A Shares $ 0.30 $ 0.28 $ 0.30 $ 0.29 $ 0.25
Trust Shares 0.37 0.36 0.31 0.29 0.25
</TABLE>
See Notes to Financial Statements.
48
<PAGE>
Trust Shares
<TABLE>
<CAPTION>
Years ended October 31,
-----------------------------------------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
----------- --------- --------- --------- ----------
<S> <C> <C> <C> <C>
$ 14.99 $ 12.75 $ 12.85 $ 11.85 $ 11.29
----------- --------- --------- --------- ----------
0.37 0.36 0.31 0.30 0.30
2.48 2.45 0.07 1.09 0.76
----------- --------- --------- --------- ----------
2.85 2.81 0.38 1.39 1.06
----------- --------- --------- --------- ----------
(0.37) (0.36) (0.29) (0.28) (0.30)
(0.54) (0.21) (0.19) (0.11) (0.20)
----------- --------- --------- --------- ----------
(0.91) (0.57) (0.48) (0.39) (0.50)
----------- --------- --------- --------- ----------
1.94 2.24 (0.10) 1.00 0.56
----------- --------- --------- --------- ----------
$ 16.93 $ 14.99 $ 12.75 $ 12.85 $ 11.85
=========== ========= ========= ========= ==========
19.65% 22.81% 3.02% 11.85% 9.71%
$ 106,094 $ 87,819 $ 78,880 $ 123,970 $ 21,778
2.32% 2.60% 2.49% 2.34% 2.84%
0.94% 0.98% 1.07% 1.16% 1.03%
0.94% 1.00% 1.07% 1.22% 1.54%
45% 21% 31% 27% 18%
$ 0.0620 N/A N/A N/A N/A
</TABLE>
49
<PAGE>
Growth and Income Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
[LOGO OF THE GALAXY FUND APPEARS HERE]
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------------------
1996/(3)/ 1995 1994 1993/(1)/(2)/
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $ 12.35 $ 11.15 $ 10.69 $ 10.23
--------- --------- ---------- ---------
Income from Investment Operations:
Net investment income (C & D)..................... 0.21 0.24 0.22 0.15
Net realized and unrealized gain on investments... 2.16 1.70 0.72 0.48
--------- --------- ---------- ---------
Total from Investment Operations:............. 2.37 1.94 0.94 0.63
--------- --------- ---------- ---------
Less Dividends:
Dividends from net investment income.............. (0.21) (0.25) (0.20) (0.17)
Dividends from net realized capital gains......... (0.73) (0.49) (0.28) --
--------- --------- ---------- ---------
Total Dividends:.............................. (0.94) (0.74) (0.48) (0.17)
--------- --------- ---------- ---------
Net increase (decrease) in net asset value.......... 1.43 1.20 0.46 0.46
--------- --------- ---------- ---------
Net Asset Value, End of Period...................... $ 13.78 $ 12.35 $ 11.15 $ 10.69
========= ========= ========== =========
Total Return (B).................................... 20.25% 18.52% 9.12% 6.20%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................... $ 77,776 $ 51,078 $ 22,244 $ 16,280
Ratios to average net assets:
Net investment income including reimbursement/
waiver.......................................... 1.65% 2.10% 2.06% 1.77%*
Operating expenses including reimbursement/waiver. 1.34% 1.32% 1.29% 1.25%*
Operating expenses excluding reimbursement/waiver. 1.45% 1.77% 1.74% 1.78%*
Portfolio Turnover Rate............................. 59% 51% 73% 38%**
Average Commission Rate Paid (A).................... $ 0.0654 N/A N/A N/A
</TABLE>
- -----------------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 14, 1992 as a separate
investment portfolio (the "Predecessor Fund") of The Shawmut Funds.
(2) The Predecessor Fund began offering Investment Shares on February 12,
1993.
(3) On December 4, 1995, the Predecessor Fund was reorganized as a new
portfolio of the Trust. Prior to the reorganization, the Predecessor Fund
offered and sold two series of shares, Investment Shares and Trust Shares,
that were similar to the Fund's Retail A and Trust Shares, respectively.
In connection with the reorganization, the predecessor shareholders
exchanged Investment Shares and Trust Shares for Retail A Shares and Trust
Shares, respectively, in the Galaxy Growth and Income Fund. (Note 8).
(4) The Fund began issuing Retail B Shares on March 1, 1996.
(A) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for which
commissions are charged.
(B) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(C) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or other parties were as follows:
<TABLE>
<CAPTION>
Years ended October 31,
----------------------------------------------------
(Unaudited)
------------------------------------
1996 1995 1994 1993/(2)/
------------ --------- --------- ------------
<S> <C> <C> <C> <C>
Retail A Shares $ 0.19 $ 0.22 $ 0.18 $ 0.18
Trust Shares 0.27 0.25 0.22 0.15
Retail B Shares 0.05 N/A N/A N/A
</TABLE>
(D) Net investment income per share does not reflect the tax reclassifications
arising in the current period.
See Notes to Financial Statements.
50
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31,
------------------------------------------------------ Period ended
1996/(3)/ 1995 1994 1993/(1)/(2)/ October 31, 1996/(4)/
---------- --------- --------- ------------ --------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $ 12.35 $ 11.15 $ 10.69 $ 10.00 $ 12.97
---------- --------- --------- ----------- --------
Income from Investment Operations:
Net investment income (C & D)..................... 0.27 0.28 0.25 0.18 0.07
Net realized and unrealized gain on investments... 2.16 1.69 0.72 0.69 0.81
---------- --------- --------- ----------- --------
Total from Investment Operations:............. 2.43 1.97 0.97 0.87 0.88
---------- --------- --------- ----------- --------
Less Dividends:
Dividends from net investment income.............. (0.25) (0.28) (0.23) (0.18) (0.08)
Dividends from net realized capital gains......... (0.73) (0.49) (0.28) -- --
---------- --------- --------- ----------- --------
Total Dividends:.............................. (0.98) (0.77) (0.51) (0.18) (0.08)
---------- --------- --------- ----------- --------
Net increase (decrease) in net asset value.......... 1.45 1.20 0.46 0.69 0.80
---------- --------- --------- ----------- --------
Net Asset Value, End of Period...................... $ 13.80 $ 12.35 $ 11.15 $ 10.69 $ 13.77
========== ========= ========= =========== ========
Total Return (B).................................... 20.77% 18.80% 9.45% 8.80%** 6.83%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................... $ 186,708 $ 189,011 $ 156,827 $ 147,090 $ 4,562
Ratios to average net assets:
Net investment income including reimbursement/
waiver.......................................... 2.01% 2.42% 2.31% 2.11%* 0.79%*
Operating expenses including reimbursement/waiver. 1.02% 1.07% 1.04% 0.98%* 1.96%*
Operating expenses excluding reimbursement/waiver. 1.03% 1.27% 1.24% 1.25%* 2.11%*
Portfolio Turnover Rate............................. 59% 51% 73% 38%** 59%
Average Commission Rate Paid (A).................... $ 0.0654 N/A N/A N/A $ 0.0654
</TABLE>
51
<PAGE>
-------------------
Equity Value Fund
FINANCIAL HIGHLIGHTS
The Galaxy Fund For a Share outstanding throughout each period.
-------------------
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
--------------------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
-------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............ $ 14.33 $ 13.31 $ 13.12 $ 11.41 $ 11.52
--------- --------- --------- ---------- ----------
Income from Investment Operations:
Net investment income (C) ..................... 0.14 0.22 0.18 0.19 0.26
Net realized and unrealized gain
on investments ............................ 2.74 2.24 0.45 2.14 0.33
--------- --------- --------- ---------- ----------
Total from Investment Operations: ...... 2.88 2.46 0.63 2.33 0.59
--------- --------- --------- ---------- ----------
Less Dividends:
Dividends from net investment income .......... (0.14) (0.23) (0.16) (0.20) (0.27)
Dividends from net realized capital gains ..... (1.11) (1.21) (0.28) (0.42) (0.43)
--------- --------- --------- ---------- ----------
Total Dividends: ....................... (1.25) (1.44) (0.44) (0.62) (0.70)
--------- --------- --------- ---------- ----------
Net increase (decrease) in net asset value .... 1.63 1.02 0.19 1.71 (0.11)
--------- --------- --------- ---------- ----------
Net Asset Value, End of Period ................ $ 15.96 $ 14.33 $ 13.31 $ 13.12 $ 11.41
========= ========= ========= ========== ==========
Total Return (B) ................................ 21.49% 20.81% 4.97% 21.18% 5.66%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ............... $ 131,998 $ 96,555 $ 74,001 $ 176,107 $ 133,578
Ratios to average net assets:
Net investment income
including reimbursement/waiver .............. 1.00% 1.62% 1.45% 1.52% 2.24%
Operating expenses
including reimbursement/waiver .............. 1.45% 1.49% 1.08% 0.97% 0.94%
Operating expenses
excluding reimbursement/waiver .............. 1.45% 1.50% 1.11% 0.97% 0.94%
Portfolio Turnover Rate ......................... 116% 76% 71% 50% 136%
Average Commission Rate Paid (A) ................ $ 0.0605 N/A N/A N/A N/A
</TABLE>
- -----------------------------------------------------
* Annualized
** Not Annualized
(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 (See Note 5).
(2) The Fund began issuing Retail B Shares on March 1, 1996.
(A) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for which
commissions are charged.
(B) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(C) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
Years ended October 31,
-------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
------- ------- ------- ------- -------
Retail A Shares..... $ 0.14 $ 0.22 $ 0.18 $ 0.19 $ 0.26
Trust Shares........ 0.21 0.28 0.19 0.19 0.26
Retail B Shares..... 0.01 N/A N/A N/A N/A
See Notes to Financial Statements.
52
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31, Period ended
-----------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/ October 31, 1996/(2)/
-------- -------- -------- -------- -------- ---------------------
<S> <C> <C> <C> <C> <C>
$ 14.33 $ 13.32 $ 13.12 $ 11.41 $ 11.52 $ 14.74
--------- -------- -------- -------- -------- ---------
0.21 0.28 0.19 0.19 0.26 0.04
2.74 2.24 0.45 2.14 0.33 1.25
--------- -------- -------- -------- -------- ---------
2.95 2.52 0.64 2.33 0.59 1.29
--------- -------- -------- -------- -------- ---------
(0.21) (0.30) (0.16) (0.20) (0.27) (0.04)
(1.11) (1.21) (0.28) (0.42) (0.43) --
--------- -------- -------- -------- -------- ---------
(1.32) (1.51) (0.44) (0.62) (0.70) (0.04)
--------- -------- -------- -------- -------- ---------
1.63 1.01 0.20 1.71 (0.11) 1.25
--------- -------- -------- -------- -------- ---------
$ 15.96 $ 14.33 $ 13.32 $ 13.12 $ 11.41 $ 15.99
========= ======== ======== ======== ======== =========
22.05% 21.31% 5.05% 21.18% 5.66% 8.80%**
$ 194,827 $165,330 $154,403 $176,107 $133,578 $ 1,916
1.42% 2.10% 1.46% 1.52% 2.24% 0.43%*
1.03% 1.02% 1.06% 0.97% 0.94% 1.94%*
1.03% 1.02% 1.06% 0.97% 0.94% 2.24%*
116% 76% 71% 50% 136% 116%
$ 0.0605 N/A N/A N/A N/A $ 0.0605
</TABLE>
53
<PAGE>
LOGO OF Equity Growth Fund
THE GALAXY FUND FINANCIAL HIGHLIGHTS
APPEARS HERE For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
------------- ------------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $ 17.29 $ 14.18 $ 13.76 $ 12.90 $ 11.99
------------- ------------- ------------ ------------ -------------
Income from Investment Operations:
Net investment income (C)................ 0.10 0.14 0.17 0.15 0.17
Net realized and unrealized gain
on investments.......................... 3.39 3.28 0.47 0.95 0.91
------------- ------------- ------------ ------------ -------------
Total from Investment Operations:...... 3.49 3.42 0.64 1.10 1.08
------------- ------------- ------------ ------------ -------------
Less Dividends:
Dividends from net investment income..... (0.11) (0.14) (0.16) (0.15) (0.17)
Dividends from net realized capital gains (0.30) (0.17) (0.06) (0.09) --
------------- ------------- ------------ ------------ -------------
Total Dividends:....................... (0.41) (0.31) (0.22) (0.24) (0.17)
------------- ------------- ------------ ------------ -------------
Net increase in net asset value................ 3.08 3.11 0.42 0.86 0.91
------------- ------------- ------------ ------------ -------------
Net Asset Value, End of Period................. $ 20.37 $ 17.29 $ 14.18 $ 13.76 $ 12.90
============= ============= ============ ============ =============
Total Return (B).............................. 20.51% 24.54% 4.72% 8.58% 9.10%
Ratios/Supplemental Data:
Net Assets, End of Period (000's).............. $ 160,800 $ 98,911 $ 70,338 $ 427,298 $ 224,630
Ratios to average net assets:
Net investment income
including reimbursement/waiver......... 0.50% 0.85% 1.22% 1.20% 1.37%
Operating expenses
including reimbursement/waiver......... 1.40% 1.45% 0.98% 0.97% 0.95%
Operating expenses
excluding reimbursement/waiver......... 1.40% 1.47% 0.99% 0.97% 0.95%
Portfolio Turnover Rate........................ 36% 14% 18% 16% 22%
Average Commission Rate Paid (A)............... $ 0.0615 N/A N/A N/A N/A
</TABLE>
- -------------------------------------------------------------------------
* Annualized
** Not Annualized
(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 (See Note 5).
(2) The Fund began issuing Retail B Shares on
March 1, 1996.
(A) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for which
commissions are charged.
(B) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(C) 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,
--------------------------------------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
-------------- --------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Retail A Shares........... $ 0.10 $ 0.13 $ 0.17 $ 0.15 $ 0.17
Trust Shares.............. 0.17 0.20 0.18 0.15 0.17
Retail B Shares........... (0.03) N/A N/A N/A N/A
</TABLE>
See Notes to Financial Statements.
54
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31,
---------------------------------------------------------------------------------------------------- Period ended
1996 1995 1994 1993/(2)/ 1992/(2)/ 1991/(1)(2)/ October 31, 1996/(2)/
-------------- --------------- --------------- --------------- --------------- ---------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
$ 17.30 $ 14.19 $ 13.76 $ 12.90 $ 11.99 $ 10.00 $ 18.77
--------- --------- --------- --------- --------- --------- -----------
0.17 0.20 0.18 0.15 0.17 0.16 (0.01)
3.40 3.28 0.47 0.95 0.91 1.97 1.50
--------- --------- --------- --------- ---------- --------- -----------
3.57 3.48 0.65 1.10 1.08 2.13 1.49
--------- --------- --------- --------- ---------- --------- -----------
(0.18) (0.20) (0.16) (0.15) (0.17) (0.14) --
(0.30) (0.17) (0.06) (0.09) -- -- --
--------- --------- --------- --------- ---------- --------- -----------
(0.48) (0.37) (0.22) (0.24) (0.17) (0.14) --
--------- --------- --------- --------- ---------- --------- -----------
3.09 3.11 0.43 0.86 0.91 1.99 1.49
--------- --------- --------- --------- ---------- --------- -----------
$ 20.39 $ 17.30 $ 14.19 $ 13.76 $ 12.90 $ 11.99 $ 20.26
========= ========= ========= ========= ========== ========= ===========
21.03% 25.08% 4.80% 8.58% 9.10% 21.39%** 7.95%**
$ 562,419 $420,016 $ 362,094 $427,298 $224,630 $ 92,224 $ 3,995
0.92% 1.31% 1.27% 1.20% 1.37% 1.46%* (0.16)%*
0.98% 1.00% 0.93% 0.97% 0.95% 0.83%* 1.92%*
0.98% 1.00% 0.93% 0.97% 0.95% 0.83%* 2.29%*
36% 14% 18% 16% 22% 16%** 36%
$ 0.0615 N/A N/A N/A N/A N/A $ 0.0615
</TABLE>
55
<PAGE>
[LOGO OF Small Cap Value Fund
THE GALAXY FUND FINANCIAL HIGHLIGHTS
APPEARS HERE] For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
---------------------------------------------------------------------------
1996/(3)/ 1995 1994 1993/(1)(2)/
------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................ $ 12.68 $ 11.06 $ 11.21 $ 10.52
------------- -------------- --------------- ---------------
Income from Investment Operations:
Net investment income (C, D & E)..............
0.01 (0.02) (0.01) (0.01)
Net realized and unrealized gain
on investments.............................. 2.95 2.21 0.18 0.70
------------- -------------- --------------- --------------
Total from Investment Operations:........... 2.96 2.19 0.17 0.69
------------- -------------- --------------- --------------
Less Dividends:
Dividends from net investment income (C)...... (0.02) -- -- --
Dividends in excess of net investment income.. -- -- -- --
Dividends from net realized capital gains..... (0.87) (0.57) (0.32) --
------------- -------------- --------------- --------------
Total Dividends (C):........................ (0.89) (0.57) (0.32) --
------------- -------------- --------------- --------------
Net increase (decrease) in net asset value.......... 2.07 1.62 (0.15) 0.69
------------- -------------- --------------- --------------
Net Asset Value, End of Period...................... $ 14.75 $ 12.68 $ 11.06 $ 11.21
============= ============== =============== ==============
Total Return (B).................................... 24.77% 21.27% 1.64% 6.56%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................... $ 34,402 $ 27,546 $ 19,764 $ 15,014
Ratios to average net assets:
Net investment income including
reimbursement/waiver........................ 0.08% (0.19)% (0.10)% (0.19)%*
Operating expenses including
reimbursement/waiver........................ 1.40% 1.35% 1.31% 1.33%*
Operating expenses excluding
reimbursement/waiver........................ 1.55% 1.85% 1.84% 1.87%*
Portfolio Turnover Rate............................. 39% 32% 29% 29%**
Average Commission Rate Paid (A).................... $ 0.0559 N/A N/A N/A
</TABLE>
- -------------------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 14, 1992 as a separate
investment portfolio (the "Predecessor Fund") of The Shawmut Funds.
(2) The Predecessor Fund began offering Investment Shares on February 12,
1993.
(3) On December 4, 1995, the Predecessor Fund was reorganized as a new
portfolio of the Trust. Prior to the reorganization, the Predecessor Fund
offered and sold two series of shares, Investment Shares and Trust Shares,
that were similar to the Fund's Retail A and Trust Shares, respectively.
In connection with the reorganization, the predecessor shareholders
exchanged Investment Shares and Trust Shares for Retail A Shares and Trust
Shares, respectively, in the Galaxy Small Cap Value Fund. (Note 8).
(A) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for which
commissions are charged.
(B) Calculation does not include sales charge for Retail A Shares.
(C) Represents less than $0.01 per Trust Share for year 1993.
(D) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or other parties were as follows:
<TABLE>
<CAPTION>
Years ended October 31,
----------------------------------------------------------------------------
(Unaudited)
--------------------------------------------------------
1996 1995 1994 1993/(2)/
-------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Retail A Shares $ 0.01 $ (0.08) $ (0.06) $ (0.05)
Trust Shares 0.05 (0.03) (0.01) 0.00
</TABLE>
(E) Net investment income per share does not reflect the tax reclassifications
arising in the current period.
See Notes to Financial Statements.
56
<PAGE>
<TABLE>
<CAPTION>
Trust Shares
Years ended October 31,
----------------------------------------------------------------------------
1996/(3)/ 1995 1994 1993/(1)(2)/
-------------- --------------- -------------- --------------
<S> <C> <C> <C>
$ 12.71 $ 11.07 $ 11.21 $ 10.00
-------------- --------------- -------------- --------------
0.05 0.01 0.02 --
2.97 2.21 0.17 1.21
-------------- --------------- -------------- --------------
3.02 2.22 0.19 1.21
-------------- --------------- -------------- --------------
(0.05) (0.01) (0.01) --
(0.01) -- -- --
(0.91) (0.57) (0.32) --
-------------- --------------- -------------- --------------
(0.97) (0.58) (0.33) --
-------------- --------------- -------------- --------------
2.05 1.64 (0.14) 1.21
-------------- --------------- -------------- --------------
$ 14.76 $ 12.71 $ 11.07 $ 11.21
============== =============== ============== ==============
25.22% 21.52% 1.86% 12.12%**
$ 137,341 $ 121,364 $ 101,905 $ 100,382
0.45% 0.07% 0.15% 0.02%*
1.05% 1.10% 1.06% 1.01%*
1.06% 1.35% 1.34% 1.29%*
39% 32% 29% 29%**
$ 0.0559 N/A N/A N/A
</TABLE>
57
<PAGE>
Small Company Equity Fund
[LOGO OF THE GALAXY FINANCIAL HIGHLIGHTS
FUND APPEARS HERE] For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
-----------------------------------------------------------------------
1996 1995 1994 1993/2/ 1992(1)/2/
--------- ---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $ 16.28 $ 12.35 $ 12.41 $ 8.79 $ 10.00
--------- --------- --------- -------- ---------
Income from Investment Operations:
Net investment income (loss) (C)........... (0.14) (0.09) (0.01) (0.04) (0.03)
Net realized and unrealized gain (loss)
on investments........................... 3.99 4.21 -- 3.66 (1.18)
--------- --------- --------- -------- ---------
Total from Investment Operations:...... 3.85 4.12 (0.01) 3.62 (1.21)
--------- --------- --------- -------- ---------
Less Dividends:
Dividends from net investment income....... -- -- -- -- --
Dividends from net realized capital gains.. (0.17) (0.19) (0.05) -- --
--------- --------- --------- -------- ---------
Total Dividends:....................... (0.17) (0.19) (0.05) -- --
--------- --------- --------- -------- ---------
Net increase (decrease) in net asset value....... 3.68 3.93 (0.06) 3.62 (1.21)
--------- --------- --------- -------- ---------
Net Asset Value, End of Period................... $ 19.96 $ 16.28 $ 12.35 $ 12.41 $ 8.79
========= ========= ========= ======== =========
Total Return (B)................................. 23.97% 34.01% (0.06)% 41.18% (12.10)%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................ $ 111,101 $ 45,668 30,845 55,683 29,072
Ratios to average net assets:
Net investment income (loss)
including reimbursement/waiver........... (1.03)% (0.85)% (0.40)% (0.66)% (0.63)%*
Operating expenses
including reimbursement/waiver........... 1.57% 1.60% 1.31% 1.18% 1.06%*
Operating expenses
excluding reimbursement/waiver........... 1.57% 1.64% 1.34% 1.22% 1.33%*
Portfolio Turnover Rate.......................... 82% 54% 35% 57% 87%**
Average Commission Rate Paid (A)................. $ 0.0531 N/A N/A N/A N/A
</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 the selected ratios reflect the financial results of both
Retail A and Trust Shares (See Note 5).
(3) The Fund began issuing Retail B Shares on March 1, 1996.
(4) The selected per share data was calculated using the weighted average
shares outstanding method for the period.
(A) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share
for which commissions are charged.
(B) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(C) 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,
-------------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(2)/
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Retail A Shares...... $ (0.14) $ (0.09) $ (0.01) $ (0.04) $ (0.05)
Trust Shares......... $ (0.09) (0.04) -- (0.04) (0.05)
Retail B Shares...... $ (0.24) N/A N/A N/A N/A
</TABLE>
See Notes to Financial Statements.
58
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31,
--------------------------------------------------------------------------------------------- Period ended
1996 1995 1994 1993/(2)/ 1992/(1)(2)/ October 31,1996/(3)/
----------- ----------- ----------- ------------ ----------- --------------------
<S> <C> <C> <C> <C> <C>
$ 16.38 $ 12.36 $ 12.41 $ 8.79 $ 10.00 $ 17.27
----------- ----------- ----------- ----------- ----------- ------------
(0.09) (0.04) -- (0.04) (0.03) (0.19)/(4)/
4.08 4.25 -- 3.66 (1.18) 2.83
----------- ----------- ----------- ----------- ----------- ------------
3.99 4.21 -- 3.62 (1.21) 2.64
----------- ----------- ----------- ----------- ----------- ------------
-- -- -- -- -- --
(0.17) (0.19) (0.05) -- -- --
----------- ----------- ----------- ----------- ----------- ------------
(0.17) (0.19) (0.05) -- -- --
----------- ----------- ----------- ----------- ----------- ------------
3.82 4.02 (0.05) 3.62 (1.21) 2.64
----------- ----------- ----------- ----------- ----------- ------------
$ 20.20 $ 16.38 $ 12.36 $ 12.41 $ 8.79 $ 19.91
=========== =========== =========== =========== =========== ============
24.69% 34.73% 0.02% 41.18% (12.10)%** 15.34%**
$ 174,990 $ 94,831 $ 66,462 $ 55,683 $ 29,072 $ 3,659
(0.60)% (0.37)% (0.35)% (0.66)% (0.63)%* (1.50)%*
1.14% 1.12% 1.27% 1.18% 1.06%* 2.04%*
1.14% 1.12% 1.27% 1.22% 1.33%* 2.44%*
82% 54% 35% 57% 87%** 82%
$ 0.0531 N/A N/A N/A N/A $ 0.0531
</TABLE>
59
<PAGE>
[LOGO OF International Equity Fund
THE GALAXY FUND FINANCIAL HIGHLIGHTS
APPEARS HERE] For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(1)(2)/
---------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $ 12.92 $ 13.20 $ 12.13 $ 9.66 $ 10.00
---------- ---------- ---------- --------- ----------
Income from Investment Operations:
Net investment income (C).......................... 0.11 0.11 0.06 0.02 0.06
Net realized and unrealized gain (loss)
on investments................................... 1.27 (0.21) 1.02 2.51 (0.40)
---------- ---------- ---------- --------- ----------
Total from Investment Operations:.............. 1.38 (0.10) 1.08 2.53 (0.34)
---------- ---------- ---------- --------- ----------
Less Dividends:
Dividends from net investment income............... (0.12) (0.02) (0.01) (0.06) --
Dividends from net realized capital gains.......... (0.24) (0.16) -- -- --
---------- ---------- ---------- --------- ----------
Total Dividends:............................... (0.36) (0.18) (0.01) (0.06) --
---------- ---------- ---------- --------- ----------
Net increase (decrease) in net asset value............... 1.02 (0.28) 1.07 2.47 (0.34)
---------- ---------- ---------- --------- ----------
Net Asset Value, End of Period........................... $ 13.94 $ 12.92 $ 13.20 $ 12.13 $ 9.66
========== ========== ========== ========= ==========
Total Return (B)......................................... 10.86% (0.64)% 8.91% 26.36% (3.40)%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........................ $ 35,144 $ 30,104 $ 32,887 $ 39,246 $ 12,584
Ratios to average net assets:
Net investment income including
reimbursement/waiver............................. 0.78% 0.84% 0.69% 0.37% 1.19%*
Operating expenses including
reimbursement/waiver............................. 1.70% 1.76% 1.49% 1.57% 1.61%*
Operating expenses excluding
reimbursement/waiver............................. 1.98% 2.03% 1.79% 2.04% 2.79%*
Portfolio Turnover Rate.................................. 146% 48% 39% 29% 21%**
Average Commission Rate Paid (A)......................... $ 0.0381 N/A N/A N/A N/A
</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 (See Note 5).
(A) For fiscal years beginning on or after September 1, 1995, a Fund is
required to disclose its average commission rate per share for which
commissions are charged.
(B) Calculation does not include sales charge for Retail A Shares.
(C) 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,
--------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(2)/
------- ------- -------- --------- ---------
<S> <C> <C> <C> <C> <C>
Retail A Shares........ $ 0.07 $ 0.08 $ 0.03 -- --
Trust Shares........... 0.13 0.13 0.04 -- --
</TABLE>
See Notes to Financial Statements.
60
<PAGE>
Trust Shares
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(1)(2)/
------------- -------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
$ 12.98 $ 13.20 $ 12.13 $ 9.66 $ 10.00
------------- -------------- --------------- --------------- --------------
0.17 0.16 0.06 0.02 0.06
1.30 (0.18) 1.02 2.51 (0.40)
------------- -------------- --------------- --------------- --------------
1.47 (0.02) 1.08 2.53 (0.34)
------------- -------------- --------------- --------------- --------------
(0.20) (0.04) (0.01) (0.06) --
(0.24) (0.16) -- -- --
------------- -------------- --------------- --------------- --------------
(0.44) (0.20) (0.01) (0.06) --
------------- -------------- --------------- --------------- --------------
1.03 (0.22) 1.07 2.47 (0.34)
------------- -------------- --------------- --------------- --------------
$ 14.01 $ 12.98 $ 13.20 $ 12.13 $ 9.66
============= ============== =============== =============== ==============
11.51% (0.02)% 8.91% 26.36% (3.40)%**
$ 172,561 $ 89,614 $ 82,350 $ 39,246 $ 12,584
1.40% 1.36% 0.74% 0.37% 1.19%*
1.08% 1.22% 1.43% 1.57% 1.61%*
1.36% 1.48% 1.72% 2.04% 2.79%*
146% 48% 39% 29% 21%**
$ 0.0381 N/A N/A N/A N/A
</TABLE>
61
<PAGE>
[LOGO OF
THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS
APPEARS HERE]
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 Asset Allocation, Equity Income, Growth
and Income, Equity Value, Equity Growth, Small Cap Value, Small Company Equity
and International Equity Funds (individually, a "Fund," collectively, the
"Funds") only.
The Equity Value, Equity Growth, Small Company Equity, Asset Allocation and
Growth and Income Funds are authorized to issue three series of shares (Trust
Shares, Retail A Shares and Retail B Shares). The Equity Income, Small Cap Value
and International Equity Funds are authorized to issue two series of shares
(Trust Shares and Retail A Shares). Trust Shares, Retail A Shares and Retail B
Shares are substantially the same, except that (i) Retail A Shares are subject
to a maximum 3.75% front-end sales charge, (ii) Retail B Shares are subject to a
maximum 5.00% contingent deferred sales charge, and (iii) series specific
expenses (distribution and shareholder servicing fees and transfer agent fees)
are borne by the specific series of shares to which they relate. 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 income 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 the
financial statements.
Portfolio Valuation: Investments in securities which are traded on a
recognized stock exchange are valued at the last sale price on the securities
exchange on which such securities are primarily traded, or at the last sale
price on the national securities market. Securities traded on over-the-counter
markets are valued at the last bid price. Short-term obligations that mature in
60 days or less are valued at amortized cost, which constitutes fair value. 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 are determined by the identified cost method. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date. 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.
Forward Foreign Currency Exchange Contracts: The International Equity Fund
may enter into forward foreign currency exchange contracts whereby the Fund
agrees to buy or sell a specific currency at a specified price at a future date
in an attempt to hedge against fluctuations in the value of the underlying
currency of certain portfolio instruments. Forward foreign currency exchange
contracts are valued at the daily exchange rate of the underlying currency.
Purchases and sales of forward foreign currency exchange contracts having the
same settlement date and broker are offset and presented on a net basis in the
Statement of Assets and Liabilities. Gains or losses on the purchase or sale of
forward foreign currency exchange contracts having the same settlement date and
broker are recognized on the date of offset, otherwise gains or losses are
recognized on the settlement date.
Foreign Currency Translation: The books and records of the International
Equity Fund are maintained in U.S. dollars. Investment valuations and other
assets and liabilities initially expressed in foreign currencies are converted
each business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investments and income and expenses are converted into U.S.
dollars based upon exchange rates prevailing on the respective dates of such
transactions. That portion of unrealized gains or losses on investments due to
fluctuations in foreign currency exchange rates is not separately disclosed.
Dividends to Shareholders: Dividends from net investment income are determined
separately for each series of a Fund and are declared and paid quarterly, with
the exception of the International Equity Fund which declares and pays dividends
annually. 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
62
<PAGE>
[LOGO OF
THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS (continued)
APPEARS HERE]
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 or
excise tax provision is recorded. Withholding taxes on foreign dividends have
been paid or provided for in accordance with the applicable country's tax rules
and rates.
Expenses: The Trust accounts separately for the assets,
liabilities and operations of each Fund. Expenses directly attributable to a
Fund are charged to the Fund, while the 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.
Repurchase Agreements: Each Fund may engage in repurchase agreement
transactions with institutions that the Trust's investment adviser or
sub-adviser has determined are creditworthy pursuant to guidelines established
by the Trust's Board of Trustees. Each repurchase agreement transaction is
recorded at cost plus accrued interest. Each Fund requires that the securities
purchased in a repurchase agreement transaction 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 securities equals or exceeds the repurchase price,
including accrued interest. 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.
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 the Fund's sponsor are redeemed
during such period, 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 Asset Allocation, Equity Income, Growth
and Income, Equity Value, Equity Growth, Small Cap Value and Small Company
Equity Funds (See Note 4).
The Trust pays the Investment Adviser a fee, computed daily and paid monthly,
with respect to the International Equity Fund at the annual rate of 1.15% of the
first $50 million of the Fund's average daily net assets, plus 0.95% of the next
$50 million of such net assets, plus 0.85% of net assets in excess of $100
million.
Effective August 12, 1996 (see Note 10), the Investment Adviser entered into
a sub-advisory agreement with Oechsle International Advisors, L.P. ("Oechsle")
with respect to the International Equity Fund pursuant to which the Investment
Adviser pays fees to Oechsle, computed daily and paid quarterly, at the annual
rate of 0.40% of the first $50 million of the Fund's average daily net assets,
plus 0.35% of all net assets in excess of $50 million.
Prior to August 12, 1996, the Investment Adviser had a sub-advisory agreement
with Wellington Management Company ("Wellington Management") with respect to the
International Equity Fund pursuant to which the Investment Adviser paid fees to
Wellington Management, computed daily and paid quarterly, at the annual rate of
0.50% of the first $50 million of the Fund's average daily net assets, plus
0.30% of the next $50 million of such assets, plus 0.20% of net assets in excess
of $100 million.
Prior to December 4, 1995, Shawmut Bank, N.A., ("Shawmut Bank") provided
investment advisory services to the Shawmut Growth and Income Equity and Shawmut
Small Capitalization Equity Funds, predecessor funds of the Galaxy Growth and
Income and Galaxy Small Cap Value Funds (collectively, the "Predecessor Funds,"
see Note 8). Shawmut Bank was paid a fee for its services at the annual rate of
1.00% of each Predecessor Funds' average daily net assets (See also Note 4).
63
<PAGE>
[LOGO OF
THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS (continued)
APPEARS HERE]
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, 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 (whose financial reports are disclosed under a separate cover),
0.085% of the next $2.5 billion of combined average daily net assets and 0.075%
of combined average daily net assets over $5 billion.
Prior to September 5, 1996, FDISG was entitled to receive administration
fees, 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 (whose financial reports are disclosed under a
separate cover) 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, Chase Manhattan Bank, N.A., for its services. Prior to March 31,
1995, the fund 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 March 31,
1995, FDISG acquired substantially all of the assets of 440 Financial Group of
Worcester, Inc.
Prior to December 4, 1995, Federated Administrative Services ("FAS")
provided certain administrative and other services to the Predecessor Funds. The
fee paid to FAS was based on the level of average aggregate net assets of The
Shawmut Funds. In addition, prior to December 4, 1995, Federated Services
Company ("FSC") provided transfer agency and dividend disbursing services to the
Predecessor Funds in return for fees at rates based on the size, type and number
of accounts and transactions made by shareholders. FSC also maintained
accounting records for the Predecessor Funds and was paid fees based on each
Predecessor Fund's average net assets plus out-of-pocket expenses.
Effective October 1, 1994, with respect to Retail A Shares and Trust Shares
and March 1, 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 Bank, an affiliate of the Investment Adviser, for performing certain
sub-account and administrative functions on a per account basis with respect to
Trust Shares held by defined contribution plans. For the year ended October 31,
1996, transfer agent charges for each series were as follows:
<TABLE>
<CAPTION>
Retail A Retail B Trust
---------- --------- ----------
<S> <C> <C> <C>
Asset Allocation $ 197,679 $ 2,485 $ 255,151
Equity Income 198,961 N/A 13,693
Growth and Income 127,955 1,961 116,545
Equity Value 276,631 1,918 181,087
Equity Growth 319,423 5,066 398,531
Small Cap Value 78,467 N/A 84,086
Small Company Equity 295,810 6,045 224,923
International Equity 148,218 N/A 93,491
</TABLE>
440 Financial Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of FDISG and an indirect wholly-owned subsidiary of First Data
Corporation, serves 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 December 4, 1995, Federated Securities Corp. (the "Shawmut
Distributor") served as the principal distributor of the Predecessor Funds. The
Predecessor Funds had adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the terms of the Plan, the Predecessor Funds
compensated the Shawmut Distributor, from the net assets of the Predecessor
Funds, to finance activities intended to result in the sale of the Predecessor
Funds' Investment Shares. The Plan permitted the Predecessor Funds to incur
distribution expenses of up to 1/2 of 1% of the average daily net assets of a
Predecessor Fund's Investment Shares.
On November 1, 1994, the Trust implemented a shareholder services plan (the
"Services Plan") with respect to Retail A Shares of the Funds. Currently, the
Services Plan has not been implemented with respect to the Funds' Trust Shares.
The Services Plan provides compensation to institutions (including and
currently limited to Fleet Bank and its affiliates) which provide
administrative and support services to their customers who beneficially own
Retail A Shares, at an aggregate annual rate not to exceed 0.50% 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 aggregate annual rate not to exceed 0.30% of
the average daily net asset value of the outstanding Retail A Shares
beneficially owned by such customers.
64
<PAGE>
[LOGO OF THE GALAXY NOTES TO FINANCIAL STATEMENTS (continued)
FUND APPEARS HERE]
The Trust has adopted a distribution and shareholder services plan (the
"12b-1 Plan") with respect to Retail B shares of the Asset Allocation, Growth
and Income, Equity Value, Equity Growth and Small Company Equity 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. Currently, payments are being made solely to
Fleet Bank and its affilitates. Payments for distribution expenses may not
exceed an annual rate of 0.65% of the average daily net assets attributable to
each Fund's outstanding Retail B Shares. The fees paid for shareholder liaison
services and/or administrative support services may not exceed the annual rates
of 0.25% and 0.25%, respectively, of the average daily net assets attributable
to each Fund's outstanding Retail B Shares owned of record or beneficially by
the institution's customer. The Trust, under the direction of the Board of
Trustees, is currently limiting each Fund's payments for shareholder liaison and
administrative support services under the 12b-1 Plan to an aggregate fee of not
more than 0.30% of the average daily net asset value of Retail B Shares of the
Fund owned of record or beneficially by the institution's customers.
For the year ended October 31, 1996, the Funds paid distribution and/or
shareholder servicing fees under the Services Plan and 12b-1 Plan as follows:
<TABLE>
<CAPTION>
Shareholder
-----------
Services Plan 12b-1 Plan
------------- ----------
Shareholder
Services Distribution
Retail A Retail B Retail B
-------- -------- --------
<S> <C> <C> <C>
Asset Allocation $ 267,695 $ 2,949 $ 6,389
Equity Income 309,334 N/A N/A
Growth and Income 154,838 3,263 7,070
Equity Value 331,670 1,624 3,518
Equity Growth 356,642 3,514 7,613
Small Cap Value 79,503 N/A N/A
Small Company Equity 172,887 3,361 7,282
International Equity 79,239 N/A N/A
</TABLE>
Certain officers of the Trust may be officers of the Administrator and/or
Distributor. Such officers receive no compensation from the Trust for serving in
their respective roles. No officer, director or employee of the Investment
Adviser serves as an officer, Trustee or employee of the Trust. For the period
covered by this report, each Trustee was 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 as
well as reimbursement for expenses incurred in attending meetings. The Chairman
of the Boards of Trustees of the Trust and VIP and the President and Treasurer
of the Trust and VIP were entitled to additional annual fees for their services
in these capacities. Effective November 1, 1996, each Trustee is entitled to
receive for services as a trustee of the Trust, VIP and Galaxy Fund II ("Galaxy
II") an aggregate fee of $29,000 per annum plus certain other fees for attending
or participating in meetings as well as reimbursement for expenses incurred in
attending meetings. The Chairman of the Boards of Trustees, and the President
and Treasurer of the Trust, VIP and Galaxy II are also entitled to additional
fees for their services in these capacities. These fees are allocated among the
funds of the Trust, VIP and Galaxy II, based on their relative net assets. In
addition, effective March 1, 1996, each Trustee became eligible to participate
in the Trust's Deferred Compensation Plan (the "Plan"), an unfunded, non-
qualified 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 year ended October 31, 1996 include legal fees paid to
Drinker Biddle & Reath. A partner of that firm is Secretary to the Trust.
4. Waiver of Fees and Reimbursement of Expenses
The Investment Adviser and FDISG (the "Administrator") voluntarily agreed to
waive a portion of their 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 and Administrator, at their discretion, may
revise or discontinue the voluntary fee waivers and expense reimbursements at
any time. For the year ended October 31, 1996, the Investment Adviser and
Administrator waived fees and/or reimbursed expenses with respect to the Funds
in the following amounts:
<TABLE>
<CAPTION>
Fees waived by Expenses
------------------------------ reimbursed
Investment by Investment
Fund Adviser Administrator Adviser
- ---- ----------- ------------- -------------
<S> <C> <C> <C>
Asset Allocation $ -- $ 2,010 $12,512
Growth and Income -- 1,560 99,656
Equity Value -- 1,640 --
Equity Growth -- 4,360 --
Small Cap Value -- -- 63,394
Small Company Equity -- 4,570 331
International Equity 464,938 -- --
</TABLE>
5. Shares of Beneficial Interest
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest, each with a par value of
$0.001. Shares of the Trust are currently classified into twenty-four classes of
shares, each consisting of one or more series including: Class N-Series 1 Shares
(Trust Shares), Class N-Series 2 Shares (Retail A Shares) and Class N-Series 3
Shares (Retail B Shares) -
65
<PAGE>
[LOGO OF THE NOTES TO FINANCIAL STATEMENTS (continued)
GALAXY FUND
APPEARS HERE]
Asset Allocation Fund; Class I-Series 1 Shares (Trust Shares) and Class I-Series
2 Shares (Retail A Shares)-Equity Income Fund; Class U-Series 1 Shares (Trust
Shares), Class U-Series 2 Shares (Retail A Shares) and Class U-Series 3 Shares
(Retail B Shares)-Growth and Income Fund; Class C Shares (Trust Shares), Class
C-Special Series 1 Shares (Retail A Shares) and Class C-Special Series 2 Shares
(Retail B Shares)-Equity Value Fund; Class H-Series 1 Shares (Trust Shares),
Class H-Series 2 Shares (Retail A Shares) and Class H-Series 3 Shares (Retail B
Shares)-Equity Growth Fund; Class X-Series 1 Shares (Trust Shares) and Class
X-Series 2 Shares (Retail A Shares)-Small Cap Value Fund; Class K-Series 1
Shares (Trust Shares), Class K-Series 2 Shares (Retail A Shares) and Class
K-Series 3 Shares (Retail B Shares) - Small Company Equity Fund; and Class
G-Series 1 Shares (Trust Shares) and Class G-Series 2 Shares (Retail A Shares) -
International Equity 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 year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
------------------------------------- ------------------------------------
Fund U.S. Government Other U.S. Government Other
--------------- -------------- --------------- -------------
<S> <C> <C> <C> <C>
Asset Allocation......................... $ 44,990,251 $ 88,943,911 $38,797,996 $ 44,854,488
Equity Income............................ -- 93,069,095 250,000 80,758,260
Growth and Income........................ -- 137,270,490 -- 150,902,439
Equity Value............................. -- 338,579,007 -- 317,936,265
Equity Growth............................ -- 340,033,474 -- 204,618,840
Small Cap Value.......................... -- 58,843,053 -- 69,320,670
Small Company Equity..................... -- 252,382,361 -- 160,275,573
International Equity..................... -- 304,338,188 -- 229,558,554
</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 October 31, 1996 for each Fund is as follows:
<TABLE>
<CAPTION>
Fund Appreciation (Depreciation) Net Cost
- ---- ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C>
Asset Allocation......................... $ 38,813,674 $ (1,469,813) $37,343,861 $206,354,136
Equity Income............................ 41,452,882 (1,758,487) 39,694,395 192,603,335
Growth and Income........................ 49,201,321 (3,205,937) 45,995,384 223,630,647
Equity Value............................. 51,965,730 (6,220,172) 45,745,558 284,084,355
Equity Growth............................ 222,373,906 (6,173,564) 216,200,342 507,991,855
Small Cap Value.......................... 43,373,368 (14,461,153) 28,912,215 144,152,338
Small Company Equity..................... 69,373,287 (20,586,892) 48,786,395 231,553,212
International Equity..................... 12,372,110 (6,400,902) 5,971,208 200,119,067
</TABLE>
7. Foreign Securities
Each Fund may purchase securities of foreign issuers. Investing in securities
of foreign issuers involves special risks not typically associated with
investing in securities of U.S. issuers. The risks include possible revaluation
of currencies, less complete financial information about companies and possible
future adverse political and economic developments. Moreover, securities of many
foreign issuers and their markets may be less liquid and their prices more
volatile than those of securities of comparable U.S. issuers.
8. Acquisition of 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 Growth Equity Fund were transferred to
the Galaxy Equity Growth Fund in exchange for shares of the Galaxy Equity Growth
Fund. In addition, all of the assets and liabilities of the Shawmut Growth and
Income Equity Fund and the Shawmut
66
<PAGE>
THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS (continued)
---------------
Small Capitalization Equity Fund were transferred to the Galaxy Growth and
Income Fund and the Galaxy Small Cap Value Fund, respectively, new portfolios of
the Trust, in exchange for shares of the Galaxy Growth and Income Fund and the
Galaxy Small Cap Value Fund, respectively. Accordingly, the net assets
attributable to Investment Shares and Trust Shares of the Shawmut Growth Equity
Fund were exchanged for 578,307 Retail A Shares and 1,090,562 Trust Shares,
respectively, of the Galaxy Equity Growth Fund, the net assets attributable to
the Investment Shares and Trust Shares of the Shawmut Growth and Income Equity
Fund were exchanged for 4,539,659 Retail A and 15,827,841 Trust Shares of the
Galaxy Growth and Income Fund and the net assets attributable to Investment
Shares and Trust Shares of the Shawmut Small Capitalization Equity Fund were
exchanged for 2,337,814 Retail A and 10,259,304 Trust Shares of the Galaxy Small
Cap Value Fund. In related transactions, the assets and liabilities of other
Shawmut portfolios were transferred to corresponding Galaxy portfolios in
exchange for shares in such Galaxy portfolios. The reorganization, which
qualified as a tax-free reorganization for federal income tax purposes, was
completed on December 4, 1995, following the approval of the reorganization by
The Shawmut Fund shareholders. Certain share registration fees incurred in
connection with the reorganization were borne by the Trust. The following is a
summary of the Net Assets, Shares Outstanding, Net Asset Values per share and
unrealized Appreciation associated with the transaction:
<TABLE>
<CAPTION>
Before Acquisition After Acquisition
------------------------------------- -----------------
Galaxy Shawmut Galaxy
Equity Growth Equity
Growth Equity Growth
-------------- --------------- ----------------
<S> <C> <C> <C>
Net Assets............................................ $ 541,014,789 $ 29,513,366 $ 570,528,155
Shares outstanding.................................... 30,602,041 2,442,515 32,270,910
Retail A (Investment) and Trust
Net Asset Value, per share.......................... $ 17.68 $ 12.08 $ 17.68
Unrealized Appreciation............................... $ 165,620,815 $ 4,373,967
Before Acquisition After Acquisition
------------------------------------- -----------------
Galaxy Shawmut Galaxy
Growth Growth and Growth
and Income Income Equity and Income
-------------- --------------- ----------------
Net Assets............................................ $ 10.00 $ 247,375,548 $ 247,375,558
Shares outstanding.................................... 1.00 20,367,500 20,367,501
Retail A (Investment)
Net Asset Value, per share.......................... $ 10.00 $ 12.14 $ 12.14
Trust Net Asset Value, per share...................... $ 10.00 $ 12.15 $ 12.15
Unrealized Appreciation............................... -- $ 36,544,615
Before Acquisition After Acquisition
------------------------------------- -----------------
Galaxy Shawmut Small Galaxy
Small Cap Capitalization Small Cap
Value Equity Value
-------------- --------------- ----------------
Net Assets............................................ $ 10.00 $ 154,893,661 $ 154,893,671
Shares outstanding.................................... 1.00 12,597,118 12,597,119
Retail A (Investrment)
Net Asset Value, per share.......................... $ 10.00 $ 12.31 $ 12.31
Trust Net Asset Value, per share...................... $ 10.00 $ 12.29 $ 12.29
Unrealized Appreciation............................... -- $ 25,218,968
</TABLE>
9. Imposition of Front-End Sales Load
Effective December 1, 1995, the public offering price for Retail A Shares of
the Funds is the sum of the net asset value of the Retail A Shares purchased
plus, if applicable, a maximum 3.75% front-end sales charge. Reduced sales
charges are available in certain circumstances. No sales charge will be 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.
10. Results of Special Meeting of Shareholders of the International Equity Fund
(Unaudited)
At a special meeting of shareholders of the Galaxy International Equity Fund
held on August 9, 1996, shareholders of the Fund approved a new sub-advisory
agreement between Fleet Investment Advisors Inc. and Oechsle International
Advisors, L.P. with respect to the Fund. The results of the shareholder vote
were as follows:
For Against Abstain
- --- ------- -------
10,627,710 shares 59,128 shares 44,777 shares
67
<PAGE>
[LOGO OF THE GALAXY NOTES TO FINANCIAL STATEMENTS (continued)
FUND APPEARS HERE]
Tax Information (unaudited):
During the fiscal year ended October 31, 1996, the following Funds made
distributions from long-term capital gains:
Long-Term Gains
Fund Paid
- ---- ---------------
Asset Allocation Fund.................................. $ 1,596,181
Equity Income Fund..................................... 6,230,915
Equity Value Fund...................................... 15,339,001
Equity Growth Fund..................................... 9,037,920
Small Company Equity Fund.............................. 77,010
International Equity Fund.............................. 2,208,657
During the fiscal year ended October 31, 1996, the following Funds earned
income from direct obligations of the U.S. Government:
U.S. Government
Fund Income
- ---- ---------------
Asset Allocation Fund.................................. 44.83%
Equity Income Fund..................................... 7.80%
International Equity Fund.............................. 2.99%
Appropriate tax information detailing government income percentages on a
calendar year basis will accompany your year-end tax statement. As each state's
rules on the exemption of this income differ, please consult your tax advisor
regarding specific tax treatment.
68
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Shareholders and the Board of Trustees of
The Galaxy Fund:
We have audited the accompanying statements of assets and liabilities
of the Asset Allocation Fund, Equity Income Fund, Equity Value Fund, Equity
Growth Fund, Small Company Equity Fund and International Equity Fund, including
the portfolios of investments, as of October 31, 1996, and the related
statements of operations for the year then ended and the statements of changes
in net assets and financial highlights for each of the periods indicated
therein. In addition, we have audited the accompanying statements of assets and
liabilities of the Growth and Income Fund (formerly Shawmut Growth and Income
Equity Fund) and Small Cap Value Fund (formerly Shawmut Small Capitalization
Equity Fund), including the portfolios of investments, as of October 31, 1996,
and the related statements of operations, changes in net assets and financial
highlights for the year then ended. These financial statements and financial
highlights for the aforementioned eight series of The Galaxy Fund are the
responsibility of The Galaxy Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
The statements of changes in net assets for the year ended October
31, 1995 and the financial highlights for each of the two years in the period
then ended and for the period from December 14, 1992 (commencement of
operations) through October 31, 1993 for Growth and Income Fund and Small Cap
Value Fund, presented herein, were audited by other auditors whose report dated
November 27, 1995 expressed an unqualified opinion on such financial statements
and financial highlights.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements and
financial highlights are free from material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of October 31, 1996, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights
referred to in the first paragraph above present fairly, in all materials
respects, the financial position of the aforementioned series of The Galaxy Fund
as of October 31, 1996, the results of their operations, changes in their net
assets, and their financial highlights for each of the periods referenced
therein, in conformity with generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
December 16, 1996
<PAGE>
Trustees
and Officers
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
Neil Forrest
Vice President &
Assistant Treasurer
Investment Adviser
Fleet Investment
Advisors Inc.
75 State Street
Boston, Massachusetts
02109
Distributor
440 Financial
Distributors, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
Administrator
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough,
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 SYMBOL APPEARS HERE]
This report was printed on recycled paper.
<PAGE>
[LOGO OF GALAXY FUNDS APPEARS HERE]
[ARTWORK APPEARS HERE]
INSTITUTIONAL TREASURY MONEY MARKET FUND REPORT
ANNUAL REPORT
For the year ended
October 31, 1996
<PAGE>
Trustees
and Officers
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
Neil Forrest
Vice President &
Assistant Treasurer
Investment Adviser
Fleet Investment
Advisors Inc.
75 State Street
Boston, Massachusetts
02109
Distributor
440 Financial
Distributors, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
Administrator
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
<PAGE>
Institutional Treasury Money Market Fund
[LOGO OF FLEET GALAXY PORTFOLIO OF INVESTMENTS
APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- ----------
U.S. GOVERNMENT OBLIGATIONS - 95.66%
U.S. Treasury Bills (A) - 73.05%
<S> <C> <C>
$40,000,000 5.08%, 11/07/96........................................................ $ 39,967,608
57,942,000 5.06%, 11/14/96........................................................ 57,837,152
35,000,000 5.06%, 11/21/96........................................................ 34,901,917
70,000,000 4.96%, 12/05/96........................................................ 69,675,961
80,000,000 5.22%, 12/12/96........................................................ 79,541,853
15,000,000 4.86%, 12/19/96........................................................ 14,902,700
5,000,000 5.05%, 12/26/96........................................................ 4,963,410
15,000,000 5.36%, 01/16/97........................................................ 14,842,142
25,000,000 5.02%, 01/30/97........................................................ 24,686,250
15,000,000 5.04%, 02/13/97........................................................ 14,781,600
10,000,000 5.29%, 03/06/97........................................................ 9,816,493
------------
365,917,086
------------
U.S. Treasury Notes - 22.61%
50,000,000 4.38%, 11/15/96........................................................ 49,986,010
38,000,000 7.50%, 12/31/96........................................................ 38,133,928
25,000,000 7.50%, 01/31/97........................................................ 25,131,335
------------
113,251,273
------------
Total U.S. Government Obligations...................................... 479,168,359
(Cost $479,168,359) ------------
Shares
------
INVESTMENT COMPANY - 4.23%
21,213,604 AIM Short Term Investment Company
Treasury Tax Advantage Portfolio....................................... 21,213,604
------------
Total Investment Company............................................... 21,213,604
(Cost $21,213,604) ------------
Total Investments - 99.89%.............................................................. 500,381,963
(Cost $500,381,963)* ------------
Net Other Assets and Liabilities - 0.11%................................................ 545,127
------------
Net Assets - 100.00%.................................................................... $500,927,090
============
</TABLE>
- --------------------------------------------------
* Aggregate cost for Federal tax purposes is $500,383,697.
(A) Annualized yields at time of purchase.
See Notes to Financial Statements.
1
<PAGE>
Institutional Treasury Money Market Fund
[LOGO OF FLEET GALAXY STATEMENT OF ASSETS AND LIABILITIES
APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments at value (Note 2) (cost $500,381,963)........... $500,381,963
Interest and dividend receivable............................ 2,502,211
Deferred organizational expense (Note 2).................... 4,727
------------
Total Assets............................................... 502,888,901
------------
LIABILITIES:
Dividends payable........................................... 1,858,540
Advisory fee payable (Note 3)............................... 43,179
Payable to FDISG (Note 3)................................... 33,748
Trustees' fees and expenses payable (Note 3)................ 3,983
Accrued expenses and other payables......................... 22,361
------------
Total Liabilities.......................................... 1,961,811
------------
NET ASSETS................................................... $500,927,090
============
NET ASSETS consist of:
Par value (Note 5).......................................... $ 500,983
Paid-in capital in excess of par value...................... 500,482,372
Undistributed (overdistributed) net investment income....... 4,970
Accumulated net realized gain (loss) on investments sold.... (61,235)
------------
TOTAL NET ASSETS............................................. $500,927,090
============
Shares of beneficial interest outstanding.................... 500,983,355
NET ASSET VALUE,
offering and redemption price per share
(Net Assets divided by Shares Outstanding).................. $ 1.00
============
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
Institutional Treasury Money Market Fund
[LOGO OF FLEET GALAXY STATEMENT OF OPERATIONS
APPEARS HERE] For the year ended October 31, 1996
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest (Note 2).................................................... $24,828,791
Dividends (Note 2)................................................... 390,319
-----------
Total investment income............................................. 25,219,110
-----------
EXPENSES:
Investment advisory fee (Note 3)..................................... 972,032
Administration fee (Note 3).......................................... 417,712
Fund accounting fee (Note 3)......................................... 60,667
Legal fee (Note 3)................................................... 28,635
Registration fees.................................................... 24,649
Insurance............................................................ 17,379
Custodian fee........................................................ 17,088
Audit fee............................................................ 16,361
Trustees' fees and expenses (Note 3)................................. 15,101
Reports to shareholders.............................................. 6,673
Transfer agent fee (Note 3).......................................... 4,146
Amortization of organization costs (Note 2).......................... 3,085
Miscellaneous........................................................ 10,564
-----------
Total expenses before reimbursement/waiver (Note 4)................. 1,594,092
Less: reimbursement/waiver (Note 4)................................. (691,316)
-----------
Total expenses net of reimbursement/waiver.......................... 902,776
-----------
NET INVESTMENT INCOME................................................. 24,316,334
-----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS SOLD (Note 2)................. (23,590)
-----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... $24,292,744
===========
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
[LOGO OF FLEET GALAXY Institutional Treasury Money Market Fund
APPEARS HERE] STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years ended October 31,
-----------------------------------
1996 1995
-------------- --------------
<S> <C> <C>
NET ASSETS at beginning of period.................................... $ 506,691,864 $ 326,224,725
-------------- --------------
Increase (Decrease) in Net Assets resulting from operations:
Net investment income............................................... 24,316,334 20,854,393
Net realized gain (loss) on investments sold........................ (23,590) 13,395
-------------- --------------
Net increase (decrease) in net assets resulting from operations.... 24,292,744 20,867,788
-------------- --------------
Dividends to shareholders from:
Net investment income............................................... (24,316,334) (20,854,393)
-------------- --------------
Share Transactions:
Net proceeds from sales of shares................................... 1,824,149,469 1,683,995,336
Issued to shareholders in reinvestment of dividends................. 1,914,180 2,162,560
Cost of shares repurchased.......................................... (1,831,804,833) (1,505,704,152)
-------------- --------------
Net increase (decrease) from share transactions.................... (5,741,184) 180,453,744
-------------- --------------
Net increase (decrease) in net assets............................. (5,764,774) 180,467,139
-------------- --------------
NET ASSETS at end of period (including line A)....................... $ 500,927,090 $ 506,691,864
============== ==============
(A) Undistributed (overdistributed) net investment income............ $ 4,970 $ 4,970
============== ==============
OTHER INFORMATION:
Share Transactions:
Sold................................................................ 1,824,149,469 1,683,995,336
Issued to shareholders in reinvestment of dividends................. 1,914,180 2,162,560
Repurchased......................................................... (1,831,804,833) (1,505,704,152)
-------------- --------------
Net increase (decrease) in shares outstanding...................... (5,741,184) 180,453,744
============== ==============
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
Institutional Treasury Money Market Fund
[LOGO OF FLEET GALAXY FINANCIAL HIGHLIGHTS
APPEARS HERE] For a share outstanding throughout each period
<TABLE>
<CAPTION>
Years ended October 31,
-----------------------------------------------------
1996 1995 1994 1993/(1)/
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income(A).................................. 0.05 0.05 0.04 0.02
Net realized and unrealized gain (loss) on investments.... -- -- -- --
----------- ----------- ----------- -----------
Total from Investment Operations:........................ 0.05 0.05 0.04 0.02
----------- ----------- ----------- -----------
Less Dividends:
Dividends from net investment income...................... (0.05) (0.05) (0.04) (0.02)
Dividends from net realized capital gains................. -- -- -- --
----------- ----------- ----------- -----------
Total Dividends:......................................... (0.05) (0.05) (0.04) (0.02)
----------- ----------- ----------- -----------
Net increase (decrease) in net asset value................. -- -- -- --
----------- ----------- ----------- -----------
Net Asset Value, End of Period............................. $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== ===========
Total Return............................................... 5.12% 5.53% 3.56% 1.59%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's).......................... $ 500,927 $ 506,692 $ 326,225 $ 158,890
Ratios to average net assets:
Net investment income including reimbursement/waiver...... 5.00% 5.38% 3.63% 2.85%*
Operating expenses including reimbursement/waiver......... 0.19% 0.17% 0.17% 0.14%*
Operating expenses excluding reimbursement/waiver......... 0.33% 0.33% 0.39% 0.46%*
</TABLE>
__________________________________________________
* Annualized
** Not Annualized
(1) The Fund commenced operations on April 15, 1993.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator for the years ended October 31,
1996, 1995 and 1994 and for the period ended October 31, 1993 were $0.05,
$0.05, $0.04 and $0.01, respectively.
See Notes to Financial Statements.
5
<PAGE>
[LOGO OF FLEET GALAXY
APPEARS HERE] NOTES TO FINANCIAL STATEMENTS
1. Organization
The Galaxy Fund, a Massachusetts business trust (the "Trust"), is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), 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
Institutional Treasury Money Market Fund (the "Fund") only.
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 income 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 Fund in the preparation of
the financial statements.
Portfolio Valuation: Securities in the Fund are valued utilizing the
amortized cost valuation method permitted in accordance with Rule 2a-7 under the
1940 Act. This method involves valuing a portfolio security initially at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Net realized gains or losses on sales of
securities are determined by the identified cost method. Interest income is
recorded on the accrual basis.
Dividends to Shareholders: Dividends from net investment income 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 the Fund as a separate entity for
Federal income tax purposes. The 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, the 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, the Fund will not be
subject to a federal excise tax. Therefore, no federal income or excise tax
provision is recorded.
Expenses: The Trust accounts separately for the assets, liabilities and
operations of the Fund. Expenses directly attributable to the 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.
Organization Costs: The 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 Fund's commencement of operation. In the event that any
of the initial shares purchased by the Fund's sponsor are redeemed during such
period, the Fund will be reimbursed by any 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 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 0.20%
of the average daily net assets of the Fund (see also Note 4).
The Trust and First Data Investor Services Group, Inc. ("FDISG") (formerly
known as The Shareholder Services Group, Inc. doing business as 440 Financial) a
6
<PAGE>
[LOGO OF FLEET GALAXY
APPEARS HERE] NOTES TO FINANCIAL STATEMENTS (continued)
wholly-owned subsidiary of First Data Corporation, are parties to an
administration agreement under which FDISG (the "Administrator") provides
services for a fee, 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 Fund
and the other funds offered by the Trust (whose financial reports are disclosed
under a separate cover), 0.085% of the next $2.5 billion of combined average
daily net assets and 0.075% 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 these fee arrangements, FDISG compensates the Trust's
custodian bank, Chase Manhattan Bank, N.A., for its services. Prior to March 31,
1995, the fund 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 March 31,
1995, FDISG acquired substantially all of the assets of 440 Financial Group of
Worcester, Inc.
Prior to September 5, 1996, FDISG was entitled to receive administration fees,
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 Fund 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.
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.
Certain officers of the Trust may be officers of the Administrator and/or
Distributor. Such officers receive no compensation from the Trust for serving in
their respective roles. No officer, director or employee of the Investment
Adviser serves as an officer, Trustee or employee of the Trust. For the period
covered by this report, each Trustee was entitled to receive for services as a
trustee of both 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 as well as reimbursement for expenses incurred in attending meetings.
The Chairman of the Boards of Trustees of the Trust and VIP and the President
and Treasurer of the Trust were entitled to additional annual fees for their
services in these capacities. Effective November 1, 1996, each Trustee is
entitled to receive for services as a trustee of the Trust, VIP and Galaxy Fund
II ("Galaxy II") an aggregate fee of $29,000 per annum plus certain other fees
for attending or participating in meetings as well as reimbursement for expenses
incurred in attending meetings. The Chairman of the Boards of Trustees, and the
President and the Treasurer of the Trust, VIP and Galaxy II are also entitled to
additional fees for their services in these capacities. These fees are allocated
among the Funds of the Trust, VIP and Galaxy II based on their relative net
assets. In addition, effective March 1, 1996, each Trustee became eligible to
participate in the Trust's Deferred Compensation Plan (the "Plan"), an unfunded,
nonqualified deferred compensation plan. The Plan allows each Trustee to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
Expenses for the year ended October 31, 1996 include legal fees paid to
Drinker Biddle & Reath. A partner of that firm is Secretary of the Trust.
4. Waiver of Fees and Reimbursement of Expenses
The Investment Adviser and Administrator voluntarily agreed to waive a
portion of their fees and to reimburse the Fund for certain expenses so that
total expenses of the Fund would not exceed certain expense limitations. For the
year ended October 31, 1996, the Investment Adviser and Administrator waived
fees totaling $484,786 and $174,704, respectively, and the Investment Adviser
reimbursed expenses of $31,826 with respect to the Fund. The Investment Adviser
and Administrator, at their discretion, may revise or discontinue the voluntary
fee waivers and expense reimbursements.
7
<PAGE>
[LOGO OF FLEET GALAXY
APPEARS HERE] NOTES TO FINANCIAL STATEMENTS (continued)
5. Shares of Beneficial Interest
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest in the Fund, each with a par
value of $0.001. The Trust's shares are classified into twenty-four classes of
shares consisting of one or more series of shares including: Class S -
Institutional Treasury Money Market Fund.
6. Capital Loss Carryforward
As of October 31, 1996, the Fund had capital loss carryforwards of $37,645,
expiring in 2002 and $21,856 expiring in 2004.
- ----------------------------
Tax Information (unaudited)
During the fiscal year ended October 31, 1996, 100% of the income earned by
the Fund was from direct obligations of the U.S. Government. Appropriate tax
information detailing this information on a calendar year basis will accompany
your year-end tax statement. As each state's rules on the exemption of this
income differ, please consult your tax advisor regarding specific tax treatment.
8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Shareholders and Board of Trustees of
The Galaxy Fund:
We have audited the accompanying statements of assets and liabilities of
the Institutional Treasury Money Market Fund, including the portfolio of
investments, as of October 31, 1996, and the related statement of operations,
the statements of changes in net assets, and financial highlights for each of
the periods indicated therein. These financial statements and financial
highlights are the responsibility of The Galaxy Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Institutional Treasury Money Market Fund as of October 31, 1996, the results of
its operations, the changes in its net assets, and its financial highlights for
each of the periods indicated therein, in conformity with generally accepted
accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
December 16, 1996
<PAGE>
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.
[LOGO OF RECYCLABLES APPEARS HERE]
This report was printed on recycled paper.
<PAGE>
--------------------
[LOGO OF 4400 Computer Drive BULK RATE
GALAXY FUNDS Box 5108 U.S. POSTAGE PAID
APPEARS HERE] Westborough, MA 01581-5108 PERMIT NO. 105
NORTH READING, MA
--------------------
<PAGE>
GALAXY
FUNDS
[ARTWORK APPEARS HERE]
TAX-FREE BOND FUNDS REPORT
Tax-Exempt Bond Fund . New York Municipal Bond Fund . Connecticut Municipal Bond
Fund . Massachusetts Municipal Bond Fund . Rhode Island Municipal Bond Fund
ANNUAL
REPORT
FOR THE YEAR ENDED
OCTOBER 31, 1996
<PAGE>
CHAIRMAN'S
MESSAGE
Dear Shareholder:
Enclosed is your annual report for the Galaxy Tax-Free Bond Funds (the
"Funds") for the 12 months ended October 31, 1996. Inside, you will find a
Market Overview that explains the major market and economic events that
influenced tax-exempt bond returns during that time. There are also Portfolio
Reviews for each of the Funds showing the management strategies that Fleet
Investment Advisors Inc. used in this environment.
During the period, bonds earned returns that were about average by
historical standards, but their prices were much more volatile than in the
previous 12 months. Stocks and money market instruments also fluctuated as
investors became uncertain over the direction of the economy, inflation and
interest rates. Toward the end of the period, investors seemed hopeful that
economic growth and inflation would remain moderate and interest rates would
become more stable.
Such an environment shows why it may be important to maintain a
well-diversified portfolio of investments. Different asset classes often move in
different directions, so using a broad range of classes can help smooth out
returns over time. Municipal bonds can provide a steady stream of income free
from federal and, often, state and local taxes that can be a useful supplement
to the growth and cash portions of your portfolio.
To stay on track, you may want to "rebalance" your portfolio each year.
This is particularly true in a year like the one just past, when market changes
were substantial. As investment classes within your portfolio gain in value, you
can maintain a diversified portfolio by reinvesting those gains in other asset
classes, which may have declined in value or stayed the same, in accordance with
your long-term allocation strategy. Of course, you should consider the tax
implications of such rebalancing.
We hope you will find the following report helpful as you review your
current portfolio. If you have questions about material in the report, or need
information on any of the Galaxy Funds, please call the Galaxy Service Center at
800-628-0414.
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>
MARKET OVERVIEW
"During this time we tried to make the most of changing bond prices by adding
longer-term bonds when rates were rising and shorter-term bonds when rates
were falling."
TAX-FREE BOND MARKET OVERVIEW
By Fleet Investment Advisors Inc.
Bond prices were volatile in the last year, as investors grew uncertain
about the economy. When investors worried that growth was accelerating and the
Federal Reserve (the "Fed") would raise interest rates to stem inflation, bond
prices fell. When investors believed growth was slowing and inflation was under
control, bond prices rose sharply.
During the 12 months ended October 31, 1996, prices of municipal bonds
were generally less volatile than prices of taxable issues -- especially
municipal issues with longer maturities. This was due in part to the demise of
flat-tax proposals, and in part to reduce municipal supplies -- which kept
upward pressure on municipal prices.
During this time we tried to make the most of changing bond prices by
adding longer-term bonds when rates were rising and shorter-term bonds when
rates were falling. Because longer-term issues are generally more sensitive to
price changes than shorter-term issues, this strategy helped us make the most of
strong yields and capital gains while seeking to protect the share values of the
Galaxy Tax-Free Bond Funds.
Increased Uncertainty
When the period started, economic growth was slowing and interest rates
were falling. After advancing at an annualized rate of 3.8% in the third quarter
of 1995, the gross domestic product ("GDP"), a measure of U.S. goods and
services, slowed to an annualized rate of only 0.3% in the fourth quarter. As
expected, the Fed cut its short-term Fed Funds rate in December from 5.75% to
5.5%. With expectations for further cuts and for a balanced federal budget, the
yield for 30-year Treasury bonds dropped to 5.94% at the end of 1995 -- down
from 6.33% at the end of October.
Performance At-A-Glance
Average Annual Returns as of October 31, 1996
Trust Shares
Tax-Exempt Bond Fund
Inception Date 12/30/91
1 Year 5.03%
3 Year 4.36% [BAR CHART APPEARS HERE]
Life of Fund 6.79%
New York Municipal Bond Fund
Inception Date 12/31/91
1 Year 4.55%
3 Year 3.95% [BAR CHART APPEARS HERE]
Life of Fund 6.38%
Connecticut Municipal Bond Fund
Inception Date 3/16/93
1 Year 4.54%
3 Year 4.08% [BAR CHART APPEARS HERE]
Life of Fund 4.99%
Massachusetts Municipal Bond Fund
Inception Date 3/12/93
1 Year 4.27%
3 Year 3.81% [BAR CHART APPEARS HERE]
Life of Fund 4.64%
1
<PAGE>
MARKET
OVERVIEW
"Although the Fed cut the Fed Funds rate to 5.25% at the start of 1996, signs of
renewed economic strength and a stalemate in federal budget talks made
investors worry that interest rates would soon rise. "
Although the Fed cut the Fed Funds rate to 5.25% at the start of 1996,
signs of renewed economic strength and a stalemate in federal budget talks made
investors worry that interest rates would soon rise. As the GDP growth
accelerated to annualized rates of 2.0% and 4.7% in the first and second
quarters, respectively, bond prices moved sharply lower. By July, prices had
fallen enough to raise the yield for 30-year Treasury bonds to a high of 7.2%.
Between the end of October 1995 and June 13, 1996, when municipal yields
hit their peak, the yield for The Bond Buyer Index rose from 5.76% to 6.12%. As
interest rates rose, many state and local governments held back new municipal
supplies -- which kept upward pressure on municipal prices. The municipal market
also benefited as Congress failed to act on proposed tax reforms.
Eventually, bond prices improved as investors saw that inflation was
moderate and the Fed was leaving interest rates alone. By the end of November,
when the Commerce Department announced that the GDP growth had slowed to an
annualized rate of 2.0% in the third quarter, the yield for long-term Treasury
Bonds had fallen to 6.64% and the yield for the Bond Buyer Index had dropped to
5.70%.
Trading Maturities
When interest rates were falling at the end of 1995, the Galaxy Tax-Free
Bond Funds had sizable investments in issues with longer maturities that we had
bought at discounted prices. This gave the Funds solid gains as bond prices
rose. By concentrating on issues that could not be called in for 10 years, we
also helped the Funds maintain strong yields.
Performance At-A-Glance
Average Annual Returns as of October 31, 1996
Retail A Shares*
Tax-Exempt Bond Fund
Inception Date 12/30/91
1 Year 0.84%
3 Year 2.90% [BAR CHART APPEARS HERE]
Life of Fund 5.86%
New York Municipal Bond Fund
Inception Date 12/31/91
1 Year 0.39%
3 Year 2.49% [BAR CHART APPEARS HERE]
Life of Fund 5.45%
Conncecticut Municipal Bond Fund
Inception Date 3/16/93
1 Year 0.45%
3 Year 2.61% [BAR CHART APPEARS HERE]
Life of Fund 3.75%
Massachusetts Municipal Bond Fund
Inception Date 3/12/93
1 Year 0.14%
3 Year 2.37% [BAR CHART APPEARS HERE]
Life of Fund 3.44%
Rhode Island Municipal Bond Fund
Inception Date 12/20/94
1 Year 1.23%
Life of Fund 6.62% [BAR CHART APPEARS HERE]
*Return figures have been restated to include the effect of the maximum 3.75%
front-end sales charge which became effective December 1, 1995.
2
<PAGE>
MARKET OVERVIEW
Near the end of 1995, when interest rates were bottoming, we added
shorter-term issues selling at par -- whose prices could be hurt less by a rise
in rates. In the spring of 1996, when municipal prices were more attractive, we
again added longer-term issues to the Funds' portfolios. Although this hurt Fund
performance when rates rose further, the longer maturities boosted returns when
rates fell. Toward the end of the period we bought bonds maturing in 15 to 20
years that offered the best value. Throughout the period we focused on issues
with high quality and strong liquidity and avoided issues with more risk. At
times this strategy limited the Funds' yields, but it helped stabilize the
Funds' share values in an uncertain market.
Looking Forward
If the annual rate of GDP growth stays near 2%, and inflation remains near
3%, real rates of return will be attractive. While continued economic
uncertainty may cause near-term volatility, we believe long-term Treasury yields
might trade in a range of 6.25% to 7.25% into 1997.
Most of the municipal rebound following the tax reform debate is now
behind us. In addition, lower interest rates have spurred modest rebuilding of
municipal supplies. Therefore, we now expect municipal prices to move more in
line with Treasury prices going forward.
To reduce near-term price fluctuations for the Galaxy Tax-Free Bond Funds,
we expect to stay focused on issues maturing in 15 to 20 years. If interest
rates edge higher, making municipal prices more attractive, we would look for
opportunities to add more longer-term issues. In the meantime, we will continue
to emphasize issues with good call protection, high credit quality and strong
liquidity.
In addition, we will maintain our high quality focus particularly in light
of recent increases in municipal ratings downgrades and the historically small
credit premium for underwriting these risks.
Performance At-A-Glance
Total Returns as of October 31, 1996
Retail B Shares*
Tax-Exempt Bond Fund
Inception Date 3/4/96
1.08%
- -3.85% [BAR CHART APPEARS HERE]
[_] 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 concert to Retail A
Shares after six years. Total returns are from the date of inception.
3
<PAGE>
PORTFOLIO REVIEWS
GALAXY TAX-EXEMPT BOND FUND
By Mary McGoldrick
Portfolio Manager
[PHOTO APPEARS HERE]
Galaxy Tax-Exempt Bond Fund
Distribution of Total Net Assets
as of October 31, 1996
[CHART APPEARS HERE]
East 37%
South 24%
North Central 21%
Pacific 11%
Mountain 3%
Other States & Territories 3%
Net Other Assets & Liabilities 1%
Over the last year we concentrated investments in the Galaxy Tax-Exempt
Bond Fund that could make the most of reversals in interest rates and bond
prices. This, plus attention to features that investors favor in uncertain
times, helped the Fund hold up relatively well in a changeable market.
For the 12 months ended October 31, 1996, the Fund's Trust Shares had a
total return of 5.03%. For the same period, Retail A Shares had a total return
of 4.77% before the deduction of the maximum 3.75% front-end sales charge on
Retail A Shares. That compares to 5.12% for the average general municipal bond
fund tracked by Lipper Analytical Services ("Lipper") and 5.71% for the Lehman
Brothers Municipal Bond Index. The Fund's Retail B Shares had a total return of
1.08%, before the deduction of the maximum 5.00% contingent deferred sales
charge, between their initial public offering on March 4, 1996 through October
31, 1996.
Managing Price Reversals
In the third quarter of 1995, when talk of tax reform made municipal bond
prices more attractive, we increased positions in longer-term issues that were
selling at discounts to their face values. These investments performed
particularly well as municipal prices rallied at the end of the year.
In 1996, when interest rates and bond prices reversed course, we focused
on issues with maturities of 20 to 25 years that were selling at par. This
helped protect the value of Fund shares while taking advantage of attractive
yields that were available. Later, as the slide in bond prices continued, we
focused on investments maturing in 15 to 20 years. Throughout the period we
emphasized securities with good call protection, high credit quality and strong
liquidity.
At the end of October 1996, the Fund's Trust Shares had a 30-day SEC
annualized yield of 4.74%. On the same date, Retail A Shares had a 30-day SEC
annualized yield of 4.32% after deduction of the maximum 3.75% front-end sales
charge. On October 31, 1996, Retail B Shares had a 30-day SEC annualized yield
of 3.98% after the deduction of the maximum 5.00% contingent deferred sales
charge. For shareholders in the 36% federal income tax bracket, these equaled
taxable yields of 7.41% for Trust Shares, 6.75% for Retail A Shares and 6.22%
for Retail B Shares.
Positioned for Slower Growth
We believe the Galaxy Tax-Exempt Bond Fund is well positioned for the
months to come. If the economy slows and inflation remains moderate, as we
expect, interest rates could edge lower and bond prices could move higher. By
emphasizing maturities of 15 to 20 years, which offer good value, we intend to
make the most of any additional gains that might occur. We will continue to look
for value in these and other issues as market fluctuations provide new
opportunities for investment.
Mary McGoldrick has managed the Galaxy Tax-Exempt Bond Fund since July of 1992.
She has managed portfolios at Fleet and other banks for ten years.
Galaxy Tax-Exempt Bond Fund
Growth of $10,000 investment*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers
Municipal Bond Galaxy Galaxy Galaxy
Index Retail Trust Retail
A Shares Shares B Shares
- -------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1991 10,000 9,625 10,000
1992 10,582 10,062 10,455
1993 12,072 11,635 12,089
1994 11,546 11,082 11,515
1995 13,213 12,657 13,084 10,000
Oct 31, 96 13,967 13,167 13,742 9,615
</TABLE>
*Since inception on 12/30/91 for Trust and Retail A Shares. Since inception on
3/4/96 for Retail B Shares. 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. Performance figures for Retail B
Shares reflect the deduction of the maximum 5.00% contingent deferred sales
charge as if shares were redeemed on October 31, 1996. The Lehman Brothers
Municipal Bond Index is an unmanaged index in which investors cannot invest.
Results for the index do not reflect the expenses and investment management
fees incurred by the Fund.
4
<PAGE>
PORTFOLIO REVIEWS
GALAXY NEW YORK MUNICIPAL BOND FUND
By Mary McGoldrick
Portfolio Manager
For the 12 months ended October 31, 1996, we made the most of changing
bond prices by emphasizing longer-term issues in the Galaxy New York Municipal
Bond Fund when prices were rising and buying shorter-term issues as prices fell.
The Fund's Trust Shares earned a total return of 4.55% for the year ended
October 31, 1996. Retail A Shares produced a total return of 4.31% for the same
period before the deduction of the maximum 3.75% front-end sales charge. These
returns compare to returns of 4.92% for the average New York municipal bond fund
tracked by Lipper and 5.71% for the Lehman Brothers Municipal Bond Index.
Enhancing Share Values and Yields
As the period began, the Fund had sizable investments in longer-term
municipals that were purchased when talk of reform made their prices especially
attractive. These issues performed particularly well as bond prices rallied. By
focusing on bonds that could not be called in by their issuers, we helped the
Fund earn solid income as interest rates fell.
When interest rates had reached a low point, we purchased municipals with
shorter maturities. Since prices for shorter-term issues tend to change less
when interest rates rise, this helped defend the value of Fund shares in the
months that followed. We further protected share value by emphasizing
investments with strong liquidity and high credit quality.
Galaxy New York Municipal Bond Fund
Growth of $10,000 investment*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers
Municipal Bond Galaxy Galaxy
Index Retail Trust
A Shares Shares
- ------------------------------------------------------------
<S> <C> <C> <C>
1991 10,000 9,625 10,000
1992 10,582 9,993 10,383
1993 12,072 11,558 12,009
1994 11,546 10,870 11,294
1995 13,213 12,395 12,901
Oct 31, 96 13,967 12,928 13,488
</TABLE>
*Since inception on 12/31/91. Performance figures for Retail A Shares have been
restated to include the effect of the maximum 3.75% front-end sales charge
which became effective on December 1, 1995. The Lehman Brothers Municipal Bond
Index is an unmanaged index in which investors cannot invest. Results for the
index do not reflect the expenses and investment management fees incurred by
the Fund.
While rising interest rates reduced municipal supplies elsewhere in the
country, supplies in New York remained relatively strong. This gave us the
opportunity to invest in longer-term issues with attractive prices when interest
rates stabilized in the middle of the year. These issues performed especially
well when prices rallied in the fall.
The longer maturities and good call protection helped to enhance the
Fund's yield. At the end of October 1996, the Fund's Trust Shares had a 30-day
SEC annualized yield of 4.89%. On th same date, Retail A Shares had a 30-day SEC
annualized yield of 4.49% after the deduction of the maximum 3.75% front-end
sales charge. These are the same as taxable yields of 7.64% and 7.02%,
respectively, for taxpayers in the 36% federal income tax bracket who live in
the State of New York.
The Months to Come
Although mixed signals on the economy may bring further price volatility
from time to time, moderate inflation and mounting evidence of slower growth
should help bond prices edge higher by year's end. Since longer-term issues tend
to be more price-sensitive than shorter-term issues do, the Fund should benefit
from the longer maturities we've added. If price fluctuations make longer-term
issues attractive again, we may purchase more for the Fund's portfolio.
Mary McGoldrick has managed the Galaxy New York Municipal Bond Fund since March
of 1996. She has managed portfolios at Fleet and other banks for 10 years.
5
<PAGE>
PORTFOLIO REVIEWS
GALAXY CONNECTICUT MUNICIPAL BOND FUND
By Mary McGoldrick
Portfolio Manager
Changes in interest rates generally move prices for longer-term bonds more
than prices for shorter-term bonds. For this reason, we gave greater attention
to longer-term bonds in the Galaxy Connecticut Municipal Bond Fund when falling
interest rates pushed bond prices higher and less attention to longer-term bonds
when rising interest rates pushed bond prices lower.
For the 12 months ended October 31, 1996, this approach gave the Fund's
Trust Shares a total return of 4.54%. Before deduction of the maximum 3.75%
front-end sales charge, Retail A Shares had a return of 4.32%. These returns
compare with a return of 5.03% for the average Connecticut municipal bond fund
tracked by Lipper and a return of 5.71% for the Lehman Brothers Municipal Bond
Index.
At the end of October 1996, the Fund's Trust Shares had 30-day
SECannualized yield of 4.70%. On the same date, Retail A Shares had a 30-day
SECannualized yield of 4.30%, respectively, after deduction of the maximum 3.75%
front-end sales charge. These equaled taxable yields of 7.34% and 6.72%,
respectively, for taxpayers in the 36% federal income tax bracket who live in
the State of Connecticut.
Galaxy Connecticut Municipal Bond Fund
Growth of $10,000 investment*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers Galaxy Galaxy
Municipal Bond Retail Trust
Index A Shares Shares
- ------------------------------------------------------------
<S> <C> <C> <C>
1993 10,000 9,625 10,000
1993 10,697 10,183 10,580
1994 10,231 9,532 9,902
1995 12,594 10,956 11,413
10/31/96 12,925 11,429 11,930
</TABLE>
*Since inception on 3/16/93. Performance figures for Retail A Shares have been
restated to include the effect of the maximum 3.75% front-end sales charge
which became effective on December 1, 1995. The Lehman Brothers Municipal Bond
Index is an unmanaged index in which investors cannot invest. Results for the
index are calculated since 3/31/93 because the index returns are calculated at
month-end only. Results for the index do not reflect the expenses and
investment management fees incurred by the fund.
Portfolio Strategy
After proposed tax reform made municipal bond prices more attractive in
the third quarter of 1995, we made sizable investments in longer-term issues
that sold at a discount. These investments appreciated strongly as bond prices
rose at the end of the year. Because we also focused on bonds that would not be
called in for some time by their issuers, the Fund enjoyed attractive income
while interest rates fell.
When interest rates rose at the start of 1996, we took profits in some
long-term investments. At this time municipal bond supplies were especially
tight in Connecticut. So we added the proceeds from these sales to the Fund's
cash reserves. We later found opportunities to put this cash to work at prices
and yields that were quite attractive. For the most part, we focused on
investments maturing in 15 to 20 years to buffer the Fund against further
declines in bond prices. We further protected the value of Fund shares by using
high-quality bonds with strong liquidity.
Managing Future Changes
Although slowing economic growth and moderate inflation could help
interest rates inch lower by year's end, there may still be uncertainty about
the economy that results in bond price fluctuation in the near term. By
emphasizing issues maturing in 15 to 20 years, we hope to reduce the effect of
such volatility on the share price of the Galaxy Connecticut Municipal Bond
Fund. Because we bought these issues at attractive prices, they should also
perform well as bond prices advance.
Mary McGoldrick has managed the Galaxy Connecticut Municipal Bond Fund since
March of 1996. She has managed portfolios at Fleet and other banks for 10 years.
6
<PAGE>
PORTFOLIO REVIEWS
GALAXY MASSACHUSETTS
MUNICIPAL BOND FUND
By Mary McGoldrick
Portfolio Manager
As interest rates reversed course in the 12 months ended October 31, 1996,
we adjusted the maturities of investments in the Galaxy Massachusetts Municipal
Bond Fund to make the most of changing bond prices. We also emphasized bonds
with good call protection, high quality and strong liquidity -- which investors
tend to favor in a changing market.
For the 12 months ended October 31, 1996, the Fund's Trust Shares had a
total return of 4.27%. Retail A Shares earned a total return of 4.05% before
deduction of the maximum 3.75% front-end sales charge. Over the same period, the
average Massachusetts Municipal Bond Fund tracked by Lipper had a total return
of 5.13% and the benchmark Lehman Brothers Municipal Bond Index had a return of
5.71%.
At the end of October 1996, the Fund's Trust Shares had a 30-day
SECannualized yield of 4.69%. On the same date, Retail A Shares had a 30-day
SECannualized yield of 4.31% after deduction of the maximum 3.75% front-end
sales charges. These equaled taxable yields of 7.33% and 6.73%, respetively, for
taxpayers in the 36% federal income tax bracket who live in the Commonwealth of
Massachusetts.
Anticipating Market Change
With interest rates still falling at the end of 1995, we held sizable
positions in longer-term issues that we had purchased at discounted prices.
These investments enjoyed strong gains as bond prices rose. By emphasizing
municipal bonds that could not be called in for at least 10 years, we also
provided the Fund with good income as interest rates declined.
When we thought that interest rates might soon head upward, we traded some
longer-term positions for shorter-term holdings to buffer the value of Fund
shares against a reversal in bond prices. We increased investments in
longer-term issues again when rising interest rates made their prices and yields
more attractive. Besides locking in higher yields for more time, these
longer-maturity investments gave the Fund added appreciation when rates reversed
course again and headed downward.
Preparing for Slower Growth
We think investors now see that the economy is slowing and that inflation
should stay under control. This should cause interest rates to fall further by
the end of 1996. In the meantime, however, interest rates and bond prices may
continue to fluctuate on near-term reports of stronger growth.
We continue to emphasize longer-term issues in the Galaxy Massachusetts
Municipal Bond Fund, expecting these investments to boost returns as interest
rates fall and bond prices rise. For now, however, we're focusing new purchases
on municipals maturing in 15 to 20 years. We believe these issues offer the best
value today, given the chance for more price fluctuations.
Mary McGoldrick has managed the Galaxy Massachusetts Municipal Bond Fund since
March of 1996. She has managed portfolios at Fleet and other banks for 10 years.
Galaxy Massachusetts Municipal Bond Fund
Growth of $10,000 investment*
[CHART APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers Galaxy Galaxy
Municipal Bond Retail Trust
Fund A Shares Shares
- ------------------------------------------------------------
<S> <C> <C> <C>
1993 10,000 9,625 10,000
1993 10,584 10,146 10,542
1994 10,231 9,491 9,859
1995 12,594 10,868 11,312
10/31/96 12,952 11,309 11,795
</TABLE>
*Since inception on 3/12/93. Performance figures for Retail A Shares have been
restated to include the effect of the maximum 3.75% front-end sales charge
which became effective on December 1, 1995. The Lehman Brothers Municipal Bond
Index is an unmanaged index in which investors cannot invest. Results for the
index are calculated since 3/31/93 because the index returns are calculated at
month-end only. Results for the index do not reflect the expenses and
investment management fees incurred by the Fund.
7
<PAGE>
PORTFOLIO REVIEWS
Galaxy Rhode Island
Municipal Bond Fund
Distribution of Total Net Assets
as of October 31, 1996
[CHART APPEARS HERE]
Rhode Island 91%
Puerto Rico 7%
Net Other Assets & Liabilities 2%
GALAXY RHODE ISLAND
MUNICIPAL BOND FUND
By Mary McGoldrick
Portfolio Manager
By adjusting investments in the Galaxy Rhode Island Municipal Bond Fund
for changes in interest rates and municipal bond supplies, we helped the Fund
perform relatively well in the 12 months ended October 31, 1996. During that
time the Fund's Retail A Shares had a total return of 5.22% before the deduction
of the maximum 3.75% front-end sales charge. That compares with a return of
5.71% for the Lehman Brothers Municipal Bond Index. Lipper does not track a
Rhode Island municipal bond fund average.
On October 31, 1996, the Fund's Retail A Shares had a 30-day SEC
annualized yield of 4.47% after deduction of the maximum 3.75% front-end sales
charges. This equaled a taxable yield of 6.98% for taxpayers in the 36% federal
income tax bracket who live in the State of Rhode Island.
Tight Supplies
When the period began, interest rates were dropping and supplies of new
municipal issues in Rhode Island were already tight. With sizable investments in
longer-term issues, the Fund enjoyed solid gains as bond prices rose. We further
enhanced returns by continuing to focus on municipals that could not be called
in for 10 years or more and by concentrating on those municipals that were
available in stronger supply and had especially attractive yields.
Galaxy Rhode Island Municipal Bond Fund
Growth of $10,000 investment*
<TABLE>
<CAPTION>
Lehman Brothers Galaxy
Municipal Bond Retail
Index A Shares
- ------------------------------------------
<S> <C> <C>
12/20/94 10,000 9,625
1995 11,445 10,711
10/31/96 12,050 11,270
</TABLE>
*Since inception on 12/20/94. Performance figures for Retail A Shares have been
restated to include the effect of the maximum 3.75% front-end sales charge
which became effective on December 1, 1995. The Lehman Brothers Municipal Bond
Index is an unmanaged index in which investors cannot invest. Results for the
index are calculated since 12/31/94 because the results are calculated at
month-end only. Results for the index do not reflect the expenses and
investment management fees incurred by the Fund.
Because supplies of municipals in Rhode Island remained relatively tight,
municipal prices there held up relatively well as interest rates turned around
in the months that followed. The Fund also benefited as we sold longer-term
issues that tend to be more vulnerable to interest rate changes. Since
municipals were in tight supply, we put most of the proceeds from these sales
into cash reserves.
In the spring, when rates had stabilized, we purchased longer-term issues
again to make the most of the attractive prices and yields that were then
available. As interest rates rose further, we bought issues maturing in 15 to 20
years, which we believed offered the best value. We continued to focus on issues
with good call protection, as well as issues with strong liquidity and high
credit quality.
Moving Forward
The Fund is well-positioned to make the most of future market changes. If
the economy slows, inflation remains moderate, and interest rates edge lower,
the Fund's longer-term holdings should provide attractive gains as bond prices
rally. In the meantime, our emphasis on good call protection, liquidity and
credit quality should help the Fund weather any market uncertainty that may
occur.
Mary McGoldrick has managed the Galaxy Rhode Island Municipal Bond Fund since
March of 1996. She has managed portfolios at Fleet and other banks for 10 years.
- --------------------------------------------------------------------------------
Investment returns and principal values will vary with market conditions so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. The Investment Adviser is presently waiving fees and/or
reimbursing expenses and may revise or discontinue such practice at any time.
Without such waivers and/or reimbursements, performance would be lower. Past
performance is no guarantee of future results. Unless otherwise indicated, total
return figures in this report include changes in share price, the effect of
sales charges, where applicable, and reinvestment of dividends and capital gains
distributions, if any.
8
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
PORTFOLIO OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES - 98.45%
Alaska - 1.33%
$ 375,000 Alaska Municipal Bond Authority, GO,
Series B
6.60%, 07/01/99
Insured: MBIA...................... $ 380,291
1,275,000 Anchorage Alaska Hospital
Sisters of Providence Project
6.75%, 10/01/00.................... 1,373,807
------------
1,754,098
------------
Arizona - 4.86%
1,000,000 Maricopa County, Unified School
District #97, GO
Deer Valley Project of 1986, Series D
6.80%, 07/01/00
Insured: MBIA..................... 1,081,250
1,455,000 Salt River Project Agricultural
Improvement and Power District,
Electric System, Series A
7.10%, 01/01/00................... 1,527,750
2,000,000 Salt River Project Agricultural
Improvement and Power District,
Electric System, Series B
5.25%, 01/01/13................... 1,937,500
2,000,000 Salt River Project Agricultural
Improvement and Power District,
Electric System, Series C
5.00%, 01/01/13................... 1,885,000
------------
6,431,500
------------
Colorado - 0.53%
700,000 Moffat County, PCR,
Pacificorp Projects
3.60%, 05/01/13
Insured: AMBAC.................... 700,000
------------
Connecticut - 4.50%
1,000,000 Connecticut State HEFA
St. Francis Hospital and Medical Center,
Series C
5.00%, 07/01/13
Insured: FGIC..................... 936,250
945,000 Connecticut State Housing Finance
Authority,
Housing Mortgage Finance Program,
Series A
6.10%, 05/15/13.................. 954,450
1,000,000 Connecticut State Housing Finance
Authority,
Housing Mortgage Finance Program,
Series B-1
6.25%, 05/15/11.................. 1,022,500
2,000,000 Connecticut State Special Tax Obligation
Transportation Infrastructure, Series A
5.40%, 09/01/10.................. 2,000,000
$ 500,000 Connecticut State Special Tax Obligation
Transportation Infrastructure, Series B
6.10%, 09/01/07.................. $ 530,625
500,000 South Central Regional Water Authority,
Water System, Series 11
5.75%, 08/01/12
Insured: FGIC.................... 510,000
------------
5,953,825
------------
Florida - 6.24%
1,000,000 Delray Beach, GO, Series A
5.10%, 02/01/13
Insured: FGIC.................... 955,000
1,070,000 Florida State Board of Education
Capital Outlay
Public Education, GO, Series D
5.13%, 06/01/18.................. 1,000,450
2,000,000 Jacksonville Electric Authority,
Bulk Power, Scherer 4 Project, Series A
5.20%, 10/01/10.................. 1,955,000
1,400,000 Orange County Sales Tax,
Series A
5.25%, 01/01/16
Insured: FGIC.................... 1,338,750
1,500,000 Orlando Utilities Commission
Water and Electric Revenue
5.00%, 10/01/13.................. 1,395,000
1,500,000 Pinellas County Resource
Recovery Revenue,
Series A
6.60%, 10/01/00
Insured: MBIA.................... 1,614,375
------------
8,258,575
------------
Georgia - 0.77%
1,000,000 Fulton County School District, GO
5.60%, 01/01/11.................. 1,012,500
------------
Idaho - 0.42%
500,000 Boise-Kuna Irrigation District,
Lucky Peak Hydroelectric Project
6.60%, 07/01/05.................. 551,875
------------
Illinois - 4.65%
2,000,000 Chicago, GO, Series B
5.13%, 01/01/22
Insured: AMBAC................... 1,832,500
1,000,000 Cook County, GO
7.25%, 11/01/07
Insured: MBIA.................... 1,156,250
50,000 Illinois State Revenue, GO
6.60%, 12/01/96.................. 51,107
1,000,000 Illinois State Revenue, GO
5.80%, 09/01/18
Insured: FGIC.................... 1,006,250
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Illinois (continued)
$ 1,000,000 Peoria Public Building Commission
School Building and Facilities,
District #150 Project
6.50%, 12/01/00
Insured: AMBAC................... $ 1,047,500
1,000,000 Regional Transportation Authority,
Series A
6.25%, 06/01/15.................. 1,055,000
------------
6,148,607
------------
Indiana - 4.86%
1,000,000 Indiana State Office Building
Commission, Series B
Capital Complex,
Government Center North
5.25%, 07/01/15
Insured: AMBAC................... 951,250
2,000,000 Indianapolis Local Public
Improvement Bond Bank, Series A
6.00%, 01/10/18.................. 2,042,500
1,800,000 Rockport, PCR, AEP Generating
Company Project, Series B
3.60%, 07/01/25
Insured: AMBAC................... 1,800,000
1,730,000 Vinton-Tecumseh School Building
Corp., First Mortgage
5.25%, 01/15/16
Insured: MBIA.................... 1,630,525
------------
6,424,275
------------
Iowa - 0.38%
500,000 Linn-Mar Community School District, GO
5.90%, 05/01/11
Insured: MBIA.................... 508,125
------------
Kentucky - 1.59%
1,000,000 Kentucky Housing Corp. Guaranteed,
Series C-3
5.70%, 01/01/11.................. 1,010,000
1,000,000 Kentucky State Turnpike Authority,
Economic Development
Road Revenue, Revitalization Projects
7.13%, 05/15/01.................. 1,098,750
------------
2,108,750
------------
Maine - 3.02%
250,000 Kennebec Water District
6.00%, 12/01/13.................. 256,563
500,000 Kennebec Water District
5.30%, 12/01/14.................. 479,375
500,000 Maine Health and Higher
Educational Facilities Authority, Series A
5.50%, 07/01/13
Insured: FSA..................... 496,250
$ 1,000,000 Maine Health and Higher
Educational Facilities Authority,
Maine Medical Center, Series C
5.00%, 11/15/13
Insured: FSA..................... 915,000
250,000 Maine Municipal Bond Bank, Series B
6.75%, 11/01/12.................. 271,250
500,000 Maine Municipal Bond Bank,
Sewer & Water Revenue,
SRF Program
Series A
6.50%, 11/01/08.................. 533,125
1,000,000 Maine State Housing Authority Mortgage,
Purchase,
Series C-1
6.50%, 11/15/11.................. 1,038,750
------------
3,990,313
------------
Maryland - 1.29%
1,750,000 Washington Suburban Sanitary District
Sewerage Disposal, GO and Revenue
5.25%, 06/01/13.................. 1,704,063
------------
Massachusetts - 6.86%
790,000 Boston, Massachusetts,
Boston City Hospital,
Series A
6.95%, 08/15/99.................. 845,300
250,000 Massachusetts Bay
Transportation Authority,
Transportation System, Series C
6.10%, 03/01/07.................. 266,250
1,000,000 Massachusetts Municipal Wholesale
Electric Copower Supply System,
Series D
6.00%, 07/01/11
Insured: MBIA.................... 1,038,750
2,000,000 Massachusetts State, GO, Series A
5.50%, 02/01/11.................. 1,995,000
1,000,000 Massachusetts State HEFA
Capital Asset Program, Series F
6.70%, 10/01/98
Insured: MBIA.................... 1,046,250
2,000,000 Massachusetts State HEFA
Baystate Medical Center, Series D
5.00%, 07/01/12
Insured: FGIC.................... 1,895,000
50,000 Massachusetts State HEFA
Brigham and Womens Hospital, Series D
6.50%, 07/01/04.................. 53,813
200,000 Massachusetts State HEFA
South Shore Hospital, Series D
6.50%, 07/01/10.................. 216,000
50,000 Massachusetts State Housing
Finance Agency,
Residential Development, Series C
6.88%, 11/15/11.................. 53,750
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Massachusetts (continued)
$ 640,000 Massachusetts State Housing
Finance Agency,
Single Family, Series 22
6.10%, 06/01/16.................. $ 649,600
1,000,000 Massachusetts State, SP OB, Series A
5.80%, 06/01/14.................. 1,011,250
------------
9,070,963
------------
Michigan - 2.54%
1,000,000 Central Michigan University
6.00%, 10/01/13
Insured: MBIA.................... 1,038,750
1,375,000 Hartford Public Schools,
Building & Site, GO
5.25%, 05/01/20
Insured: MBIA.................... 1,287,344
1,000,000 Michigan Public Power Agency,
Belle River Project, Series A
5.50%, 01/01/13.................. 982,500
50,000 Michigan State Trunk Line, Series A
6.00%, 08/15/19.................. 50,438
------------
3,359,032
------------
Minnesota - 0.83%
1,000,000 Minnesota Public Facilities Authority,
Water Pollution Control,
Series A
6.90%, 03/01/00.................. 1,093,750
------------
Nevada - 1.93%
1,000,000 Clark County, GO and Revenue, Series A
6.00%, 06/01/02
Insured: AMBAC................... 1,067,500
1,000,000 Las Vegas Sewer, GO and Revenue,
Series B
5.00%, 01/01/09
Insured: MBIA.................... 971,250
500,000 Nevada State, GO, Series B
6.00%, 05/01/10.................. 517,500
------------
2,556,250
------------
New Hampshire - 0.95%
1,000,000 Manchester, GO, Series B
5.25%, 07/01/08.................. 1,001,250
250,000 New Hampshire State
Turnpike System
6.00%, 04/01/13.................. 255,000
------------
1,256,250
------------
New Jersey - 0.76%
1,000,000 Mercer County Improvement Authority,
Customer Receipts, Justice Complex
6.05%, 01/01/07.................. 1,001,120
------------
New York - 6.10%
$ 1,000,000 Battery Park City Authority, Senior,
Series A
5.50%, 11/01/10.................. $ 980,000
1,000,000 New York City Municipal Water
Finance Authority,
Water and Sewer System, Series A
5.50%, 06/15/11.................. 998,750
250,000 New York State, GO
6.10%, 11/15/09.................. 262,188
1,000,000 New York State, GO
5.50%, 06/15/10.................. 1,000,000
1,000,000 New York State Dormitory Authority,
University of Rochester
6.50%, 07/01/09.................. 1,031,460
125,000 New York State Local Government
Assistance Corp., Series A
7.00%, 04/01/12.................. 138,750
1,000,000 New York State Local Government
Assistance Corp., Series B
5.63%, 04/01/13.................. 998,750
2,000,000 New York State Local Government
Assistance Corp., Series C
5.38%, 04/01/12.................. 1,945,000
675,000 Triborough Bridge and Tunnel Authority,
General Purpose, Series P
6.80%, 01/01/02.................. 718,875
------------
8,073,773
------------
North Carolina - 1.94%
1,500,000 Charlotte Certificates of Participation
Convention Facility Project
6.35%, 12/01/00
Insured: AMBAC................... 1,601,250
930,000 North Carolina Housing Finance Agency,
Single Family Revenue, Series Y
6.30%, 09/01/15.................. 959,063
------------
2,560,313
------------
Ohio - 2.98%
1,000,000 Cleveland Waterworks, First Mortgage,
Series F-92 A
6.25%, 01/01/15
Insured: AMBAC................... 1,047,500
1,000,000 Cleveland Waterworks, Refunding
and Improvement, First Mortgage, Series H
5.50%, 01/01/10
Insured: MBIA.................... 1,013,750
1,000,000 Ohio State Building Authority,
State Facilities, Adult Correctional, Series A
6.00%, 04/01/06
Insured: AMBAC................... 1,080,000
750,000 Ohio State Public Facilities Commission,
Higher Education Facilities, Series B
6.50%, 12/01/99
Insured: AMBAC................... 801,563
------------
3,942,813
------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
[LOGO OF Tax-Exempt Bond Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Pennsylvania - 3.83%
$ 1,000,000 Luzerne County, GO, Series B
6.00%, 09/15/11
Insured: FGIC.................... $ 1,016,250
1,000,000 Pennsylvania State, GO, Second Series A
6.50%, 11/01/04
Insured: MBIA.................... 1,087,500
955,000 Pennsylvania State Higher Education
Assistance Agency, Student Loan
Revenue, Series A
6.80%, 12/01/00.................. 1,023,044
1,900,000 Pennsylvania Higher Educational
Facilities Authority, Health Services,
University of Pennsylvania, Series A
5.88%, 01/01/15.................. 1,940,375
------------
5,067,169
------------
Rhode Island - 8.22%
50,000 Barrington, GO
6.35%, 12/01/07.................. 53,625
135,000 Jamestown, GO
6.75%, 09/01/10.................. 144,956
200,000 Rhode Island Clean Water Protection
Finance Agency,
PCR, Revolving Fund, Pooled Loan Issue,
Series A
6.75%, 10/01/13
Insured: MBIA.................... 218,250
1,000,000 Rhode Island Housing and Mortgage
Finance Corp.,
Homeownership Opportunity, Series 19-A
5.70%, 04/01/15.................. 995,000
700,000 Rhode Island Housing and Mortgage
Finance Corp.,
Homeownership Opportunity, Series 13
6.70%, 10/01/15.................. 730,625
500,000 Rhode Island State,
Consolidated Capital Development Loan,
GO, Series A
5.50%, 08/01/07.................. 511,875
1,000,000 Rhode Island State,
Consolidated Capital Development Loan,
GO, Series A
5.10%, 11/01/11.................. 953,750
250,000 Rhode Island State,
Consolidated Capital Development Loan,
GO, Series B
6.25%, 05/15/07.................. 267,813
1,000,000 Rhode Island State Health and
Educational Building Corp.,
Higher Education, Auxiliary, Series A
5.50%, 09/15/13
Insured: MBIA.................... 986,250
$ 50,000 Rhode Island State Health and
Educational Building Corp.,
Higher Education, Brown University
6.60%, 09/01/05.................. $ 53,250
1,500,000 Rhode Island State Health and
Educational Building Corp.,
Higher Education, Johnson and Wales
University
6.38%, 04/01/12
Insured: Connie Lee.............. 1,608,750
1,500,000 Rhode Island State Health and
Educational Building Corp.,
Higher Education,
Johnson and Wales University, Series A
5.75%, 04/01/12
Insured: Connie Lee.............. 1,507,500
500,000 Rhode Island State Health and
Educational Building Corp.,
Miriam Hospital, Series B
6.50%, 04/01/13.................. 509,375
1,000,000 Rhode Island State Public Buildings
Authority
State Projects, Series A
5.10%, 02/01/05
Insured: AMBAC................... 1,005,000
50,000 Rhode Island State Public Buildings
Authority
State Projects, Series A
5.25%, 08/01/06.................. 49,750
355,000 Rhode Island State Public Buildings
Authority
State Projects, Series A
6.00%, 02/01/11
Insured: AMBAC................... 374,525
395,000 Rhode Island State Public Buildings
Authority State Projects,
Unrefunded Balance, Series A
6.00%, 02/01/11
Insured: AMBAC................... 403,394
50,000 Rhode Island State Student Loan
Authority, Series A
6.40%, 12/01/99.................. 52,125
450,000 Rhode Island State,
Tax Anticipation Notes, GO
4.50%, 06/30/97.................. 452,322
------------
10,878,135
------------
South Carolina - 3.40%
2,100,000 Oconee County, PCR,
Duke Power Co. Project
5.80%, 04/01/14.................. 2,142,000
500,000 Piedmont Municipal Power Agency,
Electric Revenue
6.10%, 01/01/06
Insured: MBIA.................... 540,000
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
[LOGO OF Tax-Exempt Bond Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
South Carolina (continued)
$ 750,000 Richland County
Certificates of Participation
6.90%, 02/01/01
Insured: FGIC.......................... $ 818,438
1,000,000 South Carolina State Public
Service Authority, Series A
5.75%, 01/01/22
Insured: MBIA.......................... 1,003,750
------------
4,504,188
------------
South Dakota - 1.37%
1,000,000 Rapid City, Sales Tax Revenue, Series B
6.20%, 06/01/12
Insured: FGIC.......................... 1,045,000
750,000 South Dakota
Housing Development Authority,
Homeownership Mortgage, Series A
5.30%, 05/01/03........................ 761,250
------------
1,806,250
------------
Tennessee - 2.72%
500,000 Memphis Water Revenue, Series A
6.00%, 01/01/07........................ 527,500
2,000,000 Metropolitan Government
Nashville and Davidson County, GO
5.88%, 05/15/26........................ 2,027,500
1,000,000 Metropolitan Government
Nashville and Davidson County
Health and Education Facilities Board,
Vanderbilt University, Series B
6.30%, 10/01/14........................ 1,045,000
------------
3,600,000
------------
Texas - 3.42%
215,000 Harris County, Toll Road,
Unrefunded, Series A
6.50%, 08/15/17
Insured: AMBAC......................... 238,113
35,000 Harris County, Toll Road,
Unrefunded, Series A
6.50%, 08/15/17
Insured: AMBAC......................... 37,669
1,000,000 North Central
Health Facilities Development Corp.,
Presbyterian Healthcare
5.90%, 06/01/21........................ 993,750
950,000 North Texas Higher Education Authority,
Student Loan Revenue, Series A
6.50%, 04/01/99
Insured: AMBAC......................... 974,938
2,000,000 San Antonio Airport System
7.13%, 07/01/05
Insured: AMBAC......................... 2,285,000
------------
4,529,470
------------
Utah - 2.28%
$ 2,000,000 Intermountain Power Agency, Utah
Power Supply, Series A
5.50%, 07/01/10........................ $ 1,995,000
1,000,000 Intermountain Power Agency, Utah
Power Supply, Series F
6.75%, 07/01/98........................ 1,023,770
------------
3,018,770
------------
Vermont - 0.74%
1,000,000 Vermont State, GO, Series A
5.13%, 01/15/14........................ 977,500
------------
Virginia - 3.36%
1,000,000 Norfolk
Industrial Development Authority,
Childrens Hospital, Kings Group
6.50%, 06/01/21
Insured: AMBAC......................... 1,053,750
2,000,000 Upper Occoquan Sewage Authority,
Regional Sewage Revenue, Series A
5.00%, 07/01/25
Insured: MBIA.......................... 1,807,500
1,500,000 Virginia Beach, Public Improvement,
GO, Series A
6.88%, 05/01/05........................ 1,588,125
------------
4,449,375
------------
Washington - 5.41%
1,000,000 Lewis County Public Utilities
District No. 1,
Cowlitz Falls Hydroelectric
5.50%, 10/01/13........................ 992,500
1,000,000 Seattle Municipal Light and Power
5.38%, 11/01/18........................ 957,500
1,000,000 Seattle Municipality, Metropolitan Seattle
Sewer Revenue, Series S
6.80%, 01/01/02........................ 1,045,000
500,000 Washington State, GO, Series 93A
5.75%, 10/01/17........................ 503,750
1,000,000 Washington State, GO, Series R-96B
5.00%, 07/01/09........................ 965,000
1,500,000 Washington State Public Power
Supply System,
Nuclear Project No. 1, Series A
7.25%, 07/01/99........................ 1,610,625
1,000,000 Washington State Public Power
Supply System,
Nuclear Project No. 2, Series C
7.30%, 07/01/00........................ 1,087,500
------------
7,161,875
------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Tax-Exempt Bond Fund
[THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
LOGO APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
West Virginia - 0.37%
$ 500,000 West Virginia State
Housing Development Fund, Series A
5.50%, 11/01/14........................ $ 487,500
------------
Wisconsin - 2.77%
600,000 Milwaukee Metropolitan Sewer District,
GO, Series A
6.50%, 10/01/98........................ 624,750
500,000 Mukwonago School District, GO
5.90%, 03/01/13
Insured: AMBAC......................... 529,375
500,000 Verona Area School District, GO,
Series A
5.90%, 10/01/13
Insured: FGIC.......................... 510,000
1,000,000 Wisconsin State, GO, Series A
5.00%, 05/01/13........................ 951,250
1,000,000 Wisconsin State Transportation,
Pre-refunded, Series B
5.75%, 07/01/12........................ 1,053,750
------------
3,669,125
------------
Other Territories - 1.23%
1,650,000 Puerto Rico Public Buildings Authority,
Government Facilities, Series A
5.50%, 07/01/21........................ 1,633,500
------------
Total Investments - 98.45%............................... 130,243,627
------------
(Cost $127,340,806)
Net Other Assets and Liabilities - 1.55%................. 2,045,232
------------
Net Assets - 100.00%..................................... $132,288,859
============
</TABLE>
- ----------------------------------------------------------
AMBAC American Municipal Bond Assurance Corp.
Connie Lee College Construction Loan Association
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance
GO General Obligation
HEFA Health and Educational Facilities Authority
MBIA Municipal Bond Investors Assurance
PCR Pollution Control Revenue
SP OB Special Obligation
See Notes to Financial Statements.
14
<PAGE>
New York Municipal Bond Fund
[THE GALAXY FUND PORTFOLIO OF INVESTMENTS
LOGO APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES - 99.66%
New York - 99.66%
$ 1,000,000 Albany County, GO
5.50%, 06/01/08
Insured: FGIC........................... $ 1,016,250
500,000 Albany County, GO
5.25%, 11/01/08
Insured: MBIA........................... 498,748
500,000 Albany County, GO
5.25%, 11/01/09
Insured: MBIA........................... 496,250
300,000 Battery Park City Authority
7.60%, 05/01/06......................... 328,875
2,000,000 Battery Park City Authority
Senior Lien, Series A
5.00%, 11/01/08......................... 1,885,000
100,000 Canandaigua City School District, GO
6.50%, 06/01/10
Insured: AMBAC.......................... 109,625
150,000 Chenango, GO
6.00%, 07/15/06......................... 160,125
650,000 Farmingdale Union Free School
District, GO
5.13%, 08/01/07
Insured: FGIC........................... 641,875
100,000 Grand Island, GO
6.10%, 05/15/04......................... 105,250
1,000,000 Hempstead Town, GO
5.00%, 08/01/06
Insured: AMBAC.......................... 996,250
100,000 Huntington, GO, Series B
6.25%, 04/15/07
Insured: AMBAC.......................... 107,000
500,000 Irvington Union Free School District,
GO, Series B
5.10%, 07/15/06
Insured: AMBAC.......................... 501,875
100,000 Monroe County Public Improvement,
GO
6.20%, 06/01/05
Insured: AMBAC.......................... 106,875
750,000 Monroe County Public Improvement,
GO
6.10%, 03/01/09
Insured: MBIA........................... 785,625
100,000 Monroe County Public Improvement,
GO
6.10%, 06/01/14
Insured: AMBAC........................... 109,625
900,000 Monroe County Public Improvement,
GO, Unrefunded Balance
6.10%, 06/01/14
Insured: AMBAC........................... 942,750
1,000,000 Monroe County, Water Authority,
Series A
6.25%, 08/01/11.......................... 1,042,500
$ 450,000 Municipal Assistance Corporation,
Series 59
6.50%, 07/01/07.......................... $ 456,705
750,000 Municipal Assistance Corporation,
Series 61
5.75%, 07/01/08.......................... 757,583
225,000 Nassau County, GO
6.10%, 05/15/05
Insured: MBIA............................ 243,000
500,000 New Castle Public Improvement, GO
5.88%, 09/15/09.......................... 516,875
200,000 New Paltz Central School District, GO
6.00%, 06/15/06
Insured: AMBAC........................... 213,500
750,000 New York City Municipal Water
Finance Authority,
Water and Sewer Assistance, Series A
5.90%, 06/15/04.......................... 799,688
500,000 New York City Municipal Water
Finance Authority,
Water and Sewer Assistance, Series A
6.10%, 06/15/06.......................... 535,000
1,675,000 New York City Municipal Water
Finance Authority,
Water and Sewer Assistance, Series A
5.50%, 06/15/11.......................... 1,672,906
1,000,000 New York City Municipal Water
Finance Authority,
Water and Sewer Assistance, Series A
6.00%, 06/15/17.......................... 1,008,750
1,000,000 New York City Municipal Water
Finance Authority,
Water and Sewer Assistance, Series A
5.75%, 06/15/18
Insured: AMBAC........................... 996,250
750,000 New York City Municipal Water
Finance Authority,
Water and Sewer Assistance, Series B
5.75%, 06/15/13
Insured: MBIA............................ 774,375
2,000,000 New York City Municipal Water
Finance Authority,
Water and Sewer Assistance, Series B
5.75%, 06/15/26
Insured: MBIA............................ 1,995,000
200,000 New York State, GO
6.70%, 03/01/07.......................... 217,500
1,000,000 New York State, GO
6.25%, 09/15/07.......................... 1,070,000
100,000 New York State, GO
6.90%, 02/01/08.......................... 109,000
500,000 New York State, GO
6.25%, 06/15/08.......................... 530,000
1,000,000 New York State, GO
5.50%, 06/15/10.......................... 1,000,000
1,000,000 New York State, GO
6.13%, 11/15/10.......................... 1,040,000
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
New York Municipal Bond Fund
[THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
LOGO APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
New York (continued)
$ 500,000 New York State, GO
6.00%, 11/15/11.......................... $ 519,375
500,000 New York State, GO, Series A
5.50%, 03/15/05.......................... 512,500
1,030,000 New York State Dormitory Authority
Cornell University
5.40%, 07/01/12.......................... 1,023,563
500,000 New York State Dormitory Authority
New York University
6.25%, 07/01/09
Insured: FGIC............................ 530,000
1,000,000 New York State Dormitory Authority
St. Johns University
5.70%, 07/01/26.......................... 993,750
500,000 New York State Dormitory Authority
University of Rochester
6.50%, 07/01/09.......................... 515,730
1,000,000 New York State Dormitory Authority
University of Rochester,
Strong Memorial Hospital
5.40%, 07/01/06.......................... 1,020,000
1,500,000 New York State Energy Research
& Development Authority,
Gas Facilities, Brooklyn Union Gas
Company, Series A
5.50%, 01/01/21
Insured: MBIA............................ 1,460,625
1,000,000 New York State Environmental
Facilities Corp.,
State Water, Revolving Fund, PCR,
NYC Municipal Water
5.60%, 06/15/05.......................... 1,043,750
1,000,000 New York State Environmental
Facilities Corp., State Water,
Revolving Fund, PCR,
Pooled Loan, Series A
5.35%, 09/15/06.......................... 1,028,750
1,000,000 New York State Environmental
Facilities Corp., State Water,
Revolving Fund, PCR,
Pooled Loan, Series A
5.40%, 09/15/07.......................... 1,022,500
500,000 New York State Environmental
Facilities Corp., State Water,
Revolving Fund, PCR,
Pooled Loan, Series B
6.50%, 09/15/08.......................... 547,500
100,000 New York State Environmental
Facilities Corp., State Water,
Revolving Fund, PCR, Series A
6.40%, 09/15/06.......................... 109,500
100,000 New York State Environmental
Facilities Corp., State Water,
Revolving Fund, PCR, Series E
6.30%, 06/15/02.......................... 108,750
$ 100,000 New York State Environmental
Facilities Corp., State Water,
Revolving Fund, PCR,
Series E
6.88%, 06/15/10.......................... 110,000
500,000 New York State Housing Finance Agency,
Multifamily Mortgage Housing,
Series A
6.95%, 08/15/12.......................... 530,625
300,000 New York State Local Government
Assistance Corp., Series A
6.88%, 04/01/06.......................... 330,375
250,000 New York State Local Government
Assistance Corp., Series B
6.00%, 04/01/07.......................... 263,125
1,000,000 New York State Local Government
Assistance Corp., Series B
5.63%, 04/01/13.......................... 998,750
1,000,000 New York State Local Government
Assistance Corp., Series B
6.00%, 04/01/18.......................... 1,012,500
1,250,000 New York State Local Government
Assistance Corp., Series C
6.00%, 04/01/07.......................... 1,315,625
250,000 New York State Local Government
Assistance Corp., Series C
6.50%, 04/01/15.......................... 263,125
300,000 New York State Local Government
Assistance Corp., Series D
7.00%, 04/01/11.......................... 330,750
750,000 New York State Medical Care Facilities
Finance Agency,
Second Mortgage Program,
Health Care Projects, Series A
5.05%, 02/15/08.......................... 729,375
800,000 New York State Medical Care Facilities
Finance Agency,
Second Mortgage Program,
Health Care Projects, Series B
6.35%, 11/01/14.......................... 826,000
500,000 New York State Mortgage Agency
Homeowner Mortgage, Series 27
6.90%, 04/01/15.......................... 533,125
145,000 New York State Mortgage Agency
Revenue, Series A,
6.88%, 04/01/17.......................... 146,631
1,000,000 New York State Power Authority
Revenue, Series AA
6.38%, 01/01/12.......................... 1,046,250
500,000 New York State Power Authority
Revenue, Series BB
6.30%, 01/01/07.......................... 533,750
1,000,000 New York State Power Authority
Revenue, Series CC
5.00%, 01/01/08.......................... 978,750
500,000 New York State Power Authority
Revenue, Series Z
6.63%, 01/01/12.......................... 530,625
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
New York Municipal Bond Fund
[THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
LOGO APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
New York (continued)
$ 1,750,000 New York State Thruway Authority Revenue,
Highway & Bridge Trust Fund,
Series A
5.25%, 04/01/14
Insured: AMBAC............................. $ 1,697,500
1,250,000 New York State Thruway Authority
Revenue, Series A
5.88%, 01/01/07............................ 1,296,875
500,000 Onandaga County, GO
5.88%, 02/15/10............................ 529,375
250,000 Orange County, GO
6.20%, 12/01/09............................ 263,125
100,000 Orange County, GO
6.20%, 12/01/10............................ 105,125
100,000 Orleans County, GO
6.50%, 09/15/08............................ 111,125
450,000 Oyster Bay, GO, Series A
5.25%, 04/15/05
Insured: FGIC.............................. 454,500
500,000 Oyster Bay, GO, Series A
5.30%, 04/15/08
Insured: FGIC.............................. 498,125
200,000 Port Authority of New York
and New Jersey
Consolidated Loan, Series 71
6.90%, 07/15/09............................ 212,750
500,000 Port Authority of New York
and New Jersey,
Consolidated Loan, Series 78
6.50%, 04/15/11............................ 523,125
500,000 Port Authority of New York
and New Jersey,
Consolidated Loan, Series 82
5.70%, 08/01/07............................ 522,500
1,000,000 Port Authority of New York
and New Jersey,
Consolidated Loan, Series 86
5.00%, 07/01/06............................ 1,008,750
500,000 Port Authority of New York
and New Jersey,
Consolidated Loan, Series 100
5.75%, 12/15/13............................ 510,625
500,000 Rochester, GO, Series A
5.00%, 08/15/07
Insured: AMBAC............................. 498,125
500,000 Syracuse, GO
6.70%, 02/15/07............................ 548,750
1,000,000 Syracuse, GO, Series A
5.10%, 02/15/08............................ 981,250
500,000 Tompkins County, GO, Series B
5.63%, 09/15/12............................ 503,750
1,000,000 Triborough Bridge and
Tunnel Authority, Revenue,
General Purpose, Series A
5.00%, 01/01/07............................ 988,750
500,000 Triborough Bridge
and Tunnel Authority, Revenue,
General Purpose, Series X
6.00%, 01/01/06............................ 525,625
$ 500,000 Triborough Bridge
and Tunnel Authority, Revenue,
General Purpose, Series X
6.00%, 01/01/07............................ 523,125
750,000 Triborough Bridge
and Tunnel Authority, Revenue,
General Purpose, Series X
6.00%, 01/01/08............................ 781,875
300,000 Triborough Bridge
and Tunnel Authority, Revenue,
General Purpose, Series X
6.63%, 01/01/12............................ 337,125
750,000 Triborough Bridge
and Tunnel Authority, Revenue,
General Purpose, Series Y
6.00%, 01/01/12............................ 795,938
100,000 Triborough Bridge
and Tunnel Authority, Revenue, SP OB
6.10%, 01/01/05
Insured: FGIC.............................. 106,500
250,000 Triborough Bridge
and Tunnel Authority, Revenue, SP OB
6.15%, 01/01/06
Insured: FGIC.............................. 267,813
350,000 Triborough Bridge
and Tunnel Authority, Revenue, SP OB
6.20%, 01/01/07
Insured: FGIC.............................. 373,625
500,000 United Nations Development Corp.
Senior Lien, Series A
6.00%, 07/01/06............................ 527,500
2,000,000 United Nations Development Corp.
Senior Lien, Series A
6.00%, 07/01/12............................ 2,032,500
500,000 United Nations Development Corp.
Subordinate Lien, Series B
6.20%, 07/01/11............................ 521,250
1,000,000 White Plains, GO
4.80%, 01/15/07............................ 963,750
------------
Total Investments - 99.66%................................... 63,697,055
------------
(Cost $62,151,913)
Net Other Assets and Liabilities - 0.34%..................... 218,870
------------
Net Assets - 100.00%......................................... $ 63,915,925
============
</TABLE>
- -------------------------------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Federal Guaranty Insurance Corp.
GO General Obligation
MBIA Municipal Bond Investors Assurance
PCR Pollution Control Revenue
SP OB Special Obligation
See Notes to Financial Statements.
17
<PAGE>
[THE GALAXY FUND Connecticut Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES - 99.77%
Connecticut - 99.26%
$ 245,000 Bolton, GO
5.10%, 06/01/06.......................... $ 243,163
145,000 Bozrah, GO
4.90%, 04/15/03
Insured: MBIA............................ 147,526
355,000 Bristol Water, GO
5.15%, 06/15/07.......................... 357,663
175,000 Brookfield, GO
5.10%, 07/15/07.......................... 174,781
210,000 Brookfield, GO
5.20%, 07/15/09.......................... 207,638
250,000 Cheshire, GO
4.30%, 08/15/01.......................... 247,813
250,000 Cheshire, GO
5.10%, 08/15/07.......................... 248,750
400,000 Connecticut State Airport Revenue,
Bradley International Airport
7.40%, 10/01/04
Insured: FGIC............................ 469,000
325,000 Connecticut State Clean Water Fund
5.50%, 10/01/04.......................... 342,875
200,000 Connecticut State Clean Water Fund
6.00%, 10/01/12.......................... 214,250
750,000 Connecticut State
Development Authority, Water
Facility, Stamford Water Co. Project
5.30%, 09/01/28.......................... 694,688
200,000 Connecticut State, GO
6.70%, 12/01/98.......................... 209,524
100,000 Connecticut State, GO, Series A
4.75%, 11/15/01.......................... 101,250
250,000 Connecticut State, GO, Series A
5.00%, 11/15/03.......................... 255,000
250,000 Connecticut State, GO, Series A
5.10%, 11/15/04.......................... 254,688
200,000 Connecticut State, GO, Series B
4.80%, 09/15/01.......................... 203,000
75,000 Connecticut State, GO, Series B
5.25%, 03/15/06.......................... 76,594
100,000 Connecticut State, GO, Series B
6.50%, 08/01/06.......................... 107,375
400,000 Connecticut State, GO, Series B
5.40%, 03/15/08.......................... 408,000
315,000 Connecticut State, GO, Series C
4.90%, 05/01/04.......................... 317,756
100,000 Connecticut State, GO, Series C
5.00%, 05/01/05.......................... 100,625
500,000 Connecticut State, GO, Series C
5.50%, 08/15/05.......................... 520,625
1,000,000 Connecticut State, GO, Series D
4.70%, 08/01/03.......................... 1,002,500
300,000 Connecticut State, GO, Series D
4.75%, 08/01/04.......................... 299,625
500,000 Connecticut State, GO, Series D
5.00%, 08/01/07.......................... 495,625
$ 500,000 Connecticut State, GO, Series E
6.00%, 03/15/12.......................... 533,125
50,000 Connecticut State HEFA
Cherry Brook Nursing Center Project
5.88%, 11/01/12.......................... 50,875
250,000 Connecticut State HEFA
Connecticut State University System,
Series A
5.13%, 11/01/09
Insured: MBIA............................ 244,688
500,000 Connecticut State HEFA
Connecticut State University System,
Series A
5.13%, 11/01/10
Insured: MBIA............................ 486,250
750,000 Connecticut State HEFA
Greenwich Hospital Issue, Series A
5.30%, 07/01/08
Insured: MBIA............................ 750,000
375,000 Connecticut State HEFA
Newington Childrens Hospital, Series A
5.65%, 07/01/05
Insured: MBIA............................ 392,813
200,000 Connecticut State HEFA
St. Francis Hospital and Medical Center,
Series C
4.80%, 07/01/07
Insured: FGIC............................ 192,500
300,000 Connecticut State HEFA
St. Francis Hospital and Medical Center,
Series C
5.00%, 07/01/13
Insured: FGIC............................ 280,875
200,000 Connecticut State HEFA
Taft School Issue, Series B
5.25%, 07/01/13.......................... 189,750
200,000 Connecticut State HEFA
Taft School Issue, Series B
5.40%, 07/01/20.......................... 187,000
350,000 Connecticut State HEFA
Yale University, Series K
6.38%, 07/01/13.......................... 358,750
200,000 Connecticut State Housing
Finance Authority,
Housing Mortgage Finance Program,
Series A
5.40%, 05/15/04.......................... 204,500
105,000 Connecticut State Housing
Finance Authority,
Housing Mortgage Finance Program,
Series A
5.60%, 05/15/05.......................... 108,806
125,000 Connecticut State Housing
Finance Authority,
Housing Mortgage Finance Program,
Series A-1
5.85%, 11/15/16.......................... 125,156
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
[THE GALAXY FUND Connecticut Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Connecticut (continued)
$ 400,000 Connecticut State Housing
Finance Authority,
Housing Mortgage Finance Program,
Series B
6.25%, 11/15/05.............................$ 422,500
100,000 Connecticut State Housing
Finance Authority,
Housing Mortgage Finance Program,
Series B
6.20%, 05/15/12............................. 102,250
415,000 Connecticut State Housing
Finance Authority,
Housing Mortgage Finance Program,
Series F-1
5.60%, 05/15/14............................. 409,294
300,000 Connecticut State Resource
Recovery Authority,
Mid-Connecticut System, Series A
5.60%, 11/15/99............................. 309,750
620,000 Connecticut State Special Assessment,
Unemployment Compensation, Series A
4.60%, 11/15/00
Insured: AMBAC.............................. 623,875
400,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
6.80%, 06/01/99............................. 424,000
200,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
4.75%, 09/01/01............................. 201,500
100,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.00%, 09/01/03............................. 101,375
150,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.10%, 09/01/04............................. 152,250
950,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.13%, 09/01/05............................. 960,688
500,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.25%, 09/01/06............................. 506,250
700,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.40%, 04/01/07............................. 712,250
1,250,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.25%, 09/01/07............................. 1,270,313
925,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series A
5.38%, 09/01/08............................. 943,500
750,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series B
4.40%, 10/01/04............................. 722,813
400,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series B
6.13%, 09/01/12............................. 430,500
170,000 Connecticut State Special Tax Obligation,
Transportation Infrastructure, Series C
4.50%, 10/01/04............................. 165,113
$ 200,000 Danbury, GO
5.63%, 02/01/13............................. 201,250
175,000 East Haddam, GO
5.00%, 05/01/06
Insured: MBIA............................... 173,688
100,000 East Hampton, GO
4.95%, 06/15/04
Insured: MBIA............................... 101,750
250,000 East Hampton, GO
5.10%, 06/15/05
Insured: MBIA............................... 254,375
175,000 Groton City, GO
5.30%, 05/15/06............................. 176,094
50,000 Groton City, GO
5.40%, 05/15/07............................. 50,563
250,000 Groton Town, GO, Lot A
5.00%, 08/15/07............................. 242,813
500,000 Guilford, GO
5.00%, 11/15/08............................. 481,875
500,000 Hamden, GO
5.50%, 08/15/14
Insured: MBIA............................... 497,500
250,000 Hartford County,
Metropolitan District, GO
6.70%, 10/01/09............................. 284,688
500,000 Hartford County,
Metropolitan District, GO
5.10%, 12/01/09............................. 490,000
200,000 Madison, GO
5.00%, 05/01/06............................. 198,000
300,000 Meriden, GO
5.75%, 10/15/04
Insured: AMBAC.............................. 322,125
100,000 Middletown, GO
6.50%, 04/15/98............................. 103,500
100,000 Middletown, GO
4.75%, 04/15/01............................. 101,750
400,000 Milford, GO
5.00%, 01/15/08............................. 395,000
370,000 Montville, GO
5.30%, 12/01/09............................. 370,925
370,000 Montville, GO
5.35%, 12/01/10............................. 371,388
100,000 New Milford, GO
5.80%, 10/01/01............................. 106,000
250,000 New Milford, GO
5.50%, 08/01/08............................. 260,625
140,000 North Branford, GO
5.00%, 02/01/11............................. 131,950
150,000 North Branford, GO
5.00%, 12/01/12............................. 141,000
350,000 Norwalk, GO
5.00%, 01/15/05............................. 353,938
200,000 Norwalk, GO
5.00%, 01/15/06............................. 200,500
500,000 Norwich, GO
5.63%, 09/15/07............................. 522,500
50,000 Regional School District No. 5, GO
4.90%, 05/15/02............................. 50,813
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
[THE GALAXY FUND Connecticut Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Connecticut (continued)
$ 330,000 Regional School District No. 5, GO
5.05%, 05/15/04.......................... $ 329,175
135,000 Regional School District No. 5, GO
5.15%, 05/15/05.......................... 136,688
225,000 South Central Regional
Water Authority,
Water System, Series 11
5.75%, 08/01/12
Insured: FGIC............................ 229,500
200,000 South Central Regional
Water Authority,
Water System, Series 12
4.90%, 08/01/04
Insured: FGIC............................ 199,750
100,000 South Central Regional
Water Authority,
Water System, Series 12
5.00%, 08/01/05
Insured: FGIC............................ 99,875
175,000 South Central Regional
Water Authority,
Water System, Series 12
5.13%, 08/01/07
Insured: FGIC............................ 173,688
250,000 South Central Regional
Water Authority,
Water System, Series 12
5.25%, 08/01/12
Insured: FGIC............................ 245,000
110,000 Stonington, GO
5.00%, 06/15/06.......................... 110,000
75,000 Torrington, GO
5.20%, 04/15/06
Insured: FGIC............................ 76,219
100,000 Trumbull, GO
6.00%, 05/15/04.......................... 108,125
55,000 Washington, GO
4.85%, 11/01/10.......................... 51,700
55,000 Washington, GO
4.90%, 11/01/11.......................... 51,563
100,000 West Hartford, GO
6.00%, 05/01/07.......................... 107,500
100,000 West Haven, GO, Series A
4.75%, 12/01/01.......................... 101,250
250,000 West Haven, GO, Series B
5.20%, 06/01/05.......................... 253,125
250,000 West Haven, GO, Series B
5.40%, 06/01/09.......................... 250,000
------------
29,371,411
------------
Other Territories - 0.51%
$ 150,000 Puerto Rico Telephone Authority,
Series M
4.80%, 01/01/01.......................... $ 151,313
------------
Total Investments - 99.77%................................. 29,522,724
------------
(Cost $29,346,410)
Net Other Assets and Liabilities - 0.23%................... 69,306
------------
Net Assets - 100.00%....................................... $ 29,592,030
============
</TABLE>
- -----------------------------------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Federal Guaranty Insurance Corp.
GO General Obligation
HEFA Health and Educational Facilities Authority
MBIA Municipal Bond Investors Assurance
See Notes to Financial Statements.
20
<PAGE>
[THE GALAXY FUND Massachusetts Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES - 97.71%
Massachusetts - 97.71%
$ 250,000 Andover, GO
5.10%, 11/15/08............................ $ 241,875
300,000 Attleboro, GO
5.20%, 07/01/02
Insured: AMBAC............................. 308,601
250,000 Attleboro, GO
5.50%, 12/01/13............................ 249,375
375,000 Billerica, GO, Lot A
5.40%, 07/15/09
Insured: MBIA.............................. 373,594
250,000 Boston, GO
5.25%, 10/01/05
Insured: MBIA.............................. 255,938
200,000 Boston, GO, Series A
5.00%, 02/01/03
Insured: AMBAC............................. 203,000
250,000 Boston, GO, Series A
4.70%, 07/01/05
Insured: AMBAC............................. 244,375
70,000 Boston, GO, Series A
5.35%, 02/01/06
Insured: AMBAC............................. 71,575
360,000 Boston, GO, Series A
5.45%, 02/01/07
Insured: AMBAC............................. 367,650
225,000 Boston, GO, Series A
5.55%, 02/01/08
Insured: AMBAC............................. 229,781
200,000 Boston Metropolitan District, GO
5.35%, 12/01/12............................ 197,250
290,000 Boston Metropolitan District, GO
5.35%, 12/01/14............................ 284,200
200,000 Boston Water and
Sewer Commission,
Senior Series A
5.50%, 11/01/01
Insured: FSA............................... 208,000
50,000 Boston Water and
Sewer Commission,
Senior Series A
5.25%, 11/01/07............................ 50,375
50,000 Boston Water and
Sewer Commission,
Senior Series A
5.40%, 11/01/09............................ 50,125
25,000 Boston Water and
Sewer Commission,
Senior Series A
5.25%, 11/01/11............................ 24,500
230,000 Boston Water and
Sewer Commission,
Senior Series A, Pre-refunded
7.00%, 11/01/01
Insured: FGIC.............................. 259,038
250,000 Brookline, GO
4.50%, 01/15/06............................ 237,813
$ 100,000 Brookline, GO
5.60%, 09/01/10............................ 101,500
230,000 Burlington, GO
5.05%, 01/15/11............................ 217,925
155,000 Chatham, GO
4.60%, 01/15/05............................ 152,094
10,000 Dedham-Westwood Water District,
GO
5.20%, 11/01/05
Insured: MBIA.............................. 10,163
50,000 Dedham-Westwood Water District,
GO
5.40%, 11/01/07
Insured: MBIA.............................. 50,563
250,000 Deerfield, GO
5.60%, 06/15/02............................ 262,813
25,000 Fairhaven
7.10%, 02/01/04............................ 27,063
250,000 Franklin, GO
5.50%, 11/15/02
Insured: MBIA.............................. 261,875
250,000 Franklin, GO
5.25%, 11/15/11
Insured: MBIA.............................. 244,688
100,000 Kingston, GO
5.70%, 08/01/07............................ 103,500
105,000 Lawrence, GO
4.63%, 09/15/99............................ 105,525
250,000 Lawrence, GO
5.13%, 09/15/03............................ 252,813
570,000 Longmeadow, GO
5.25%, 11/15/13............................ 547,913
250,000 Lowell, GO
6.05%, 04/01/11
Insured: CGIC.............................. 263,125
200,000 Lowell, GO, Series A
5.10%, 01/15/04
Insured: FSA............................... 202,250
265,000 Lowell, GO, Series A
5.20%, 01/15/05
Insured: FSA............................... 268,313
25,000 Ludlow, GO
7.30%, 11/01/02
Insured: MBIA.............................. 28,438
35,000 Lynn Water and Sewer Commission
5.50%, 06/01/99
Insured: FGIC.............................. 35,963
100,000 Lynn Water and Sewer Commission
5.30%, 12/01/06
Insured: FGIC.............................. 101,625
130,000 Massachusetts Bay Transportation
Authority, Series A
6.00%, 03/01/12............................ 132,925
200,000 Massachusetts Bay Transportation
Authority, Series A
5.75%, 03/01/22............................ 200,000
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
[THE GALAXY FUND Massachusetts Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Massachusetts (continued)
$ 70,000 Massachusetts Bay Transportation
Authority, Series A
5.75%, 03/01/22
Insured: FGIC.............................. $ 70,175
350,000 Massachusetts Bay Transportation
Authority, Series B
5.50%, 03/01/21............................ 338,625
1,000,000 Massachusetts Bay Transportation
Authority, General Transportation, Series B
5.38%, 03/01/25
Insured: AMBAC............................. 957,500
50,000 Massachusetts Bay Transportation
Authority, Transportation System, Series C
6.10%, 03/01/23............................ 51,625
200,000 Massachusetts Municipal Wholesale
Electric Copower
Supply System, Series A
6.50%, 07/01/02
Insured: AMBAC............................. 217,750
300,000 Massachusetts Municipal Wholesale
Electric Copower
Supply System, Series B
4.80%, 07/01/07
Insured: MBIA.............................. 291,375
100,000 Massachusetts Municipal Wholesale
Electric Copower
Supply System, Series E
5.75%, 07/01/02
Insured: AMBAC............................. 105,125
250,000 Massachusetts State, GO, Series A
6.25%, 07/01/02............................ 270,000
250,000 Massachusetts State, GO, Series A
6.25%, 07/01/04............................ 273,438
750,000 Massachusetts State, GO, Series A
5.25%, 02/01/08............................ 751,875
100,000 Massachusetts State, GO, Series B
5.10%, 11/01/02............................ 102,500
200,000 Massachusetts State, GO, Series B
5.30%, 11/01/05............................ 206,250
100,000 Massachusetts State, GO, Series B
5.50%, 11/01/07............................ 103,625
250,000 Massachusetts State, GO, Series C
4.80%, 08/01/03
Insured: AMBAC............................. 250,313
250,000 Massachusetts State, GO, Series C
4.80%, 08/01/03
Insured: MBIA.............................. 250,313
200,000 Massachusetts State Consolidated
Loan, GO, Series A
7.00%, 06/01/98............................ 208,250
50,000 Massachusetts State Consolidated
Loan, GO, Series A
5.10%, 11/01/03............................ 51,250
$ 250,000 Massachusetts State Consolidated
Loan, GO, Series A
5.75%, 02/01/15
Insured: MBIA.............................. 253,125
250,000 Massachusetts State Consolidated
Loan, GO, Series B
5.10%, 07/01/03............................ 255,938
100,000 Massachusetts State Consolidated
Loan, GO, Series D
5.75%, 05/01/12............................ 101,125
100,000 Massachusetts State Convention
Center Authority, Boston Common
Parking Garage, Series A
5.35%, 09/01/06............................ 101,750
100,000 Massachusetts State Convention
Center Authority,
Boston Common Parking Garage,
Series A
5.40%, 09/01/07............................ 101,000
350,000 Massachusetts State Convention
Center Authority,
Boston Common Parking Garage,
Series A
5.38%, 09/01/13............................ 336,875
200,000 Massachusetts State Convention
Center Authority,
Hynes Convention Center, Lot A
6.00%, 09/01/99............................ 208,250
370,000 Massachusetts State Federal Assisted
Housing, GO
6.00%, 02/01/08............................ 385,263
200,000 Massachusetts State HEFA
Baystate Medical Center, Series D
4.80%, 07/01/04
Insured: FGIC.............................. 196,750
150,000 Massachusetts State HEFA
Baystate Medical Center, Series D
4.90%, 07/01/05
Insured: FGIC.............................. 147,750
400,000 Massachusetts State HEFA
Beth Israel Hospital, Series G
5.70%, 07/01/05
Insured: AMBAC............................. 419,500
350,000 Massachusetts State HEFA
Boston College, Series K
4.70%, 06/01/03............................ 347,813
300,000 Massachusetts State HEFA
Boston College, Series K
4.90%, 06/01/05............................ 297,375
250,000 Massachusetts State HEFA
Boston College, Series K
5.25%, 06/01/23
Insured: MBIA.............................. 234,688
</TABLE>
See Noes to Financial Statements.
22
<PAGE>
[THE GALAXY FUND Massachusetts Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Massachusetts (continued)
$ 385,000 Massachusetts State HEFA
Brigham and Womens Hospital,
Series E
4.50%, 07/01/01........................... $ 384,519
130,000 Massachusetts State HEFA
Brigham and Womens Hospital,
Series E
4.60%, 07/01/02........................... 129,838
100,000 Massachusetts State HEFA
Brigham and Womens Hospital,
Series E
4.80%, 07/01/04........................... 99,750
350,000 Massachusetts State HEFA
Cape Cod Health System, Series A
5.25%, 11/15/21
Insured: Connie Lee....................... 325,500
65,000 Massachusetts State HEFA
Childrens Hospital, Series E
5.40%, 10/01/01........................... 67,113
50,000 Massachusetts State HEFA
Harvard University, Series M
5.50%, 12/01/15........................... 50,000
100,000 Massachusetts State HEFA
Lahey Clinic Medical Center, Series B
5.63%, 07/01/15
Insured: MBIA............................. 98,750
500,000 Massachusetts State HEFA
Lahey Clinic Medical Center, Series B
5.38%, 07/01/23
Insured: MBIA............................. 470,625
40,000 Massachusetts State HEFA
Massachusetts General Hospital,
Series F
6.00%, 07/01/05
Insured: AMBAC............................ 43,050
250,000 Massachusetts State HEFA
Massachusetts General Hospital,
Series G
4.65%, 07/01/02
Insured: AMBAC............................ 248,438
100,000 Massachusetts State HEFA
Massachusetts General Hospital,
Series G
4.75%, 07/01/03
Insured: AMBAC............................ 99,375
100,000 Massachusetts State HEFA
Massachusetts General Hospital,
Series G
5.15%, 07/01/07
Insured: AMBAC............................ 99,250
550,000 Massachusetts State HEFA
Massachusetts Institute of Technology,
Series H
4.70%, 07/01/04........................... 546,563
1,000,000 Massachusetts State HEFA
Massachusetts Institute of Technology,
Series H
5.00%, 07/01/10........................... 967,500
$ 100,000 Massachusetts State HEFA
McLean Hospital, Series C
6.63%, 07/01/15
Insured: FGIC............................. 108,000
250,000 Massachusetts State HEFA
Medical Center of
Central Massachusetts, Series B
6.00%, 07/01/02
Insured: AMBAC............................ 265,625
250,000 Massachusetts State HEFA
Newton-Wellesley Hospital, Series E
5.00%, 07/01/03
Insured: MBIA............................. 251,875
200,000 Massachusetts State HEFA, Series G
4.50%, 07/01/02
Insured: MBIA............................. 197,250
400,000 Massachusetts State HEFA, Series G
4.60%, 07/01/03
Insured: MBIA............................. 394,000
100,000 Massachusetts State HEFA
South Shore Hospital, Series E
5.40%, 07/01/07
Insured: MBIA............................. 101,375
325,000 Massachusetts State HEFA
South Shore Hospital, Series E
5.50%, 07/01/13
Insured: MBIA............................. 318,094
10,000 Massachusetts State HEFA
Tufts University, Series F
5.65%, 08/15/07
Insured: FGIC............................. 10,275
75,000 Massachusetts State HEFA
University of Massachusetts
Medical School
Research, Project A
6.00%, 07/01/12
Insured: Connie Lee....................... 76,406
10,000 Massachusetts State HEFA
University of Massachusetts
Medical School
Research, Project A
6.00%, 07/01/23
Insured: Connie Lee....................... 10,013
250,000 Massachusetts State HEFA
Wheaton College, Series C
5.25%, 07/01/19........................... 238,125
500,000 Massachusetts State HEFA
Williams College, Series D
5.40%, 07/01/05........................... 515,000
250,000 Massachusetts State HEFA
Williams College, Series D
5.50%, 07/01/17........................... 247,188
150,000 Massachusetts State HEFA
Youville Hospital, Series B
5.00%, 02/15/99........................... 152,250
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
[THE GALAXY FUND Massachusetts Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Massachusetts (continued)
$ 150,000 Massachusetts State Housing
Finance Agency,
Single Family, Series 41
5.25%, 06/01/01........................... $ 152,438
400,000 Massachusetts State IFA
Brooks School
5.95%, 07/01/23........................... 403,500
300,000 Massachusetts State IFA
Holy Cross College, Series II
5.90%, 11/01/01........................... 317,250
50,000 Massachusetts State IFA
Holy Cross College
5.75%, 01/01/02........................... 52,438
250,000 Massachusetts State IFA
Lesley College Project, Series A
6.00%, 07/01/10
Insured: Connie Lee....................... 256,563
300,000 Massachusetts State IFA
Milton Academy, Series B
5.30%, 09/01/08
Insured: MBIA............................. 300,375
240,000 Massachusetts State IFA
Milton Academy, Series B
5.25%, 09/01/19
Insured: MBIA............................. 225,600
635,000 Massachusetts State Port Authority
5.63%, 07/01/12........................... 624,681
40,000 Massachusetts State Port Authority,
Series A
5.50%, 07/01/07
Insured: FGIC............................. 40,750
250,000 Massachusetts State Port Authority,
Series B
5.30%, 07/01/01........................... 258,125
350,000 Massachusetts State, SP OB
and Revenue, Series A
5.80%, 06/01/00
Insured: AMBAC............................ 364,438
300,000 Massachusetts State, SP OB
and Revenue, Series A
7.00%, 06/01/02........................... 331,875
200,000 Massachusetts State, SP OB
and Revenue, Series A
6.00%, 06/01/13
Insured: AMBAC............................ 204,000
250,000 Massachusetts State, SP OB
Series A
5.80%, 06/01/14........................... 252,813
500,000 Massachusetts State
Turnpike Authority, Series A
5.00%, 06/01/99........................... 508,125
450,000 Massachusetts State
Turnpike Authority, Series A
4.63%, 01/01/02........................... 449,438
$ 45,000 Massachusetts State
Turnpike Authority, Series A
5.10%, 01/01/08........................... 44,044
400,000 Massachusetts State
Turnpike Authority, Series A
5.13%, 01/01/23
Insured: FGIC............................. 368,000
50,000 Massachusetts State Water
Pollution Abatement Trust,
MWRA Loan Program, Series A
4.85%, 02/01/03........................... 50,313
100,000 Massachusetts State Water
Pollution Abatement Trust,
MWRA Loan Program, Series A
4.85%, 08/01/03........................... 100,625
50,000 Massachusetts State
Water Pollution Abatement Trust,
MWRA Loan Program, Series A
5.20%, 02/01/06........................... 50,500
25,000 Massachusetts State
Water Pollution Abatement Trust,
MWRA Loan Program, Series A
5.30%, 02/01/07........................... 25,313
50,000 Massachusetts State
Water Pollution Abatement Trust,
MWRA Loan Program, Series A
5.30%, 08/01/07........................... 50,625
250,000 Massachusetts State
Water Pollution Abatement Trust,
MWRA Loan Program, Series A
5.40%, 08/01/11........................... 247,813
200,000 Massachusetts State
Water Pollution Abatement Trust,
MWRA Loan Program, Series B
4.85%, 08/01/05........................... 198,750
250,000 Massachusetts State
Water Pollution Abatement Trust,
Pooled Loan Program, Series 1
5.00%, 02/01/02........................... 254,063
300,000 Massachusetts State
Water Resource Authority, Series A
6.30%, 12/01/01........................... 323,625
100,000 Massachusetts State
Water Resource Authority, Series A
6.00%, 04/01/20........................... 100,625
190,000 Massachusetts State
Water Resource Authority, Series A
6.50%, 07/15/21........................... 210,900
40,000 Massachusetts State
Water Resource Authority, Series A
5.75%, 12/01/21........................... 39,800
300,000 Massachusetts State
Water Resource Authority, Series B
5.88%, 11/01/04........................... 318,375
50,000 Massachusetts State
Water Resource Authority, Series B
6.00%, 11/01/06........................... 53,000
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
[LOGO OF GALAXY Massachusetts Municipal Bond Fund
FUND APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Massachusetts (continued)
$ 50,000 Massachusetts State
Water Resource Authority, Series B
6.25%, 11/01/10............................ $ 52,688
100,000 Massachusetts State
Water Resource Authority, Series B
5.50%, 11/01/15............................ 97,750
250,000 Massachusetts State
Water Resource Authority, Series B
5.00%, 12/01/16
Insured: MBIA.............................. 232,500
200,000 Massachusetts State
Water Resource Authority, Series C
5.00%, 12/01/03............................ 203,000
100,000 Methuen, GO
7.15%, 05/15/97............................ 101,784
1,000,000 Methuen, GO
5.63%, 11/15/14
Insured: FSA............................... 1,010,000
250,000 Milford, GO
5.10%, 12/15/10
Insured: AMBAC............................. 241,250
230,000 Milton, GO
5.25%, 06/15/97............................ 232,247
220,000 Nantucket Islands Land Bank,
GO and Revenue, Series E
7.25%, 07/01/19............................ 242,000
400,000 New England Educational
Loan Marketing Corp.,
Massachusetts Student
Loan Revenue, Issue A
5.80%, 03/01/02............................ 416,000
65,000 Norfolk, GO
5.60%, 01/15/05
Insured: AMBAC............................. 66,950
50,000 North Adams, GO
5.40%, 03/01/07
Insured: AMBAC............................. 50,625
50,000 North Adams, GO
5.50%, 03/01/08
Insured: AMBAC............................. 50,813
150,000 North Middlesex Regional
High School District, GO, Lot B
4.50%, 08/15/02
Insured: AMBAC............................. 147,375
175,000 Northampton, GO
5.30%, 03/01/09
Insured: AMBAC............................. 172,813
200,000 Northampton, GO
5.30%, 09/01/10
Insured: AMBAC............................. 196,250
150,000 Pittsfield, GO
5.40%, 07/15/13
Insured: MBIA.............................. 148,313
25,000 Plainville, GO
7.00%, 09/01/03............................ 26,844
20,000 Plymouth-Carver
Regional School District, GO
6.05%, 10/01/02
Insured: AMBAC............................. 21,275
25,000 Plymouth-Carver
Regional School District, GO
6.15%, 10/01/03
Insured: AMBAC............................. 26,813
25,000 Quaboag
Regional School District, GO
5.10%, 06/15/06
Insured: MBIA.............................. 24,969
25,000 Quaboag
Regional School District, GO
5.40%, 06/15/09
Insured: MBIA.............................. 25,000
250,000 Salem, GO
4.50%, 07/15/03
Insured: MBIA.............................. 244,063
150,000 Salem, GO
5.80%, 07/15/06
Insured: AMBAC............................. 156,188
100,000 Salem, GO
5.90%, 07/15/07
Insured: AMBAC............................. 104,000
200,000 Sandwich, GO
5.40%, 11/01/07
Insured: AMBAC............................. 204,000
75,000 Sandwich Water District,
GO and Revenue
5.40%, 05/15/07............................ 76,406
25,000 Sandwich Water District,
GO and Revenue
5.50%, 05/15/08............................ 25,438
25,000 Sandwich Water District,
GO and Revenue
5.60%, 05/15/12............................ 24,906
125,000 Sandwich Water District,
GO and Revenue
5.60%, 05/15/13............................ 123,906
200,000 Sharon, GO
4.65%, 07/15/06............................ 191,750
115,000 South Essex Sewer District, GO
5.30%, 11/01/01
Insured: AMBAC............................. 119,025
500,000 South Essex Sewer District,
GO, Series A
4.90%, 06/15/07
Insured: MBIA.............................. 483,750
245,000 South Shore
Regional School District, GO
5.10%, 02/01/12
Insured: AMBAC............................. 232,750
240,000 South Shore
Regional School District, GO
5.10%, 02/01/13
Insured: AMBAC............................. 227,400
110,000 Southbridge, GO
5.80%, 01/01/03
Insured: AMBAC............................. 114,813
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
[THE GALAXY FUND Massachusetts Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Massachusetts (continued)
$ 200,000 Southern Berkshire
Regional School District, GO
5.38%, 04/15/10
Insured: MBIA.............................. 197,750
400,000 Taunton, GO
8.00%, 02/01/01............................ 447,500
250,000 University of Lowell
Building Authority, Fifth Series A
6.75%, 11/01/03
Insured: AMBAC............................. 278,438
200,000 University of Massachusetts
Building Authority, Series A
5.50%, 05/01/03
Insured: MBIA.............................. 206,750
50,000 Westfield, GO
6.70%, 12/15/00
Insured: AMBAC............................. 54,063
100,000 Woods Hole,
Marthas Vineyard and Nantucket
Steamship
Bonds, Series B
6.00%, 03/01/02............................ 106,750
50,000 Yarmouth, GO
5.10%, 03/01/08............................ 49,563
------------
Total Investments - 97.71%................................... 36,466,325
------------
(Cost $36,469,152)
Net Other Assets and Liabilities - 2.29%..................... 855,492
------------
Net Assets - 100.00%......................................... $ 37,321,817
============
</TABLE>
- -------------------------------------------
AMBAC American Municipal Bond Assurance Corp.
CGIC Capital Guarantee Insurance Corp.
Connie Lee College Construction Loan Association
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance
GO General Obligation
HEFA Health and Educational Facilities Authority
IFA Industrial Finance Agency
MBIA Municipal Bond Investors Assurance
MWRA Massachusetts Water Resource Authority
SP OB Special Obligation
See Notes to Financial Statements.
26
<PAGE>
[THE GALAXY FUND Rhode Island Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
MUNICIPAL SECURITIES - 97.97%
Rhode Island - 91.16%
$ 200,000 Burrillville, GO
5.85%, 05/01/14
Insured: FGIC............................. $ 204,500
150,000 Burrillville, GO
5.75%, 10/15/17
Insured: MBIA............................. 150,563
500,000 Convention Center Authority,
Series A
6.70%, 05/15/20
Insured: MBIA............................. 551,875
500,000 Convention Center Authority,
Series A
6.38%, 05/15/23
Insured: MBIA............................. 545,000
700,000 Lincoln, GO
5.50%, 08/15/10
Insured: MBIA............................. 709,625
175,000 Middletown, Series B, GO
4.20%, 07/15/99
Insured: AMBAC............................ 175,219
400,000 Pawtucket, GO
5.75%, 04/15/11
Insured: FGIC............................. 406,500
225,000 Providence, GO
6.75%, 01/15/10
Insured: MBIA............................. 241,031
150,000 Rhode Island
Clean Water Protection Finance Agency,
Revenue, Safe Drinking Water,
Providence, Series A
6.20%, 01/01/06
Insured: AMBAC............................ 162,000
100,000 Rhode Island
Clean Water Protection Finance Agency,
Revenue, Safe Drinking Water,
Providence, Series A
6.70%, 01/01/15
Insured: AMBAC............................ 109,000
500,000 Rhode Island
Depositors Economic Protection Corp.,
SP OB, Pre-refunded, Series A
5.75%, 08/01/21........................... 506,875
500,000 Rhode Island
Depositors Economic Protection Corp.,
SP OB, Series B, Pre-refunded
5.25%, 02/01/11
Insured: MBIA............................. 492,500
Rhode Island (continued)
$ 300,000 Rhode Island
Housing and Mortgage Finance Corp.,
Revenue, Homeownership Opportunity,
Series 17-A
6.25%, 04/01/17........................... 304,125
500,000 Rhode Island
Housing and Mortgage Finance Corp.,
Revenue, Homeownership Opportunity,
Series 19-A
5.70%, 04/01/15........................... 497,500
500,000 Rhode Island Housing and Mortgage
Finance Corp., Revenue, Multifamily
Housing, Series A
6.15%, 07/01/17
Insured: AMBAC............................ 507,500
250,000 Rhode Island Housing and Mortgage
Finance Corp., Revenue, Rental Housing
Program, Series A
5.65%, 10/01/07........................... 250,313
200,000 Rhode Island State, GO, Series A
6.10%, 06/15/03
Insured: FGIC............................. 215,500
300,000 Rhode Island State, GO, Series A
6.25%, 06/15/07
Insured: FGIC............................. 323,625
500,000 Rhode Island State
Consolidated Capital Development Loan,
GO, Series A
5.30%, 07/15/06
Insured: FGIC............................. 510,000
350,000 Rhode Island State
Consolidated Capital Development Loan,
GO, Series A
5.00%, 11/01/07
Insured: FGIC............................. 346,063
360,000 Rhode Island State
Consolidated Capital Development Loan,
GO, Series A
5.50%, 08/01/10........................... 360,900
100,000 Rhode Island State
Consolidated Capital Development Loan,
GO, Series B
6.00%, 05/15/98........................... 102,500
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
[THE GALAXY FUND Rhode Island Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Rhode Island (continued)
$ 500,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Series B
5.25%, 09/15/23
Insured: MBIA............................. $ 461,250
130,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Brown University
6.75%, 09/01/16........................... 136,013
500,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Brown University
6.00%, 09/01/20........................... 512,500
100,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Bryant College, Option Bond
4.95%, 10/01/03........................... 100,000
275,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Bryant College, SP OB
6.50%, 06/01/05
Insured: MBIA............................. 298,031
475,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
New England Institute
6.00%, 03/01/15
Insured: Connie Lee....................... 482,719
300,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Providence College
5.60%, 11/01/09
Insured: MBIA............................. 302,625
500,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Rhode Island School of Design
5.63%, 06/01/16
Insured: MBIA............................. 494,375
500,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Roger Williams
6.50%, 11/15/24
Insured: Connie Lee....................... 533,125
160,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Roger Williams
7.25%, 11/15/24
Insured: Connie Lee....................... $ 177,200
260,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Higher Education Facility,
Salve Regina
6.25%, 03/15/13
Insured: Connie Lee....................... 269,750
500,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Miriam Hospital Issue,
Series B
6.60%, 04/01/19........................... 511,250
300,000 Rhode Island State
Health and Educational Building Corp.,
Revenue, Saint Antoine
6.75%, 11/15/18
LOC: Allied Irish Banks NY................ 316,875
500,000 Rhode Island State
Industrial Facilities Corp., Revenue,
Marine Terminal, Mobil Oil Refining
5.80%, 11/01/14........................... 515,000
185,000 Rhode Island State
Public Buildings Authority, Revenue,
State Projects, Series A
6.70%, 02/01/03
Insured: AMBAC............................ 203,269
100,000 South Kingston, GO, Series B
5.50%, 06/15/10
Insured: FSA.............................. 101,250
100,000 Warwick, GO
7.00%, 11/15/02
Insured: FGIC............................. 109,000
215,000 West Warwick, GO
6.88%, 03/01/07
Insured: MBIA............................. 238,381
140,000 Westerly, GO
6.00%, 09/15/14
Insured: AMBAC............................ 147,175
------------
13,582,502
------------
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
[THE GALAXY FUND Rhode Island Municipal Bond Fund
LOGO APPEARS HERE] PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- -------------- -------------
<S> <C> <C>
Other Territories - 6.81%
$ 400,000 Puerto Rico Municipal Finance Agency,
Series A
6.00%, 07/01/14......................... $ 415,000
500,000 Puerto Rico Public Buildings Authority
Government Facilities, Series A
5.50%, 07/01/21......................... 494,998
100,000 Puerto Rico Public Buildings Authority
Public Education and Health Facilities,
Series H
7.40%, 07/01/99
Insured: FGIC........................... 104,521
------------
1,014,519
------------
Total Investments - 97.97%................................ 14,597,021
------------
(Cost $14,369,906)
Net Other Assets and Liabilities - 2.03%.................. 302,718
------------
Net Assets - 100.00%...................................... $ 14,899,739
============
</TABLE>
- ------------------------------------------------------
AMBAC American Municipal Bond Assurance Corp.
Connie Lee College Construction Loan Association
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Investors Assurance
SP OB Special Obligation
See Notes to Financial Statements.
29
<PAGE>
[THE GALAXY FUND STATEMENTS OF ASSETS AND LIABILITIES
LOGO APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
New York Connecticut Massachusetts Rhode Island
Tax-Exempt Municipal Municipal Municipal Municipal
Bond Fund Bond Fund Bond Fund Bond Fund Bond Fund
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost.................... $127,340,806 $ 62,151,913 $ 29,346,410 $ 36,469,152 $ 14,369,906
Net unrealized appreciation
(depreciation)........................ 2,902,821 1,545,142 176,314 (2,827) 227,115
------------ ------------ ------------ ------------ ------------
Total investments at value............. 130,243,627 63,697,055 29,522,724 36,466,325 14,597,021
Cash..................................... 237,555 298,739 48,325 379,269 111,443
Receivable for investments sold.......... 104,383 --- --- --- ---
Receivable for shares sold............... 30,396 36,630 1,934 --- ---
Interest and dividend receivables ....... 2,272,680 1,052,092 426,393 632,188 243,030
Receivable from Investment Adviser
(Note 4)............................... 13,554 42,166 159 429 37,790
Deferred organizational expense (Note 2). --- --- 2,926 2,882 10,279
------------ ------------ ------------ ------------ ------------
Total Assets........................... 132,902,195 65,126,682 30,002,461 37,481,093 14,999,563
------------ ------------ ------------ ------------ ------------
LIABILITIES:
Dividends payable........................ 448,907 128,042 47,737 67,454 37,042
Payable for investments purchased........ --- 989,313 --- --- ---
Payable for shares repurchased........... 43,962 11,000 291,496 12,006 30,015
Advisory fee payable (Note 3)............ 61,332 29,728 9,187 7,873 3,184
Payable to Fleet and affiliates (Note 3). 5,312 5,366 4,310 4,423 ---
Payable to FDISG (Note 3)................ 19,346 7,442 --- --- 661
Trustees fees and expenses payable
(Note 3)............................... 3,268 976 1,679 2,586 2,947
Accrued expenses and other payables...... 31,209 38,890 56,022 64,934 25,975
------------ ------------ ------------ ------------ ------------
Total Liabilities...................... 613,336 1,210,757 410,431 159,276 99,824
------------ ------------ ------------ ------------ ------------
NET ASSETS................................. $132,288,859 $ 63,915,925 $ 29,592,030 $ 37,321,817 $ 14,899,739
============ ============ ============ ============ ============
NET ASSETS consist of:
Par value (Note 5)....................... $ 12,272 $ 5,946 $ 2,917 $ 3,754 $ 1,399
Paid-in capital in excess of par value... 129,291,604 64,262,852 30,354,964 38,077,924 14,610,453
Undistributed net investment income...... 2,378 --- 4,402 12,622 2,050
Accumulated net realized gain (loss) on
investments sold....................... 79,784 (1,898,015) (946,567) (769,656) 58,722
Net unrealized appreciation (depreciation)
of investments......................... 2,902,821 1,545,142 176,314 (2,827) 227,115
------------ ------------ ------------ ------------ ------------
TOTAL NET ASSETS............................ $132,288,859 $ 63,915,925 $ 29,592,030 $ 37,321,817 $ 14,899,739
============ ============ ============ ============ ============
Retail A Shares:
Net Assets............................... $ 28,339,203 $ 40,154,063 $ 23,244,072 $ 26,274,732 $ 14,899,739
Shares of beneficial interest outstanding 2,628,976 3,735,346 2,291,223 2,642,762 1,398,502
NET ASSET VALUE and redemption
price per share...................... $ 10.78 $ 10.75 $ 10.14 $ 9.94 $ 10.65
Sales charge - 3.75% of offering price... 0.42 0.42 0.40 0.39 0.41
------------ ------------ ------------ ------------ ------------
Maximum offering price per share $ 11.20 $ 11.17 $ 10.54 $ 10.33 $ 11.06
============ ============ ============ ============ ============
Retail B Shares:
Net Assets............................... $ 786,622 $ --- $ --- $ --- $ ---
Shares of beneficial interest outstanding 72,978 --- --- --- ---
NET ASSET VALUE and offering
price per share*..................... $ 10.78 $ --- $ --- $ --- $ ---
============ ============ ============ ============ ============
Trust Shares:
Net Assets............................... $103,163,034 $ 23,761,862 $ 6,347,958 $ 11,047,085 $ ---
Shares of beneficial interest outstanding 9,570,225 2,210,466 625,772 1,111,654 ---
NET ASSET VALUE, offering and redemption
price per share....................... $ 10.78 $ 10.75 $ 10.14 $ 9.94 $ ---
============ ============ ============ ============ ============
</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.
30
<PAGE>
[THE GALAXY FUND STATEMENTS OF OPERATIONS
LOGO APPEARS HERE] For the year ended October 31, 1996
<TABLE>
<CAPTION>
New York Connecticut Massachusetts Rhode Island
Tax-Exempt Municipal Municipal Municipal Municipal
Bond Fund Bond Fund Bond Fund Bond Fund Bond Fund
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2)........................ $ 7,119,276 $ 3,572,340 $ 1,486,563 $ 1,829,371 $ 732,497
Dividends (Note 2)....................... --- --- 2,013 2,467 ---
------------ ------------ ------------ ------------ ------------
Total Investment income................ 7,119,276 3,572,340 1,488,576 1,831,838 732,497
------------ ------------ ------------ ------------ ------------
EXPENSES:
Investment advisory fee (Note 3)......... 949,249 491,318 230,995 270,407 98,973
Administration fee (Note 3).............. 108,062 55,624 26,272 30,732 11,196
Custodian fee............................ 11,452 8,048 7,269 10,014 6,898
Fund accounting fee (Note 3)............. 58,094 66,591 43,021 48,125 30,072
Legal fee (Note 3)....................... 5,856 13,103 1,594 1,087 713
Audit fee................................ 14,578 29,919 14,016 19,604 11,943
Transfer agent fee (Note 3).............. 26,854 42,073 14,728 7,047 2,683
12b-1 fee (Note 3)....................... 300 --- --- --- ---
Shareholder servicing fee (Note 3)....... 42,210 57,674 36,878 38,823 ---
Trustees fees and expenses (Note 3)...... 4,308 2,307 879 887 250
Amortization of organization costs
(Note 2)............................... 3,394 4,678 2,006 2,006 3,420
Reports to shareholders.................. 20,296 33,491 18,801 5,076 1,330
Registration fees........................ 25,172 12,661 12,739 19,308 8,544
Insurance................................ 1,464 2,562 842 1,244 233
Miscellaneous............................ 4,589 708 2,293 2,651 566
------------ ------------ ------------ ------------ ------------
Total expenses before
reimbursement/waiver............... 1,275,878 820,757 412,333 457,011 176,821
Less: reimbursement/waiver (Note 4).... (315,987) (254,337) (210,463) (238,396) (75,109)
------------ ------------ ------------ ------------ ------------
Total expenses net of
reimbursement/waiver............... 959,891 566,420 201,870 218,615 101,712
------------ ------------ ------------ ------------ ------------
NET INVESTMENT INCOME....................... 6,159,385 3,005,920 1,286,706 1,613,223 630,785
------------ ------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (Note 2):
Net realized gain (loss) on
investments sold....................... 184,040 (16,589) 6,306 13,421 60,733
Net change in unrealized appreciation
(depreciation) of investments.......... (121,103) (200,532) 52,961 (183,226) (40,492)
------------ ------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS............... 62,937 (217,121) 59,267 (169,805) 20,241
------------ ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................ $ 6,222,322 $ 2,788,799 $ 1,345,973 $ 1,443,418 $ 651,026
============ ============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
[THE GALAXY FUND STATEMENTS OF CHANGES IN NET ASSETS
LOGO APPEARS HERE]
<TABLE>
<CAPTION>
Tax-Exempt Bond Fund New York Municipal Bond Fund
------------------------------ -------------------------------
Years Ended October 31, Years Ended October 31,
------------------------------ -------------------------------
1996 1995 1996 1995
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period...................... $ 123,348,800 $ 127,557,885 $ 65,946,713 $ 66,660,390
------------- ------------- ------------- --------------
Increase in Net Assets
resulting from operations:
Net investment income............................... 6,159,385 6,134,079 3,005,920 3,041,722
Net realized gain (loss) on investments sold........ 184,040 (100,337) (16,589) (676,456)
Net change in unrealized appreciation
(depreciation) of investments.................... (121,103) 8,951,806 (200,532) 5,939,391
------------- ------------- ------------- --------------
Net increase in net assets resulting from operations 6,222,322 14,985,548 2,788,799 8,304,657
------------- ------------- ------------- --------------
Dividends to shareholders from:
Retail A Shares:
Net investment income............................ (1,393,399) (1,567,694) (1,896,290) (1,910,077)
Dividends in excess of net investment income..... (19) (19) --- ---
Net realized gain on investments................. --- --- --- ---
------------- ------------- ------------- --------------
Total Dividends............................... (1,393,418) (1,567,713) (1,896,290) (1,910,077)
------------- ------------- ------------- --------------
Retail B Shares:
Net investment income............................ (8,291) --- --- ---
------------- ------------- ------------- --------------
Total Dividends............................... (8,291) --- --- ---
------------- ------------- ------------- --------------
Trust Shares:
Net investment income............................ (4,757,676) (4,566,366) (1,109,630) (1,131,645)
------------- ------------- ------------- --------------
Total Dividends............................... (4,757,676) (4,566,366) (1,109,630) (1,131,645)
------------- ------------- ------------- --------------
Total Dividends to shareholders.......... (6,159,385) (6,134,079) (3,005,920) (3,041,722)
------------- ------------- ------------- --------------
Net increase (decrease) from share transactions/2/..... 8,877,122 (13,060,554) (1,813,667) (5,976,612)
------------- ------------- ------------- --------------
Net increase (decrease) in net assets............... 8,940,059 (4,209,085) (2,030,788) (713,677)
------------- ------------- ------------- --------------
NET ASSETS at end of period (including line A)......... $ 132,288,859 $ 123,348,800 $ 63,915,925 $ 65,946,713
============= ============= ============= ==============
(A) Undistributed (overdistributed) net
investment income $ 2,378 $ (19) $ --- $ ---
============= ============= ============ ==============
</TABLE>
- --------------------------------------------------------------------------------
(1) The Rhode Island Municipal Bond Fund commenced operations on
December 20, 1994.
(2) For detail on share transactions by series, see Statements of Changes
in Net Assets - Capital Stock Activity on pages 34 and 35.
See Notes to Financial Statements.
32
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal Rhode Island Municipal
Bond Fund Bond Fund Bond Fund
----------------------------- ----------------------------- -------------------------------
Year ended Period ended
Years ended October 31, Years ended October 31, October 31, October 31,
----------------------------- ----------------------------- -------------------------------
1996 1995 1996 1995 1996 1995/1/
----------- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
$22,148,469 $ 22,647,317 $ 23,720,447 $ 21,583,932 $ 10,849,844 $ ---
----------- ------------ ------------ ------------ ------------ -------------
1,286,706 955,026 1,613,223 991,702 630,785 287,771
6,306 (685,391) 13,421 (487,619) 60,733 59,256
52,961 2,577,697 (183,226) 2,378,642 (40,492) 267,607
----------- ------------ ------------ ------------ ------------ -------------
1,345,973 2,847,332 1,443,418 2,882,725 651,026 614,634
----------- ------------ ------------ ------------ ------------ -------------
(1,015,743) (766,186) (1,133,798) (675,007) (630,785) (287,771)
--- --- --- --- --- ---
--- --- --- --- (59,217) ---
----------- ------------ ------------ ------------ ------------ -------------
(1,015,743) (766,186) (1,133,798) (675,007) (690,002) (287,771)
----------- ------------ ------------ ------------ ------------ -------------
--- --- --- --- --- ---
----------- ------------ ------------ ------------ ------------ -------------
--- --- --- --- --- ---
----------- ------------ ------------ ------------ ------------ -------------
(267,813) (188,840) (468,311) (316,695) --- ---
----------- ------------ ------------ ------------ ------------ -------------
(267,813) (188,840) (468,311) (316,695) --- ---
----------- ------------ ------------ ------------ ------------ -------------
(1,283,556) (955,026) (1,602,109) (991,702) (690,002) (287,771)
----------- ------------ ------------ ------------ ------------ -------------
7,381,144 (2,391,154) 13,760,061 245,492 4,088,871 10,522,981
----------- ------------ ------------ ------------ ------------ -------------
7,443,561 (498,848) 13,601,370 2,136,515 4,049,895 10,849,844
----------- ------------ ------------ ------------ ------------ -------------
$29,592,030 $ 22,148,469 $ 37,321,817 $ 23,720,447 $ 14,899,739 $ 10,849,844
=========== ============ ============ ============ ============ =============
$ 4,402 $ --- $ 12,622 $ --- $ 2,050 $ 1,300
=========== ============ ============ ============ ============ =============
</TABLE>
33
<PAGE>
[THE GALAXY FUND STATEMENTS OF CHANGES IN NET ASSETS -
LOGO APPEARS HERE] Capital Stock Activity
<TABLE>
<CAPTION>
Tax-Exempt Bond Fund New York Municipal Bond Fund Connecticut Municipal Bond Fund
------------------------------- ------------------------------ -------------------------------
Years ended October 31, Years ended October 31, Years ended October 31,
------------------------------- ------------------------------ -------------------------------
1996 1995 1996 1995 1996 1995
------------ ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold.................... $ 3,667,225 $ 3,393,523 $ 7,610,907 $ 8,557,413 $ 2,793,266 $ 2,461,093
Issued in connection with
acquisition (Note 8).. --- --- --- --- 7,856,253 ---
Issued to shareholders in
reinvestment of dividends 989,521 1,127,507 1,393,109 1,383,629 720,485 505,845
Repurchased............. (7,906,263) (11,114,588) (11,561,982) (12,892,384) (6,235,644) (4,667,739)
------------ ------------ ----------- ------------ ----------- ------------
Net increase (decrease) in
shares outstanding.... $ (3,249,517) $ (6,593,558) $(2,557,966) $ (2,951,342) $ 5,134,360 (1,700,801)
============ ============ =========== ============ =========== ============
Retail B Shares:
Sold.................... $ 775,566 $ --- N/A N/A N/A N/A
Issued to shareholders in
reinvestment of dividends 3,525 --- N/A N/A N/A N/A
Repurchased............. --- --- N/A N/A N/A N/A
------------ ------------ ----------- ------------ ----------- ------------
Net increase in
shares outstanding.... $ 779,091 $ --- N/A N/A N/A N/A
============ ============ =========== ============ =========== ============
Trust Shares:
Sold.................... $ 17,408,564 $ 11,981,067 $ 4,313,377 $ 5,456,617 $ 1,367,373 $ 1,132,087
Issued in connection with
acquisition (Note 8).. --- --- --- --- 1,902,226 ---
Issued to shareholders in
reinvestment of dividends 58,201 69,312 144,855 148,397 16,017 23,783
Repurchased............. (6,119,217) (18,517,375) (3,713,933) (8,630,284) (1,038,832) (1,846,223)
------------ ------------ ----------- ------------ ----------- ------------
Net increase (decrease) in
shares outstanding.... $ 11,347,548 $ (6,466,996) $ 744,299 $ (3,025,270) $ 2,246,784 $ (690,353)
============ ============ =========== ============ =========== ============
SHARE ACTIVITY
Retail A Shares:
Sold.................... 341,647 324,422 707,832 819,060 290,186 249,241
Issued in connection with
acquisition (Note 8).. --- --- --- --- 765,050 ---
Issued to shareholders in
reinvestment of dividends 92,052 108,329 129,708 133,768 71,265 52,285
Repurchased............. (737,059) (1,093,280) (1,079,631) (1,266,830) (619,017) (495,791)
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in
shares outstanding.... (303,360) (660,529) (242,091) (314,002) 507,484 (194,265)
============ ============ =========== =========== =========== ===========
Retail B Shares:
Sold.................... 72,647 --- N/A N/A N/A N/A
Issued to shareholders in
reinvestment of dividends 331 --- N/A N/A N/A N/A
Repurchased............. --- --- N/A N/A N/A N/A
------------ ------------ ----------- ----------- ----------- -----------
Net increase in
shares outstanding.... 72,978 --- N/A N/A N/A N/A
============ ============ =========== =========== =========== ===========
Trust Shares:
Sold.................... 1,625,350 1,143,572 402,557 534,383 138,864 116,490
Issued in connection with
acquisition (Note 8).. --- --- --- --- 185,222 ---
Issued to shareholders in
reinvestment of dividends 5,421 6,696 13,488 14,344 1,582 2,465
Repurchased............. (571,530) (1,808,645) (346,485) (855,234) (103,022) (195,278)
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in
shares outstanding.... 1,059,241 (658,377) 69,560 (306,507) 222,646 (76,323)
============ ============ =========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
[LOGO OF
THE GALAXY FUND
APPEARS HERE]
STATEMENTS OF CHANGES IN NET ASSETS
Capital Stock Activity (continued)
<TABLE>
<CAPTION>
Massachusetts Municipal Bond Fund Rhode Island Municipal Bond Fund/(1)/
--------------------------------- ------------------------------------
Years ended October 31, Year ended Period ended
--------------------------------- ------------------------------------
1996 1995 October 31, 1996 October 31, 1995
------------ ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold.................... $ 7,299,767 $ 3,953,342 $ 7,329,224 $ 10,940,054
Issued in connection with
acquisition (Note 8)... 11,025,564 --- --- ---
Issued to shareholders in
reinvestment of dividends 838,981 406,422 299,394 115,793
Repurchased............. (8,871,687) (5,497,814) (3,539,747) (532,866)
------------ ------------- ------------- --------------
Net increase (decrease) in
shares outstanding.... $ 10,292,625 $ (1,138,050) $ 4,088,871 $ 10,522,981
============ ============= ============= ==============
Retail B Shares:
Sold.................... N/A N/A N/A N/A
Issued to shareholders in
reinvestment of dividends N/A N/A N/A N/A
Repurchased............. N/A N/A N/A N/A
------------ ------------- ------------- --------------
Net increase (decrease) in
shares outstanding.... N/A N/A N/A N/A
============ ============= ============= ==============
Trust Shares:
Sold.................... $ 3,035,952 $ 2,920,242 $ --- $ ---
Issued in connection with
acquisition (Note 8)... 1,814,561 --- --- ---
Issued to shareholders in
reinvestment of dividends 121 681 --- ---
Repurchased............. (1,383,198) (1,537,381) --- ---
------------ ------------- ------------- --------------
Net increase in
shares outstanding.... $ 3,467,436 $ 1,383,542 $ --- $ ---
============ ============= ============= ==============
SHARE ACTIVITY
Retail A Shares:
Sold.................... 749,419 410,284 688,695 1,056,796
Issued in connection with
acquisition (Note 8)... 1,090,523 --- --- ---
Issued to shareholders in
reinvestment of dividends 84,645 42,549 28,196 11,026
Repurchased............. (896,522) (589,053) (335,169) (51,042)
------------ ------------- ------------- --------------
Net increase (decrease) in
shares outstanding.... 1,028,065 (136,220) 381,722 1,016,780
============ ============= ============= ==============
Retail B Shares:
Sold.................... N/A N/A N/A N/A
Issued to shareholders in
reinvestment of dividends N/A N/A N/A N/A
Repurchased............. N/A N/A N/A N/A
------------ ------------- ------------- --------------
Net increase (decrease) in
shares outstanding.... N/A N/A N/A N/A
============ ============= ============= ==============
Trust Shares:
Sold.................... 309,904 307,893 --- ---
Issued in connection with
acquisition (Note 8)... 179,482 --- --- ---
Issued to shareholders in
reinvestment of dividends 12 71 --- ---
Repurchased............. (140,144) (161,596) --- ---
------------ ------------- ------------- --------------
Net increase in
shares outstanding.... 349,254 146,368 --- ---
============ ============= ============= ==============
</TABLE>
- --------------------------------------------------------------------------------
/(1)/ As of October 31, 1996, the Rhode Island Municipal Bond Fund had not
issued Trust Shares.
See Notes to Financial Statements.
35
<PAGE>
[LOGO OF
THE GALAXY FUND
APPEARS HERE]
Tax-Exempt Bond Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding
throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(1)(2)/
---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 10.78 $ 9.99 $ 11.12 $ 10.11 $ 10.00
---------- ---------- ---------- ----------- ----------
Income from Investment Operations:
Net investment income (A)........................... 0.50 0.52 0.53 0.54 0.34
Net realized and unrealized gain (loss) on investments --- 0.79 (1.04) 1.01 0.11
---------- ---------- ---------- ----------- ----------
Total from Investment Operations: 0.50 1.31 (0.51) 1.55 0.45
---------- ---------- ---------- ----------- ----------
Less Dividends:
Dividends from net investment income................ (0.50) (0.52) (0.53) (0.54) (0.34)
Dividends from net realized capital gains........... --- --- --- --- ---
Dividends in excess of net realized capital gains... --- --- (0.09) --- ---
---------- ---------- ---------- ----------- ----------
Total Dividends:................................. (0.50) (0.52) (0.62) (0.54) (0.34)
---------- ---------- ---------- ----------- ----------
Net increase (decrease) in net asset value............. --- 0.79 (1.13) 1.01 0.11
---------- ---------- ---------- ----------- ----------
Net Asset Value, End of Period......................... $ 10.78 $ 10.78 $ 9.99 $ 11.12 $ 10.11
========== ========== ========== =========== ==========
Total Return/(4)/...................................... 4.77% 13.40% (4.75)% 15.63% 4.55%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)...................... $ 28,339 $ 31,609 35,911 $ 144,048 $ 15,891
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.68% 4.99% 5.01% 5.00% 5.03%*
Operating expenses including reimbursement/waiver... 0.93% 0.91% 0.80% 0.64% 0.42%*
Operating expenses excluding reimbursement/waiver... 1.18% 1.24% 1.03% 1.08% 2.15%*
Portfolio Turnover Rate................................ 15% 11% 17% 38% 11%**
</TABLE>
- --------------------------------------------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 30, 1991.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail A Shares
and Trust Shares.
(3) The Fund began offering Retail B shares on March 4, 1996.
(4) Calculation does not include sales charge for Retail A Shares and Retail B
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator was as follows:
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(2)/
---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Retail A Shares $ 0.48 $ 0.48 $ 0.50 $ 0.49 $ 0.23
Trust Shares 0.51 0.51 0.50 0.49 0.23
Retail B Shares 0.25 --- --- --- ---
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31,
- ------------------------------------------------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(1)(2)/ 1996/(3)/
- ------------ ------------- ------------- ---------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
$ 10.78 $ 9.99 $ 11.12 $ 10.11 $ 10.00 $ 10.94
-------- ------- -------- -------- -------- --------
0.53 0.54 0.53 0.54 0.34 0.27
--- 0.79 (1.04) 1.01 0.11 (0.16)
-------- ------- -------- -------- -------- --------
0.53 1.33 (0.51) 1.55 0.45 0.11
-------- ------- -------- -------- -------- --------
(0.53) (0.54) (0.53) (0.54) (0.34) (0.27)
--- --- --- --- --- ---
--- --- (0.09) --- --- ---
-------- ------- -------- -------- -------- --------
(0.53) (0.54) (0.62) (0.54) (0.34) (0.27)
-------- ------- -------- -------- -------- --------
--- 0.79 (1.13) 1.01 0.11 (0.16)
-------- ------- -------- -------- -------- --------
$ 10.78 $ 10.78 $ 9.99 $ 11.12 $ 10.11 $ 10.78
======== ======= ======== ======== ======== ========
5.03% 13.62% (4.75)% 15.63% 4.55%** 1.08%**
$103,163 $91,740 $ 91,647 $144,048 $ 15,891 $ 787
4.91% 5.18% 5.01% 5.00% 5.03%* 4.08%*
0.70% 0.72% 0.78% 0.64% 0.42%* 1.57%*
0.95% 0.97% 1.00% 1.08% 2.15%* 1.77%*
15% 11% 17% 38% 11%** 15%
</TABLE>
37
<PAGE>
[LOGO OF THE GALAXY FUND New York Municipal Bond Fund
APPEARS HERE] FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
<TABLE>
<CAPTION>
Retail A Shares Years ended October 31,
-------------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(1)//(2)/
---------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 10.78 $ 9.89 $ 11.04 $ 10.00 $ 10.00
---------- --------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A)........................... 0.48 0.49 0.49 0.50 0.38
Net realized and unrealized gain (loss) on investments (0.03) 0.89 (1.15) 1.04 ---
---------- --------- ---------- ---------- ----------
Total from Investment Operations:................. 0.45 1.38 (0.66) 1.54 0.38
---------- --------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income................ (0.48) (0.49) (0.49) (0.50) (0.38)
Dividends from net realized capital gains........... --- --- --- --- ---
---------- --------- ---------- ---------- ----------
Total Dividends:................................. (0.48) (0.49) (0.49) (0.50) (0.38)
---------- --------- ---------- ---------- ----------
Net increase (decrease) in net asset value............. (0.03) 0.89 (1.15) 1.04 ---
---------- --------- ---------- ---------- ----------
Net Asset Value, End of Period......................... $ 10.75 $ 10.78 $ 9.89 $ 11.04 $ 10.00
========== ========= ========== ========== ==========
Total Return (3)....................................... 4.31% 14.03% (6.14)% 15.66% 3.83%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)...................... $ 40,154 $ 42,870 $ 42,451 $ 70,242 $ 20,144
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.50% 4.73% 4.64% 4.54% 5.22%*
Operating expenses including reimbursement/waiver... 0.95% 0.92% 0.87% 0.87% 0.65%*
Operating expenses excluding reimbursement/waiver... 1.35% 1.31% 1.10% 1.19% 1.70%*
Portfolio Turnover Rate................................ 12% 5% 18% 3% 19%**
</TABLE>
- -----------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 31, 1991.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail A Shares
and Trust Shares.
(3) Calculation does not include sales charge for Retail A Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Adviser and/or Administrator was as follows:
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(2)/
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Retail A Shares $ 0.44 $ 0.44 $ 0.46 $ 0.47 $ 0.30
Trust Shares 0.47 0.48 0.47 0.47 0.30
</TABLE>
See Notes to Financial Statements.
38
<PAGE>
Trust Shares
<TABLE>
<CAPTION>
Years ended October 31,
-----------------------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(1)(2)/
-------- -------- -------- -------- ------------
<S> <C> <C> <C> <C>
$ 10.78 $ 9.89 $ 11.04 $ 10.00 $ 10.00
-------- -------- -------- -------- ----------
0.51 0.51 0.49 0.50 0.38
(0.03) 0.89 (1.15) 1.04 ---
-------- -------- -------- -------- ----------
0.48 1.40 (0.66) 1.54 0.38
-------- -------- -------- -------- ----------
(0.51) (0.51) (0.49) (0.50) (0.38)
--- --- --- --- ---
-------- -------- -------- -------- ----------
(0.51) (0.51) (0.49) (0.50) (0.38)
-------- -------- -------- -------- ----------
(0.03) 0.89 (1.15) 1.04 ---
-------- -------- -------- -------- ----------
$ 10.75 $ 10.78 9.89 11.04 10.00
======== ======== ======== ======== ==========
4.55% 14.23% (6.14)% 15.66% 3.83%**
$ 23,762 $ 23,077 $ 24,209 $ 70,242 20,144
4.75% 4.91% 4.64% 4.54% 5.22%*
0.70% 0.74% 0.87% 0.87% 0.65%*
1.10% 1.07% 1.08% 1.19% 1.70%*
12% 5% 18% 3% 19%**
</TABLE>
39
<PAGE>
Connecticut Municipal Bond Fund
THE GALAXY FUND FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------------
1996 1995 1994 1993/(1)(2)/
--------- -------- --------- ------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 10.13 $ 9.22 $ 10.32 $ 10.00
--------- -------- --------- ------------
Income from Investment Operations:
Net investment income (A)........................... 0.42 0.44 0.46 0.25
Net realized and unrealized gain (loss) on investments 0.01 0.91 (1.10) 0.32
--------- -------- --------- ------------
Total from Investment Operations:................. 0.43 1.35 (0.64) 0.57
--------- -------- --------- ------------
Less Dividends:
Dividends from net investment income................ (0.42) (0.44) (0.46) (0.25)
Dividends from net realized capital gains........... --- --- --- ---
--------- -------- --------- ------------
Total Dividends:................................. (0.42) (0.44) (0.46) (0.25)
--------- -------- --------- ------------
Net increase (decrease) in net asset value............. 0.01 0.91 (1.10) 0.32
--------- -------- --------- ------------
Net Asset Value, End of Period......................... $ 10.14 $ 10.13 $ 9.22 $ 10.32
========= ======== ========= ============
Total Return /(3)/..................................... 4.32% 14.94% (6.39)% 5.80%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)...................... $ 23,244 $ 18,066 $ 18,229 $ 18,771
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.13% 4.53% 4.66% 4.30%*
Operating expenses including reimbursement/waiver... 0.70% 0.68% 0.25% 0.00%*
Operating expenses excluding reimbursement/waiver... 1.38% 1.48% 1.42% 1.73%*
Portfolio Turnover Rate................................ 3% 7% 4% 7%**
</TABLE>
- -------------------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on March 16, 1993.
(2) For periods prior to the year ended October 31, 1994, the per share
amounts and selected ratios reflect the financial results of both Retail
A Shares and Trust Shares.
(3) Calculation does not include sales charge for Retail A Shares.
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator was as follows:
<TABLE>
<CAPTION>
Years ended October 31,
--------------------------------------------
1996 1995 1994 1993(2)
------- -------- -------- --------
<S> <C> <C> <C> <C>
Retail A Shares $ 0.35 $ 0.37 $ 0.34 $ 0.15
Trust Shares 0.37 0.38 0.35 0.15
</TABLE>
See Notes to Financial Statements.
40
<PAGE>
Trust Shares
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------------
1996 1995 1994 1993(1)(2)
---------- ---------- ---------- -------------
<S> <C> <C> <C>
$ 10.13 $ 9.22 $ 10.32 $ 10.00
--------- --------- --------- ---------
0.44 0.46 0.46 0.25
0.01 0.91 (1.10) 0.32
--------- --------- --------- ---------
0.45 1.37 (0.64) 0.57
--------- --------- --------- ---------
(0.44) (0.46) (0.46) (0.25)
--- --- --- ---
--------- --------- --------- ---------
(0.44) (0.46) (0.46) (0.25)
--------- --------- --------- ---------
0.01 0.91 (1.10) 0.32
--------- --------- --------- ---------
$ 10.14 $ 10.13 $ 9.22 $ 10.32
========= ========= ========= =========
4.54% 15.21% (6.37)% 5.80%**
$ 6,348 $ 4,083 $ 4,419 $ 18,771
4.34% 4.76% 4.66% 4.30%*
0.49% 0.45% 0.23% 0.00%*
1.17% 1.24% 1.41% 1.73%*
3% 7% 4% 7%**
</TABLE>
41
<PAGE>
[LOGO OF THE GALAXY FUND Massachusetts Municipal Bond Fund
APPEARS HERE] FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------
1996 1995 1994 1993(1)(2)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $ 9.98 $ 9.12 $ 10.24 $ 10.00
--------- --------- --------- ---------
Income from Investment Operations:
Net investment income (A)........................... 0.43 0.44 0.47 0.29
Net realized and unrealized gain (loss) on
investments........................................ (0.04) 0.86 (1.12) 0.24
--------- --------- --------- ---------
Total from Investment Operations:................. 0.39 1.30 (0.65) 0.53
--------- --------- --------- ---------
Less Dividends:
Dividends from net investment income................ (0.43) (0.44) (0.47) (0.29)
Dividends from net realized capital gains........... --- --- --- ---
--------- --------- --------- ---------
Total Dividends:................................. (0.43) (0.44) (0.47) (0.29)
--------- --------- --------- ---------
Net increase (decrease) in net asset value............. (0.04) 0.86 (1.12) 0.24
--------- --------- --------- ---------
Net Asset Value, End of Period......................... $ 9.94 $ 9.98 $ 9.12 $ 10.24
========= ========= ========= =========
Total Return /(3)/..................................... 4.05% 14.52% (6.46)% 5.42%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)...................... $ 26,275 $ 16,113 $ 15,966 $ 20,121
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.42% 4.56% 4.89% 4.87%*
Operating expenses including reimbursement/waiver... 0.66% 0.70% 0.33% 0.05%*
Operating expenses excluding reimbursement/waiver... 1.32% 1.58% 1.43% 1.82%*
Portfolio Turnover Rate................................ 16% 19% 11% 0%**
</TABLE>
- --------------------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on March 12, 1993.
(2) For periods prior to the year ended October 31, 1994, the per share amounts
and selected ratios reflect the financial results of both Retail A Shares
and Trust Shares.
(3) Calculation does not include sales charge for Retail A Shares.
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator was as follows:
<TABLE>
<CAPTION>
Years ended October 31,
--------------------------------------------
1996 1995 1994 1993(2)
------- ------- ------- --------
<S> <C> <C> <C> <C>
Retail A Shares $ 0.37 $ 0.36 $ 0.37 $ 0.18
Trust Shares 0.40 0.38 0.38 0.18
</TABLE>
See Notes to Financial Statements.
42
<PAGE>
Trust Shares
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------------
1996 1995 1994 1993(1)(2)
--------- --------- ---------- ----------
<S> <C> <C> <C>
$ 9.98 $ 9.12 $ 10.24 $ 10.00
--------- --------- ---------- ----------
0.46 0.45 0.48 0.29
(0.04) 0.86 (1.12) 0.24
--------- --------- ---------- ----------
0.42 1.31 (0.64) 0.53
--------- --------- ---------- ----------
(0.46) (0.45) (0.48) (0.29)
--- --- --- ---
--------- --------- ---------- ----------
(0.46) (0.45) (0.48) (0.29)
--------- --------- ---------- ----------
(0.04) 0.86 (1.12) 0.24
--------- --------- ---------- ----------
$ 9.94 $ 9.98 $ 9.12 $ 10.24
========= ========= ========== ==========
4.27% 14.72% (6.46)% 5.42%**
$ 11,047 $ 7,607 $ 5,617 $ 20,121
4.60% 4.73% 4.89% 4.87%*
0.48% 0.52% 0.33% 0.05%*
1.14% 1.31% 1.41% 1.82%*
16% 19% 11% 0%**
</TABLE>
43
<PAGE>
[LOGO OF THE GALAXY FUND Rhode Island Municipal Bond Fund
APPEARS HERE] FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Year ended Period ended
October 31, 1996 October 31, 1995/(1)/
----------------- -------------------
<S> <C> <C>
Net Asset Value, Beginning of Period....................................... $ 10.67 $ 10.00
----------- -----------
Income from Investment Operations:
Net investment income (A)............................................... 0.51 0.44
Net realized and unrealized gain on investments......................... 0.03 0.67
----------- -----------
Total from Investment Operations:.................................... 0.54 1.11
----------- -----------
Less Dividends:
Dividends from net investment income.................................... (0.51) (0.44)
Dividends from net realized capital gains............................... (0.05) ---
----------- -----------
Total Dividends:.................................................... (0.56) (0.44)
----------- -----------
Net increase (decrease) in net asset value................................. (0.02) 0.67
----------- -----------
Net Asset Value, End of Period............................................. $ 10.65 $ 10.67
=========== ===========
Total Return/(2)/.......................................................... 5.22% 11.29%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's).......................................... $ 14,900 $ 10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver.................... 4.78% 5.13%*
Operating expenses including reimbursement/waiver....................... 0.77% 0.40%*
Operating expenses excluding reimbursement/waiver....................... 1.34% 2.25%*
Portfolio Turnover Rate.................................................... 13% 34%**
</TABLE>
- --------------------------------------------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 20, 1994.
(2) Calculation does not include sales charge for Retail A Shares.
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Adviser and/or Administrator for the year ended October 31,
1996 and for the period ended October 31, 1995 were $ 0.45 and $0.28,
respectively.
See Notes to Financial Statements.
44
<PAGE>
[THE GALAXY FUND
LOGO APPEARS HERE] NOTES TO FINANCIAL STATEMENTS
1. Organization
The Galaxy Fund, a Massachusetts business trust (the "Trust"), is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. As of the date of this report, the Trust offered twenty-four
managed investment portfolios. The accompanying financial statements and
financial highlights are those of the Tax-Exempt Bond, New York Municipal Bond,
Connecticut Municipal Bond, Massachusetts Municipal Bond and Rhode Island
Municipal Bond Funds (individually, a "Fund", collectively, the "Funds") only.
Each Fund is authorized to issue two series of shares (Trust Shares and
Retail A Shares), except for the Tax-Exempt Bond Fund which is authorized to
issue three series of shares (Trust Shares, Retail A Shares, and Retail B
Shares). As of October 31, 1996, the Rhode Island Municipal Bond Fund has
offered only Retail A Shares. Trust Shares, Retail A Shares and Retail B Shares
are substantially the same except that (i) Retail A Shares are subject to a
maximum 3.75% front-end sales charge, (ii) Retail B Shares are subject to a
maximum 5.00% contingent deferred sales charge, and (iii) each series of shares
bears the following series specific expenses: distribution fees, 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 income 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 Trusts 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 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 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 or excise tax
provision is recorded.
Expenses: The Trust accounts separately for the assets, liabilities and
operations of each Fund. Expenses directly attributable 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.
45
<PAGE>
[THE GALAXY FUND
LOGO APPEARS HERE] NOTES TO FINANCIAL STATEMENTS (continued)
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 Funds operations. In the event
that any of the initial shares purchased by a Funds sponsor are redeemed during
such period by any holder thereof, the Fund involved will be reimbursed by such
holder for any unamortized organization costs in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
outstanding at the time of redemption.
When-Issued Securities: Each Fund may purchase and sell securities, such as
municipal obligations, on a "when-issued" basis. Delivery of the security and
payment take place after the date of the commitment to purchase and such
securities are subject to market fluctuations during this period. The fair value
of these securities is determined in the same manner as other municipal
obligations. The Trusts custodian will set aside cash or liquid portfolio
securities equal to the amount of the when-issued commitment in a separate
account.
3. Investment Advisory, Administration,
Shareholder Services 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 each Fund (See Note 4).
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 (the "Administrator") provides
services for a fee, 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 (whose financial reports are disclosed
under a separate cover), 0.085% of the next $2.5 billion of combined average
daily net assets and 0.075% of combined average daily net assets over $5
billion. Prior to September 5, 1996, FDISG was entitled to receive
administration fees, 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 (whose financial reports are
disclosed under a separate cover) 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 Chase
Manhattan Bank, N.A., the Trusts custodian bank, for its services. Prior to
March 31, 1995, the fund 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
March 31, 1995, FDISG acquired substantially all of the assets of 440 Financial
Group of Worcester, Inc.
440 Financial Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of FDISG and an indirect wholly-owned subsidiary of First Data
Corporation, serves as the exclusive distributor of the Trusts 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.
On October 1, 1994, the Trust implemented a shareholder services plan
("Services Plan") with respect to Retail A Shares of the Funds. Currently, the
Services Plan has not been implemented with respect to the Funds Trust Shares.
The Services Plan provides compensation to institutions (including and currently
limited to Fleet Bank and its affiliates) which provide administrative and
support services to their customers who beneficially own Retail A Shares at an
aggregate 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
aggregate 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.
46
<PAGE>
[THE GALAXY FUND
LOGO APPEARS HERE] NOTES TO FINANCIAL STATEMENTS (continued)
No fees were charged under the Services Plan with respect to the Rhode Island
Municipal Bond Fund for the period ended October 31, 1996.
The Trust has adopted a distribution and shareholder services plan (the
"12b-1 Plan") with respect to Retail B Shares of the Tax-Exempt Bond Fund. Under
the 12b-1 Plan, the Trust may pay (i) the Distributor or another person for
expenses and activities intended to result in the sale of Retail B Shares, (ii)
institutions for shareholder liaison services and (iii) institutions for
administrative support services. Currently, payments are being made solely to
Fleet Bank and its affilitates. Payments for distribution expenses may not
exceed an annual rate of 0.65% of the average daily assets attributable to the
Funds outstanding Retail B Shares. The fees for shareholder liaison services
and/or administrative support services may not exceed the annual rates of 0.15%
and 0.15%, respectively, of the average daily net assets attributable to the
Funds outstanding Retail B Shares. The Trust, under the direction of the Board
of Trustees, is currently limiting each 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 institutions customers. For the year
ended October 31, 1996, the Funds paid shareholder servicing fees, liaison
and/or distribution fees under the Services Plan and 12b-1 Plan as follows:
<TABLE>
<CAPTION>
Shareholder Services Distribution
-------------------- ------------
Fund Retail A Retail B Retail B
- ---- --------- -------- ------------
<S> <C> <C> <C>
Tax-Exempt Bond.......................... $ 42,210 $ --- $ 300
New York Municipal Bond.................. 57,674 N/A N/A
Connecticut Municipal Bond............... 36,878 N/A N/A
Massachusetts Municipal Bond............. 38,823 N/A N/A
Rhode Island Municipal Bond --- N/A N/A
</TABLE>
Effective October 1, 1994, with respect to Retail A Shares and Trust Shares,
and effective March 1, 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 Bank, 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
year ended October 31, 1996, transfer agent charges for each series were as
follows:
<TABLE>
<CAPTION>
Fund Retail A Retail B Trust
- ---- -------- -------- --------
<S> <C> <C> <C>
Tax-Exempt Bond................................. $ 26,686 $ 95 $ 73
New York Municipal Bond......................... 42,011 N/A 62
Connecticut Municipal Bond...................... 14,666 N/A 62
Massachusetts Municipal Bond.................... 6,977 N/A 70
Rhode Island Municipal Bond..................... 2,683 N/A ---
</TABLE>
Certain officers of the Trust may be officers of the Administrator and/or
Distributor. Such officers receive no compensation from the Trust for serving in
their respective roles. No officer, director or employee of the Investment
Adviser serves as an officer, Trustee or employee of the Trust. For the period
covered by this report, each Trustee was 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 as
well as reimbursement for expenses incurred in attending meetings. The Chairman
of the Boards of Trustees of the Trust and VIPand the President and Treasurer of
the Trust and VIP were entitled to additional annual fees for their services in
these capacities. Effective November 1, 1996, each Trustee is entitled to
receive for services as a trustee of the Trust, VIP and Galaxy Fund II ("Galaxy
II") an aggregate fee of $29,000 per annum plus certain other fees for attending
or participating in meetings as well as reimbursement for expenses incurred in
attending meetings. The Chairman of the Boards of Trustees, and the President
and Treasurer of the Trust, VIP and Galaxy II are also entitled to additional
fees for their services in these capacities. These fees are allocated among the
funds of the Trust, VIP and Galaxy II, based on their relative net assets. In
addition, effective March 1, 1996, each Trustee became eligible to participate
in the Trust's Deferred Compensation Plan (the "Plan"), an unfunded,
non-qualified 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 year ended October 31, 1996 include legal fees paid to
Drinker Biddle & Reath. A partner of that firm is Secretary to the Trust.
47
<PAGE>
[THE GALAXY FUND
LOGO APPEARS HERE] NOTES TO FINANCIAL STATEMENTS (continued)
4. Waiver of Fees and Reimbursement of Expenses
The Investment Adviser and Administrator voluntarily agreed to waive a
portion of their fees and/or to reimburse the Funds for certain expenses so that
total expenses would not exceed certain expense limitations established for each
series. The Investment Adviser and Administra-tor may revise or discontinue the
voluntary fee waivers and expense reimbursements at any time. For the year ended
October 31, 1996, the Investment Adviser and Administrator waived fees and/or
reimbursed expenses with respect to the Funds in the following amounts:
<TABLE>
<CAPTION>
Fees Waived by
----------------------------
Investment
Fund Adviser Administrator
- ---- ------------ -------------
<S> <C> <C>
Tax-Exempt Bond.................................... $ 253,133 ---
New York Municipal Bond............................ 131,020 ---
Connecticut Municipal Bond......................... 163,904 $ 46,559
Massachusetts Municipal Bond....................... 191,624 46,772
Rhode Island Municipal Bond........................ 60,030 ---
</TABLE>
<TABLE>
<CAPTION>
Reimbursement by
Fund Investment Adviser
- ---- ------------------
<S> <C>
Tax-Exempt Bond.................................... $ 62,854
New York Municipal Bond............................ 123,317
Connecticut Municipal Bond......................... ---
Massachusetts Municipal Bond....................... ---
Rhode Island Municipal Bond........................ 15,079
</TABLE>
5. Shares of Beneficial Interest
The Trusts 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 M - Series 1
Shares (Trust Shares), Class M - Series 2 Shares (Retail A Shares) and Class M -
Series 3 Shares (Retail B Shares) - Tax-Exempt Bond Fund; Class O - Series 1
Shares (Trust Shares) and Class O - Series 2 Shares (Retail A Shares) - New York
Municipal Bond Fund; Class P - Series 1 Shares (Trust Shares) and Class P -
Series 2 Shares (Retail A Shares) - Connecticut Municipal Bond Fund; Class Q -
Series 1 Shares (Trust Shares) and Class Q - Series 2 Shares (Retail A Shares) -
Massachusetts Municipal Bond Fund; and Class R - Series 1 Shares (Trust Shares)
and Class R - Series 2 Shares (Retail A Shares) - Rhode Island Municipal Bond
Fund. Each share represents an equal proportionate interest in the respective
Fund, bears the same fees and expenses (except that 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 Trusts 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, other than
short-term investments, for the year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
Fund Purchases Sales
- ---- ------------ -----------
<S> <C> <C>
Tax-Exempt Bond.................................... $ 30,545,667 $18,273,104
New York Municipal Bond............................ 7,543,408 7,904,621
Connecticut Municipal Bond......................... 9,214,622 730,969
Massachusetts Municipal Bond....................... 19,122,198 5,333,218
Rhode Island Municipal Bond........................ 5,863,464 1,704,433
</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 October 31, 1996 for each Fund is as follows:
<TABLE>
<CAPTION>
Fund Appreciation (Depreciation)
- ---- ------------ --------------
<S> <C> <C>
Tax-Exempt Bond.................................... $ 3,553,513 $ (650,692)
New York Municipal Bond............................ 1,772,630 (227,488)
Connecticut Municipal Bond......................... 388,260 (211,946)
Massachusetts Municipal Bond....................... 366,513 (369,677)
Rhode Island Municipal Bond........................ 275,253 (48,138)
</TABLE>
<TABLE>
<CAPTION>
Fund Net Cost
- ---- ------------ -------------
<S> <C> <C>
Tax-Exempt Bond.................................... $ 2,902,821 $ 127,340,806
New York Municipal Bond............................ 1,545,142 62,151,913
Connecticut Municipal Bond......................... 176,314 29,346,410
Massachusetts Municipal Bond....................... (3,164) 36,469,489
Rhode Island Municipal Bond........................ 227,115 14,369,906
</TABLE>
At October 31, 1996, the following Funds had capital loss carryforwards:
<TABLE>
<CAPTION>
Fund Amount Expiration
- ---- ------------ ------------
<S> <C> <C>
New York Municipal Bond............................ $ 9,630 2000
1,195,340 2002
676,456 2003
16,589 2004
Connecticut Municipal Bond......................... 178,995 2001
82,181 2002
685,391 2003
Massachusetts Municipal Bond....................... 30,505 2001
251,195 2002
487,619 2003
</TABLE>
7. Concentration of Credit
48
<PAGE>
[LOGO OF THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS (continued)
APPEARS HERE]
The New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond, and Rhode Island Municipal Bond Funds invest primarily in debt
obligations issued by the State of New York, the State of Connecticut, the
Commonwealth of Massachusetts and the State of Rhode Island, respectively, and
their respective political subdivisions, agencies and public authorities to
obtain funds for various public purposes. The Funds, as non diversified
investment portfolios, are more susceptible to economic and political factors
adversely affecting issuers of each respective states specific municipal
securities than are municipal bond funds that are not concentrated in these
issuers to the same extent.
8. Acquisition of The Shawmut Funds
At a meeting held on June 12, 1995, the Board of Trustees of the Trust
approved an Agreement and Plan of Reorganization (the "Agreement") for the
acquisition of The Shawmut Funds ("Shawmut") by the Trust. Pursuant to the
Agreement, all of the assets and liabilities of the Shawmut Connecticut
Intermediate Municipal Income Fund and the Shawmut Massachusetts Intermediate
Municipal Income Fund were transferred to the Galaxy Connecticut Municipal Bond
Fund and the Galaxy Massachusetts Municipal Bond Fund, respectively, in exchange
for Retail A and Trust shares of the Galaxy Connecticut Municipal Bond Fund and
the Galaxy Massachusetts Municipal Bond Fund, respectively. Accordingly, the net
assets of the Shawmut Connecticut Intermediate Municipal Income Fund were
exchanged for 765,050 Retail A Shares and 185,222 Trust Shares of the Galaxy
Connecticut Municipal Bond Fund and the net assets of the Shawmut Massachusetts
Intermediate Municipal Income Fund were exchanged for 1,090,523 Retail A Shares
and 179,482 Trust Shares of the Galaxy Massachusetts Municipal Bond Fund,
respectively. In related transactions, the assets and liabilities of the other
Shawmut portfolios were transferred to corresponding Galaxy portfolios in
exchange for shares in such Galaxy portfolios. The reorganization, which
qualified as a tax-free reorganization for federal income tax purposes, was
completed on December 4, 1995 following approval of the reorganization by The
Shawmut Fund shareholders. Certain share registration fees incurred in
connection with the reorganization were borne by the Trust. The following is a
summary of the Net Assets, Shares Outstanding, Net Asset Values per share and
Unrealized Appreciation associated with the transaction:
<TABLE>
<CAPTION>
Before Acquisition After Acquisition
------------------------------------- -------------------------
Galaxy Shawmut Galaxy
Connecticut Connecticut Connecticut
Municipal Intermediate Municipal
Bond Municipal Bond Bond
------------- -------------- -------------------------
<S> <C> <C> <C>
Net Assets............................. $ 22,703,295 $ 9,758,479 $ 32,461,774
Shares outstanding..................... 2,210,642 963,404 3,160,914
Retail A and Trust Net Asset Value, per share $ 10.27 $ 10.13 $ 10.27
Unrealized Appreciation................ $ 435,707 $ 182,610
Before Acquisition After Acquisition
------------------------------------- -------------------------
Galaxy Shawmut Galaxy
Massachusetts Massachusetts Massachusetts
Municipal Intermediate Municipal
Bond Municipal Bond Bond
------------- -------------- -------------------------
Net Assets $ 24,534,165 $12,840,125 $ 37,374,290
Shares outstanding 2,426,213 1,270,005 3,696,218
Retail A and Trust Net Asset Value, per share.$ 10.11 $ 10.11 $ 10.11
Unrealized Appreciation $ 501,126 $ 199,433
</TABLE>
9. Imposition of Front-End Sales Load
Effective December 1, 1995, the public offering price for Retail A Shares
of the Funds is the sum of the net asset value of the Retail A Shares purchased
plus, if applicable, a maximum 3.75% front-end sales charge. Reduced sales
charges are available. No sales charge is assessed on certain transactions
and/or investors, including purchases by persons who were beneficial owners of
shares of Galaxy or any other funds advised by Fleet Investment Advisors Inc. or
its affiliates before December 1, 1995.
49
<PAGE>
[LOGO OF THE GALAXY FUND
APPEARS HERE]
Tax Information (unaudited)
During the fiscal year ended October 31, 1996, the Funds earned 100% of their
income from municipal obligations which generally qualify as exempt from federal
and state taxation.
See Notes to Financial Statements.
50
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Shareholders and the Board of Trustees of
The Galaxy Fund:
We have audited the accompanying statements of assets and liabilities
of the Tax-Exempt Bond Fund, New York Municipal Bond Fund, Connecticut Municipal
Bond Fund, Massachusetts Municipal Bond Fund and Rhode Island Municipal Bond
Fund (five series of The Galaxy Fund), including the portfolios of investments,
as of October 31, 1996, and the related statements of operations, the statements
of changes in net assets, and financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of The Galaxy Funds management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the aforementioned series of The Galaxy Fund as of October 31, 1996,
the results of their operations, the changes in their net assets, and their
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
December 16, 1996
<PAGE>
Shareholder
Services
"A well-balanced asset allocation plan may help to control your risk while
pursuing your goals."
Automatic Investment Program
The Golden Rule of investing is "pay yourself first." That is easy to do with
Galaxys 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. Galaxys comprehensive array of investment
choices can be used in combination to match the needs of nearly everyone.
Exchange Privileges
As your investment needs change, you can conveniently exchange your shares in
one fund for shares in another fund.
Quarterly Magazine
Service also means giving you the practical information you need, in language
you can understand, to make smart investment decisions. The quarterly magazine,
Galaxy Observer, brings news, strategies and simple, straight-forward
explanations of investment basics and terminology.
Consolidated Statements
Timely, comprehensive mutual fund account statements offer detailed information
on your individual account. If you have a Fleet One or a Fleet Private Banking
Account, your Galaxy Fund information can be added to these statements.
Investment Specialists
In many Fleet branch offices or in the convenience of your home or office, you
can visit one-on-one with an Investment Specialist* who can help you select the
investments that match your individual needs. This service is at no cost to you.
24-Hour Access to Registered Representatives
24 hours a day, seven days a week, 365 days a year, we are ready and available
to help. Our toll-free telephone lines offer round-the-clock access to Fund
information and service. Call 1-800-628-0414 for information on initial
purchases and current performance.
Customer Service
Quality customer service is only a phone call away. Call 1-800-628-0414 between
9 a.m. and 5 p.m. to arrange bank wires, or to make telephone exchanges and
redemptions.
In addition, Galaxy's state-of-the-art InvestConnect automated voice response
system is available to serve you 24-hours a day, seven days a week by calling
1-800-FOR-GLXY (367-4599).
- --------------------------------------------------------------------------------
Certain shareholder services may not be available for Trust Share investors.
Please consult your Fund Prospectus.
* Shares of the Funds are distributed through 440 Financial Distributors,
Inc., member NASD and SIPC. Investment Specialists are registered
representatives of FIS Securities, Inc., member NASD, Fleet Enterprises, Inc.,
member NASD and SIPC, or MDS Securities Inc., member NASD and SIPC.
<PAGE>
Trustees
and Officers
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. ONeill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce McConnel, III, Esq.
Secretary
Neil Forrest
Vice President &
Assistant Treasurer
Investment Adviser
Fleet Investment
Advisors Inc.
75 State Street
Boston Massachusetts
02109
Distributor
440 Financial
Distributors, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
Administrator
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough,
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 Funds 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.
[GRAPHIC APPEARS HERE]
This report was printed on recycled paper.
<PAGE>
[LOGO OF THE GALAXY FUNDS APPEARS HERE]
[ARTWORK APPEARS HERE]
TAXABLE BOND FUNDS REPORT
Short-Term Bond Fund . Intermediate Government Income Fund .
Corporate Bond Fund . High Quality Bond Fund
Annual
Report
For The Year Ended
October 31, 1996
<PAGE>
[LOGO OF THE FLEET GALAXY
FUND APPEARS HERE]
CHAIRMAN'S
MESSAGE
Dear Shareholder:
Enclosed is your annual report for the Galaxy Taxable Bond Funds (the
"Funds") for the 12 months ended October 31, 1996. Inside, you will find a
Market Overview that explains the major market and economic events that
influenced bond returns during that time. There are also Portfolio Reviews for
each of the Funds showing the management strategies that Fleet Investment
Advisors Inc. used in this environment.
During the period, bonds earned returns that were about average by
historical standards, but their prices were much more volatile than in the
previous 12 months. Stocks and money market instruments also fluctuated as
investors became uncertain over the direction of the economy, inflation and
interest rates. Toward the end of the period, investors seemed hopeful that
economic growth and inflation would remain moderate and interest rates would
become more stable.
Such an environment shows why it may be important to maintain a well-
diversified portfolio of investments. Different asset classes often move in
different directions, so using a broad range of classes can help smooth out
returns over time. Debt-oriented investments, such as bonds, can provide a
steady stream of income that can be a useful supplement to the growth and cash
portions of your portfolio.
To stay on track, you may want to "rebalance" your portfolio each year.
This is particularly true in a year like the one just past, when market changes
were substantial. As investment classes within your portfolio gain in value, you
can maintain a diversified portfolio by reinvesting those gains in other asset
classes, which may have declined in value or stayed the same, in accordance with
your long-term allocation strategy. Of course, you should consider the tax
implications of such rebalancing.
We hope you will find the following report helpful as you review your
current portfolio. If you have questions about material in the report, or need
information on any of the Galaxy Funds, please call the Galaxy Service Center at
800-628-0414.
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>
[LOGO OF FLEET GALAXY
FUND APPEARS HERE]
"In the 12 months ended October 31, 1996, we took advantage of rising yields by
emphasizing bonds with longer maturities in the Galaxy Taxable Bond Funds."
Bond Market Overview
By Fleet Investment Advisors Inc.
After rising strongly for most of 1995, bond prices were more volatile in
1996. During that time, investors became less certain about future economic
growth, inflation and interest rates. Bond prices rose when investors thought
growth was slowing and inflation was in check. Prices then fell when investors
worried that growth was accelerating and the Federal Reserve (the "Fed") would
raise interest rates to curb inflation.
In the 12 months ended October 31, 1996, we took advantage of rising yields
by emphasizing bonds with longer maturities in the Galaxy Taxable Bond Funds.
When we were concerned about falling prices, we focused on shorter-maturity
issues. We further enhanced returns for the Funds by taking advantage of
selective opportunities in higher coupon investments.
Watching the Economy and the Fed
At the end of 1995, the economy was growing slowly and bond prices were
still rising. After advancing at an annualized rate of 3.8% in the third quarter
of the year, the gross domestic product ("GDP"), a measure of U.S. goods and
services, slowed to an annualized rate of only 0.3% in the fourth quarter. As
expected, the Fed cut its short-term Fed Funds rate from 5.75% to 5.5%. This,
plus expectations for further cuts and a balanced federal budget, drove the
yield for 30-year Treasury bonds from 6.33% at the end of October to 5.94% at
the end of December.
At the start of 1996, a stalemate in federal budget talks and signs of
stronger growth caused a sudden fall in bond prices. Although inflation remained
moderate and the Fed cut the Fed Funds rate to 5.25%, investors worried that
interest rates would soon rise. As the GDP growth accelerated to annualized
rates of 2.0% and 4.7% in the first and second quarters, respectively, declining
bond prices pushed the yield for 30-year Treasury bonds to a high of 7.2%.
Performance At-A-Glance
Average Annual Returns as of October 31, 1996
Trust Shares
Short-Term Bond Fund
Inception Date 12/30/91
[BAR GRAPH APPEARS HERE]
4.91%
4.52%
5.32%
Intermediate Government Income Fund
Inception Date 9/1/88
[BAR GRAPH APPEARS HERE]
3.88%
3.97%
5.95%
7.47%
Corporate Bond Fund
Inception Date 12/12/94
[BAR GRAPH APPEARS HERE]
5.00%
9.92%
High Quality Bond Fund
Inception Date 12/14/90
[BAR GRAPH APPEARS HERE]
4.46%
4.33%
7.69%
8.25%
1 Year 5 Years
3 Years Life of Fund
1
<PAGE>
[LOGO OF FLEET GALAXY
FUND APPEARS HERE]
"When bond prices were rising at the end of 1995, we gave greater emphasis to
longer-term bonds -- whose prices generally rise more than shorter-term issues
in a rally.
Because inflation remained in check the Fed did not raise interest rates.
This inaction, plus reports of slower growth, helped bond prices rebound in the
fall. Prices remained volatile, however, suffering near-term declines on reports
of economic strength. By October, investors seemed convinced that inflation and
interest rates had stabilized. This made bond prices more stable, too. At the
end of November, as the Commerce Department announced that GDP growth had slowed
to an annualized rate of 2.0% in the third quarter, the yield for long-term
Treasury bonds stood at 6.64%.
Adjusting to Market Changes
When bond prices were rising at the end of 1995, we gave greater emphasis
to longer-term bonds -- whose prices generally rise more than shorter-term
issues in a rally.
Corporate bonds and mortgages performed very well during this period. This
was due, partly, to reduced supplies of corporates as companies focused on
cutting costs instead of issuing debt and to increased demand for corporates as
interest rates fell. Meanwhile, yields for mortgages were attractive due to
large supplies of these issues. In this environment, we felt the yields for
lower quality corporate bonds were not strong enough to compensate for the added
risk that these securities carry. While this approach dampened performance of
the Galaxy Taxable Bond Funds in the near-term, it maintained our focus on
lower-risk issues that perform more evenly over times of uncertainty.
Performance At-A-Glance
Average Annual Returns as of October 31, 1996
Retail A Shares*
Short-Term Bond Fund
Inception Date 12/30/91
[GRAPH APPEARS HERE]
0.72%
3.01%
4.38%
Intermediate Government Income Fund
Inception Date 9/1/88
[GRAPH APPEARS HERE]
- -0.30%
2.44%
5.01%
6.88%
High Quality Bond Fund
Inception Date 12/14/90
[GRAPH APPEARS HERE]
0.37%
2.88%
6.79%
7.48%
1 Year 5 Years
3 Years Life of Fund
*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.
2
<PAGE>
MARKET
OVERVIEW
"Later, as yields for corporate securities and issues of U.S. government
agencies became more attractive relative to yields for Treasuries, we added
investments in these instruments."
The large positions we held in longer-term issues early in 1996, when
interest rates suddenly moved higher, also weakened performance . We soon
softened the effect of higher rates, however, by adding shorter-term securities
- -- whose prices are generally more stable. Later, as yields for corporate
securities and issues of U.S. government agencies became more attractive
relative to yields for Treasuries, we added investments in these instruments.
This strategy, plus the addition of mortgage-backed securities and continued
focus on non-callable securities, helped enhance the Funds' yields.
Market Outlook
Fleet Investment Advisors Inc. believes bond prices could improve further
in coming months. If GDP growth stays near 2%, as we expect, inflation should
remain near 3%. This should further calm investor fears about higher interest
rates and help bond prices to edge higher. We believe prices for Treasuries
could rise enough to keep long-term yields at or below 6.5% into 1997. Further
economic uncertainty, however, could cause temporary fluctuations in prices and
yields.
For this reason, we expect to focus the Galaxy Taxable Bond Funds on
securities that tend to outperform in uncertain times. For now, we're keeping
the Funds' average maturities near those of their benchmarks and we are looking
for additional opportunities in higher-coupon investments. Believing the spreads
between yields of corporate and Treasury issues will remain historically tight,
we expect to focus on shorter-term corporate bonds, mortgage-backed and
asset-backed issues.
Performance At-A-Glance
Total Returns as of October 31, 1996
Retail B Shares*
Short-Term Bond Fund
Inception Date 3/4/96
[GRAPH APPEARS HERE]
2.12%
- --2.83%
High Quality Bond Fund
Inception Date 3/4/96
[GRAPH APPEARS HERE]
1.14%
-3.74%
*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.
3
<PAGE>
PORTIFOLIO REVIEWS
[PHOTO OF PERRY VIETH APPEARS HERE]
Perry Vieth
Galaxy Short-Term Bond Fund
Distribution of Total Net Assets
as of October 31, 1996
[GRAPH APPEARS HERE]
Repurchase Agreement &
Net Other Assets & Liabilities 4%
Foreign Bond 1%
Asset-Backed Securities 11%
U.S. Government
& Agency Obligations 26%
Corporate Notes & Bonds 58%
Galaxy Short-Term Bond Fund
By Perry Vieth
Portfolio Manager
In the 12 months ended October 31, 1996, we added higher yielding
securities to the Galaxy Short-Term Bond Fund. During this time, the Fund's
Trust Shares earned a total return of 4.91%. During the same period, the Fund's
Retail A Shares had a total return of 4.63% before deduction of the maximum
3.75% front-end sales charge. Over the same period, the average short
intermediate investment grade bond fund tracked by Lipper Analytical Services
("Lipper") earned a return of 5.54% and the Lehman Brothers One to Three Year
Government Bond Index had a return of 5.98%. From their initial public offering
on March 4, 1996 through October 31, 1996, the Fund's Retail B Shares had a
total return of 2.12% before deduction of the maximum 5.00% contingent deferred
sales charge.
Investment Strategy
When interest rates were falling at the end of 1995, the Fund's portfolio
had a "barbelled" maturity structure with investments in zero-coupon Treasury
securities and shorter-maturity issues. Such a structure benefits from
significant changes in bond prices. At the same time, we also were purchasing
securities that could not be called in by their issuers.
At the start of 1996, after interest rates reversed, we unwound the barbell
structure and returned to a neutral weighting along the yield curve. We also
added investments in asset-backed securities that offered excellent credit
quality and attractive yields. This buffered the Fund against falling prices
while helping to maintain its income. In the second quarter, when bond prices
and yields were more attractive, we added longer-maturity issues to the
portfolio. We then sold these issues after the bond market rallied.
The Fund's income was enhanced with a significant increase in holdings of
high quality corporate issues and asset-backed securities. However, as spreads
between yields for corporate and government issues tightened, we replaced some
longer-term corporate instruments with U.S. government agency debt, including
mortgage pass-through securities. On October 31, 1996, the Fund's Trust Shares
had a 30-day SEC annualized yield of 5.17%. On the same date, Retail A Shares
had a 30-day SEC annualized yield of 4.72% after deduction of the maximum 3.75%
front-end sales charge. On October 31, 1996, Retail B Shares had a 30-day SEC
annualized yield of 4.38% after deduction of the maximum 5.00% contingent
deferred sales charge.
Looking Ahead
Given the uncertainty of the economy's strength, we will expect to keep the
Fund's average maturity close to that of its market benchmark. In addition, we
will most likely maintain the current investment mix in coming months -- keeping
sizable positions in asset-backed securities and short-term corporate issues.
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 APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Bros. Galaxy Galaxy Galaxy
One-to-three Years Retail A Institutional Retail B
Government Bond Index Shares Shares Shares
--------------------- -------- ------------- --------
<S> <C> <C> <C> <C>
91 10,000 9,625 10,000
92 10,542 10,127 10,521
93 11,150 10,833 11,256
94 11,280 10,759 11,181
95 12,276 11,758 12,249 10,000
10/31/96 13,010 12,302 12,850 9,717
</TABLE>
. Lehman Brothers One to Three Year Government Bond Index
. Galaxy Short-Term Bond Fund-Retail A Shares
. Galaxy Short-Term Bond Fund-Trust Shares
. Galaxy Short-Term Bond Fund-Retail B Shares
* Since inception on 12/30/91 for Trust and Retail A Shares. Since inception on
3/4/96 for Retail B Shares. 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. Performance figures for Retail B
Shares reflect the deduction of the maximum 5.00% contingent deferred sales
charge as if shares were redeemed on October 31, 1996. 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.
4
<PAGE>
PORTFOLIO REVIEW
[PHOTO OF MARIE SCHOFIELD APPEARS HERE]
Marie Schofield
Galaxy Intermediate
Government
Income Fund
Distribution of Total Net Assets
as of October 31, 1996
[GRAPH APPEARS HERE]
Corporate Notes & Bonds 21%
Asset-Backed Securities 9%
Repurchase Agreement
& Net Other Assets & Liabilities 2%
U.S. Government &
Agency Obligations 68%
Galaxy Intermediate
Government Income Fund
By Marie Schofield
Portfolio Manager
As interest rates rose and bond prices fell, we replaced longer-term issues
in the Galaxy Intermediate Government Income Fund with shorter-term issues. This
helped to lock in profits earned in the bond rally of 1995 and buffered the Fund
against falling prices in 1996. To increase the Fund's income during this time,
we added investments in higher-yielding securities.
For the 12 months ended October 31, 1996, the Fund's Trust Shares had a
total return of 3.88%. During the same time, its Retail A Shares had a total
return of 3.58% before deduction of the maximum 3.75% front-end sales charge.
That compares with a return of 5.14% for the average intermediate investment
grade bond fund tracked by Lipper and a return of 5.81% for the Lehman Brothers
Intermediate Government/Corporate Bond Index.
Switching Gears
When bond prices rose at the start of the period, we focused on longer-term
securities to increase potential price appreciation and lock in higher yields
for a longer period of time. We further enhanced return by adding positions in
U.S. Treasury securities, which could not be called as rates fell, and by
investing in bonds of high quality U.S. corporations and government agencies
with yields that were especially attractive.
When interest rates rose in 1996, the Fund's strong yield helped offset
falling bond prices. As higher interest rates discouraged homeowners from
prepaying their mortgages, making mortgage-backed securities more attractive, we
added investments in that sector. This, plus larger investments in asset-backed
securities and selected corporate bonds of high quality, further enhanced the
Fund's yield.
During this time, we replaced some of the Fund's longer-term securities
with shorter-term issues -- whose prices tend to hold up better when interest
rates rise. We maintained this strategy as interest rates rose further.
Throughout the period, we gave greater attention to bonds that would not be
called in from time to time by their issuers. This also helped to enhance the
Fund's yield. On October 31, 1996, the Fund's Trust Shares had a 30-day SEC
annualized yield of 5.83%. On the same date, Retail A Shares had a 30-day SEC
annualized yield of 5.30% after deduction of the maximum 3.75% front-end sales
charge.
Continued Attention to Income
Although investors remain nervous about inflation and bond prices may
continue to fluctuate, we expect prices gradually to edge higher and will look
for new ways to benefit from such gains. For the most part, however, we expect
income to constitute the majority of the Fund's return. With sizable investments
in asset-backed securities, mortgage-backed securities and high quality
corporate bonds, we believe the Fund could enjoy above-average income into next
year.
Marie Schofield has managed the Galaxy Intermediate Government Income Fund since
December of 1996. She has managed fixed-income investments since 1975. Jim Evans
managed the Fund from March of 1996 to December 1996.
Galaxy Intermediate
Government Income Fund
Growth of $10,000 investment*
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Bros.
Intermediate Galaxy Galaxy
Government/Corporate Retail A Trust
Bond Shares Shares Shares
-------------------- -------- -------------
<S> <C> <C> <C>
88 10,000 9,625 10,000
88 10,312 10,000 10,390
89 11,399 11,023 11,451
90 12,240 11,250 11,687
91 13,933 12,977 13,482
92 15,326 14,398 14,958
93 16,850 15,414 16,014
94 16,524 14,733 15,310
95 18,596 16,626 17,329
10/31/96 19,866 17,221 18,002
</TABLE>
. Lehman Brothers Intermediate Government/Corporate Bond Index
. Galaxy Intermediate Government Income Fund-Retail A Shares
. Galaxy Intermediate Government Income Fund-Trust Shares
* 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.
5
<PAGE>
PORTFOLIO REVIEW
[PHOTO OF DAVID LINDSAY APPEARS HERE]
David Lindsay
Galaxy Corporate
Bond Fund
Distribution of Total Net Assets
as of October 31, 1996
U.S. Government & Agency Obligations 12%
Foreign Bonds 6%
Other Corporate Notes & Bonds 23%
Finance 22%
Utilities 13%
Transportation 6%
Manufacturing 6%
Asset-Backed Securities 9%
Repurchase Agreement &Net Other Assets & Liabilities 3%
Galaxy Corporate Bond Fund
By David Lindsay
Portfolio Manager
In the 12 months ended October 31, 1996, we restructured maturities in the
Galaxy Corporate Bond Fund to make the most of changing bond prices. We also
gave greater emphasis to corporate bonds, which performed relatively well in
this environment. With these strategies, the Fund's Trust Shares earned a total
return of 5.00%. That compares to returns of 4.82% for the average A-rated
corporate bond fund tracked by Lipper and 5.81% for the Lehman Brothers
Intermediate Government/Corporate Bond Index, the Fund's benchmark index. At the
end of the period, the Fund's Trust Shares had a 30-day SEC annualized yield of
5.90%.
Defending Share Value,
Boosting Yield
At the end of 1995, when interest rates were bottoming, we used a
"barbelled" maturity structure for the Fund's investments. For the most part, we
concentrated investments in shorter-term issues, which could outperform the
benchmark index when interest rates rose, and in longer-term issues, which could
provide the Fund with increased yield.
As interest rates rose in 1996, we added high-quality, intermediate-term
corporates from the finance, telecommunications and retail sectors. This helped
the Fund endure the accompanying decline in bond prices relatively well. While
prices for corporates fell with the rest of the bond market, an improving
economy strengthened the credit quality of corporate issuers and kept corporate
prices from falling as much as prices for other bonds.
We continued to add corporates in the second and third quarters of 1996 --
finding attractive issues from a wide range of industries. We also added
asset-backed securities, which had largely been overlooked by investors and had
yields that were especially strong.
At the same time we began to unwind the Fund's barbell maturity structure
and give even greater attention to intermediate-term issues. Since these
securities had been hit especially hard when interest rates rose, they enjoyed
strong gains as rates fell late in the period ended October 31, 1996. Many of
the bonds we bought came from the finance, paper, electric utility and
broadcasting sectors.
New Opportunities
We continue to look for high-quality corporates representing good value,
although the recent outperformance of corporates has made us quite selective. If
the economy slows, as we believe it will, corporates may underperform
temporarily. This would give us the opportunity to make additional investments
at attractive prices and yields.
In the meantime, we expect to maintain sizable positions in asset-backed
securities. Many banks are using these instruments to finance their growth. This
has boosted supplies of asset-backed issues and kept their prices and yields
quite appealing.
David Lindsay has managed the Galaxy Corporate Bond Fund since its inception in
December of 1994, Galaxy Fund II Treasury Index Fund since 1994, and managed
fixed-income portfolios for Fleet Investment Advisors Inc. since 1986.
Galaxy Corporate Bond Fund
Growth of $10,000 investment*
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Intermediate Galaxy Institutional
Corporate Bond Index Shares
-------------------- --------------------
<S> <C> <C>
94 10,000 10,000
95 10,967 11,385
10/31/96 11,658 11,954
</TABLE>
. Lehman Brothers Intermediate Government/Corporate Bond Index
. Galaxy Corporate Bond Fund-Trust Shares
* Since inception on 12/12/94. 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.
6
<PAGE>
[LOGO OF THE FLEET GALAXY
FUND APPERS HERE]
PORTFOLIO REVIEW
Galaxy High Quality
Bond Fund
Distribution of Total Net Assets
as of October 31, 1996
Repurchase Agreement &
Net Other Assets & Liabilities 2%
Asset-Backed Securities 9%
Foreign Bond 2%
Corporate Notes & Bonds 29%
U.S. Government & Agency Obligations 58%
Galaxy High Quality Bond Fund
By Marie Schofield
Portfolio Manager
The interest rate environment of the last 12 months can best be
characterized as volatile, with yields for 30-year Treasury bonds generally
fluctuating between 6% and 7%. The period began with long-term yields near 6.25%
and ended with long-term yields near 6.75%. Such yield volatility generally
affects the prices of longer-term bonds more than the prices of short-term
bonds. The Galaxy High Quality Bond Fund adapted to this changing environment by
using defensive maturity strategies when interest rates were low and rising and
extending maturities when rates were near the high end of the range.
This was in keeping with our active duration discipline, which reviews
"real" bond yields, or yields minus inflation. Under this discipline we look to
be opportunistic and lengthen the average maturity and duration of the Fund when
real yields are high and look attractive -- which is currently around 7%. When
real yields are less attractive, we generally have a neutral to shorter maturity
structure.
For the 12 months ended October 31, 1996, the Fund's Trust Shares produced
a total return of 4.46%. During the same period, Retail A Shares produced a
total return of 4.24% before deduction of the maximum 3.75% front-end sales
charge. Over the same time, the average A-rated corporate bond fund tracked by
Lipper had a total return of 4.82% and the Lehman Brothers Long-Term Government/
Corporate Bond Index had a return of 4.39%. For the period since their intial
public offering on March 4, 1996 through October 31, 1996, the Fund's Retail B
Shares produced a total return of 1.14% before deduction of the maximum 5.00%
contingent deferred sales charge.
On October 31, 1996, the Fund's Trust Shares had a 30-day SEC annualized
yield of 5.72%. On the same date, Retail A Shares had a 30-day SEC annualized
yield of 5.29% after deduction of the maximum 3.75% front-end sales charge. On
October 31, 1996, the Fund's Retail B Shares had a 30-day SEC annualized yield
of 5.00% after deduction of the maximum 5.00% contingent deferred sales charge.
Restructuring Maturities
In the falling rate environment at the end of 1995, we emphasized longer,
non-call maturities and zero-coupon bonds. This both enhanced the Fund's
potential for capital gains and helped to lock in higher yields. When interest
rates began to rise along with accelerating economic growth during the first
quarter of 1996, we replaced securities with longer maturities and durations
with short-term issues of high quality.
7
<PAGE>
PORTFOLIO REVIEWS
As a further defensive measure, we restructured the Fund's portfolio in the
second quarter to spread maturities across the yield curve -- thereby reducing
the Fund's concentration in intermediate-term maturities. Purchases of
shorter-term issues included "AAA"-rated asset-backed securities and corporate
debt with top credit ratings and attractive yields. We also purchased government
mortgage-backed securities, which offered incremental yield and stable cash
flows. These issues had grown more appealing as higher interest rates
discouraged home loan prepayments.
In the third quarter, we reduced holdings in longer-term corporate bonds
due to our concerns over the widening in the spreads between their yields and
those of government issues and the related underperformance that could occur. We
continued to emphasize shorter-term corporates, which would be less affected by
changing yield spreads. With long-term yields near the 7.0% threshold, we
lengthened the average maturity and duration of the Fund slightly with the
purchase of longer-maturity Treasury bonds. As rates fell toward 6.75% near the
end of the fourth quarter, we took gains in these issues and adopted a more
neutral maturity position.
Future Strategies
In keeping with our active duration discipline, we expect to make similar
adjustments in the coming months. As before, we will monitor yield spreads among
the different market sectors to find investments that offer the best relative
value.
Marie Schofield has managed the Galaxy High Quality Bond Fund since March of
1996. She has managed fixed-income investments since 1975.
Galaxy High Quality Bond Fund
Growth of $10,000 investment*
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
Lehman Brothers Galaxy Galaxy Galaxy
Long-Term Government/ Retail A Institutional Retail B
Corporate Bond Index Shares Shares Shares
--------------------- -------- ------------- --------
<S> <C> <C> <C> <C>
90 10,000 9,625 10,000
91 11,155 10,951 11,003
92 12,329 11,684 12,139
93 14,009 13,510 14,037
94 13,359 12,374 12,859
95 16,856 14,658 15,259 10,000
10/31/96 17,355 15,280 15,939 9,626
</TABLE>
. Lehman Brothers Long-Term Government/Corporate Bond Index
. Galaxy High Quality Bond Fund-Retail A Shares
. Galaxy High Quality Bond Fund-Trust Shares
. Galaxy High Quality Bond Fund-Retail B Shares
* Since inception on 12/14/90 for Trust and Retail A Shares. Since inception on
3/4/96 for Retail B Shares. 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. Performance figures for Retail B
Shares reflect the deduction of the maximum 5.00% contingent deferred sales
charge as if shares were redeemed on October 31, 1996. 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.
- -------------------------------------------------------------------------------
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 and may revise or discontinue such practice at any time.
Without such waivers and/or reimbursements, performance would be lower. Past
performance is no guarantee of future results. Unless otherwise indicated, total
return figures in this report include changes in share price, the effect of
sales charges, where applicable, and reinvestment of dividends and capital gains
distributions, if any.
8
<PAGE>
Short-Term Bond Fund
PORTFOLIO OF INVESTMENTS
[LOGO OF THE GALAXY FUND October 31, 1996
APPEARS HERE]
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ------------- ------------
CORPORATE NOTES AND BONDS - 58.03%
<S> <C> <C>
Finance - 34.65%
$ 1,000,000 American General Finance Corp
7.70%, 11/15/97 ..................................$ 1,018,759
1,500,000 Associates Corp. of North America
6.25%, 03/15/99 .................................. 1,507,500
3,000,000 Associates Corp. of North America
5.25%, 03/30/00 .................................. 2,902,500
5,000,000 CIT Group Holdings, Inc., MTN
6.20%, 04/15/98 .................................. 5,025,000
2,000,000 Commercial Credit Co
8.50%, 02/15/98 .................................. 2,065,000
1,000,000 Commercial Credit Co.
6.70%, 08/01/99 .................................. 1,012,500
2,000,000 Ford Motor Credit Co.
6.38%, 10/06/00 .................................. 1,995,000
2,500,000 General Electric Capital Corp., MTN
5.48%, 03/01/99 .................................. 2,471,875
5,000,000 General Motors Acceptance Corp.
8.00%, 10/01/99 .................................. 5,225,000
3,000,000 Household Finance Corp.
7.75%, 06/15/97 .................................. 3,040,287
3,000,000 Norwest Financial, Inc., MTN
6.68%, 09/15/99 .................................. 3,045,000
2,500,000 Pitney Bowes Credit Corp., MTN
6.54%, 07/15/99 .................................. 2,525,000
-----------
31,833,421
-----------
Consumer Staples - 10.03%
2,000,000 American Home Products Corp.
7.70%, 02/15/00 .................................. 2,085,000
1,000,000 Coca-Cola Enterprises, Inc.
7.00%, 11/15/99 .................................. 1,022,500
1,000,000 Procter & Gamble Co.
6.85%, 06/01/97 .................................. 1,005,929
5,000,000 Sears Roebuck & Co., MTN
7.40%, 03/16/98 .................................. 5,100,000
-----------
9,213,429
-----------
Banking - 8.97%
1,000,000 BankAmerica Corp.
6.00%, 07/15/97 .................................. 1,002,309
5,200,000 NationsBank Corp.
7.50%, 02/15/97 .................................. 5,229,739
2,000,000 Society National Bank
7.13%, 04/15/97 .................................. 2,014,340
-----------
8,246,388
-----------
Aerospace - 3.30%
3,000,000 Lockheed Martin Corp.
6.63%, 06/15/98 .................................. 3,033,750
----------
Telephone and Telecommunications - 1.08%
$ 1,000,000 New York Telephone Co.
5.25%, 09/01/98 ..................................$ 988,750
-----------
Total Corporate Notes and Bonds .................. 53,315,738
(Cost $53,065,447) -----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 25.98%
U.S. Treasury Notes - 11.19%
1,250,000 7.38%, 11/15/97 .................................. 1,272,549
5,000,000 5.88%, 08/15/98 .................................. 5,013,293
3,000,000 5.50%, 11/15/98 .................................. 2,985,657
1,000,000 6.38%, 05/15/99 .................................. 1,012,179
-----------
10,283,678
-----------
Federal Home Loan Mortgage Corporation- 8.77%
3,000,000 5.18%, 11/22/96, Discount Note ................... 2,990,490
4,731,445 5.50%, 12/01/99, Pool #G50277 .................... 4,721,093
355,238 7.00%, 05/01/19, Pool #D29158 .................... 349,576
-----------
8,061,159
-----------
Federal Home Loan Bank - 3.12%
400,000 6.85%, 02/25/97 .................................. 401,936
2,500,000 6.00%, 01/18/01 .................................. 2,460,550
-----------
2,862,486
-----------
Federal National Mortgage Association - 2.90%
200,000 6.05%, 01/12/98 .................................. 200,754
2,500,000 5.32%, 02/10/99, MTN ............................. 2,462,523
-----------
2,663,277
-----------
Total U.S. Government
and Agency Obligations .......................... 23,870,600
(Cost $23,671,807) -----------
ASSET-BACKED SECURITIES - 10.90%
5,000,000 Premier Auto Trust
1996-1 Asset Backed Note, Class A-3
6.00%, 10/06/99 .................................. 5,002,295
3,000,000 Sears Credit Account Master Trust
6.50%, 10/15/03 .................................. 3,033,657
2,000,000 Standard Credit Card Master Trust II
1993-3 Participation Certificate, Class A
5.50%, 02/07/00 .................................. 1,976,294
-----------
Total Asset-Backed Securities .................... 10,012,246
(Cost $9,950,333) -----------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
Short-Term Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
[LOGO OF THE GALAXY FUND October 31, 1996
APPEARS HERE]
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------------- ------------
FOREIGN BOND - 1.04%
<S> <C> <C>
$ 900,000 Export-Import Bank of Japan
Yankee Debenture
8.35%, 12/01/99 .............................. $ 955,125
---------
Total Foreign Bond ........................... 955,125
(Cost $959,670) ---------
REPURCHASE AGREEMENT - 3.39%
3,114,281 Chase Securites, Inc.
5.45%, 11/01/96, Dated 10/31/96
Repurchase Price $3,114,752
(Collateralized By
U.S. Treasury Bond 7.25%
Due 05/15/2016;
Total Par Value $2,925,000;
Total Market Value $3,196,636) ............... 3,114,281
-----------
Total Repurchase Agreement ................... 3,114,281
(Cost $3,114,281) -----------
Total Investments - 99.34%....................................... 91,267,990
(Cost $90,761,538) -----------
Net Other Assets and Liabilities - 0.66% ........................ 607,464
-----------
Net Assets - 100.00% ............................................$ 91,875,454
===========
- ------------------------------------------
MTN Medium Term Note
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
Intermediate Government Income Fund
PORTFOLIO OF INVESTMENTS
[LOGO OF THE GALAXY October 31, 1996
FUND APPEARS HERE]
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ------------- ----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 68.14%
Federal Home Loan
Mortgage Corporation - 15.28%
<S> <C> <C>
$ 5,348,917 7.00%, 11/01/00, Pool #G50300......... $ 5,410,761
5,825,351 7.50%, 10/01/09, Pool #E62671......... 5,930,935
14,203,981 7.00%, 12/01/10, Pool #E00407......... 14,239,491
19,543,173 6.50%, 03/01/11, Pool #E00420......... 19,256,123
------------
44,837,310
------------
U.S. Treasury Bonds - 13.49%
20,000,000 11.13%, 08/15/03....................... 25,361,380
11,000,000 10.75%, 08/15/05....................... 14,228,269
------------
39,589,649
------------
U.S. Treasury Notes - 12.99%
10,000,000 6.13%, 05/15/98........................ 10,070,200
20,000,000 6.88%, 08/31/99........................ 20,504,980
7,500,000 6.25%, 08/31/00........................ 7,559,993
------------
38,135,173
------------
Federal National
Mortgage Association - 11.93%
12,000,000 8.42%, 10/20/04, MTN................... 12,260,028
10,000,000 8.00%, 04/13/05, Pass-thru Certificate,
Pool #313180........................... 10,154,190
7,123,864 6.00%, 10/01/09, Pool #303344.......... 6,867,847
5,555,000 8.00%, 10/01/09........................ 5,726,855
------------
35,008,920
------------
U.S. Government Backed Bonds - 7.23%
10,000,000 Small Business Administration
Participation Certificates
Series SBIC-PS 1995-10B
7.25%, 05/10/05........................ 9,825,000
5,000,000 State of Israel
6.38%, 08/15/01........................ 5,012,500
6,450,000 State of Israel, Series 6-A Note
6.05%, 08/15/00........................ 6,393,563
------------
21,231,063
------------
Government National
Mortgage Association - 7.22%
779,952 7.50%, 09/15/07, Pool #329067.......... 796,282
2,842,124 7.50%, 10/15/07, Pool #332722.......... 2,901,629
1,471,784 7.50%, 03/15/08, Pool #347309.......... 1,502,599
1,597,093 7.50%, 12/15/08, Pool #345085.......... 1,630,531
9,375,050 6.50%, 07/15/09, Pool #780357.......... 9,272,505
4,743,816 9.00%, 12/15/17, Pool #780047.......... 5,093,673
------------
21,197,219
------------
Total U.S. Government
and Agency Obligations................ 199,999,334
(Cost $198,865,096) ------------
Value
Par Value (Note 2)
- ------------- ----------
CORPORATE NOTES AND BONDS - 21.42%
Finance - 11.41%
$ 7,500,000 Associates Corp. N.A., MTN
6.00%, 03/15/99........................$ 7,500,000
5,000,000 Commercial Credit Co., Note
5.55%, 02/15/01........................ 4,837,500
5,000,000 Ford Motor Credit Co., Sr. Note
6.25%, 11/08/00........................ 4,962,500
6,000,000 General Motors Acceptance Corp.
7.13%, 06/01/99........................ 6,127,500
5,000,000 IBM Credit Corp., MTN
5.86%, 07/28/98........................ 4,987,500
5,000,000 Pitney Bowes Credit Corp., Series C, MTN
6.78%, 07/16/01........................ 5,075,000
------------
33,490,000
------------
Banking - 7.78%
7,500,000 Bank One Milwaukee
National Association, MTN
6.35%, 03/19/01........................ 7,490,625
7,550,000 Branch Banking & Trust Co., Sr. Note
5.70%, 02/01/01........................ 7,351,813
8,000,000 NationsBank Texas,
National Association, Sr. Note, MTN
6.35%, 03/15/01........................ 7,980,000
------------
22,822,438
------------
Healthcare - 1.72%
5,000,000 Columbia/HCA Healthcare Corp.
6.50%, 03/15/99........................ 5,043,750
------------
Retail - 0.51%
1,500,000 May Department Stores
6.88%, 11/01/05........................ 1,500,000
------------
Total Corporate Notes and Bonds........ 62,856,188
(Cost $62,084,373) ------------
ASSET-BACKED SECURITIES - 9.22%
5,000,000 Ford Credit Owner Trust
Series 1996-A, Class A-3
6.50%, 11/15/99........................ 5,053,265
750,000 Guaranteed Trade Trust
Series 1993-A, Class A
4.86%, 04/01/98........................ 747,186
6,500,000 MBNA Master Credit Card Trust
Series 1993-3, Class A
5.40%, 09/15/00........................ 6,419,387
5,000,000 Signet Credit Card Master Trust
1993-1 Credit Card Participation
Certificate, Class A
5.20%, 02/15/02........................ 4,921,765
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
Intermediate Government Income Fund
PORTFOLIO OF INVESTMENTS (continued)
[LOGO OF THE GALAXY October 31, 1996
FUND APPEARS HERE]
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------------- ----------
<S> <C> <C>
$ 5,000,000 Standard Credit Card Master Trust I
Series 1993-3 Participation Certificate
Class A, Eurodollar
5.50%, 02/07/00........................... $ 4,940,735
5,000,000 Standard Credit Card Master Trust I
Series 1995-10 Participation Certificate
Class A
5.90%, 02/07/01........................... 4,977,020
--------------
Total Asset-Backed Securities............. 27,059,358
(Cost $26,868,281) --------------
REPURCHASE AGREEMENT - 1.14%
3,333,250 Chase Securities, Inc.
5.45%, 11/01/96, Dated 10/31/96
Repurchase Price $3,333,755
(Collateralized by U.S. Treasury Bond
7.25% Due 05/15/2016;
Total Par Value $3,130,000;
Total Market Value $3,420,673)............ 3,333,250
--------------
Total Repurchase Agreement................ 3,333,250
(Cost $3,333,250) --------------
Total Investments - 99.92%.................................. 293,248,130
(Cost $291,151,000) --------------
Net Other Assets and Liabilities - 0.08%.................... 242,679
--------------
Net Assets - 100.00%........................................ $ 293,490,809
==============
</TABLE>
- -----------------------------------
MTN Medium Term Note
See Notes to Financial Statements.
12
<PAGE>
Corporate Bond Fund
[LOGO OF FLEET GALAXY FUND PORTFOLIO OF INVESTMENTS
APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ------------ ----------
CORPORATE NOTES AND BONDS - 69.88%
<S> <C> <C>
Finance - 22.12%
$ 600,000 Ameritech Capital Funding
7.50%, 04/01/05........................ $ 627,750
100,000 Aristar, Inc.
6.30%, 07/15/00........................ 99,625
750,000 Associates Corp. of North America
8.38%, 01/15/98........................ 772,500
500,000 Associates Corp. of North America
5.25%, 09/01/98........................ 494,375
1,000,000 Caterpillar Financial Services Corp.
6.87%, 11/30/99........................ 1,017,500
1,000,000 Chase Manhattan Corp.
6.63%, 01/15/98........................ 1,008,750
300,000 Chrysler Building New York, Inc.
9.13%, 05/01/99........................ 320,625
1,000,000 CIT Group Holdings, Inc., MTN
6.20%, 04/15/98........................ 1,005,000
750,000 Commercial Credit Co.
6.70%, 08/01/99........................ 759,375
300,000 Commercial Credit Co.
8.70%, 06/15/09........................ 343,125
1,000,000 Commercial Credit Co.,
Debenture
9.60%, 05/15/99........................ 1,080,000
500,000 Dean Witter Discover & Co.
6.75%, 08/15/00........................ 506,250
600,000 Dow Capital BV, Debenture
9.00%, 05/15/10........................ 687,750
600,000 Fletcher Challenge Financial USA, Inc.
9.80%, 06/15/98........................ 634,500
1,000,000 Ford Motor Credit Co.
8.88%, 06/15/99........................ 1,063,750
500,000 Ford Motor Credit Co.
6.85%, 08/15/00........................ 506,250
500,000 Ford Motor Credit Co., Sr. Note
6.25%, 11/08/00........................ 496,250
150,000 General Motors Acceptance Corp.
5.63%, 02/01/99........................ 148,312
160,000 General Motors Acceptance Corp.
9.38%, 04/01/00........................ 174,200
200,000 General Motors Acceptance Corp.
9.63%, 05/15/00........................ 219,750
200,000 General Motors Acceptance Corp.
9.63%, 12/15/01........................ 227,000
1,300,000 General Motors Acceptance Corp.
8.88%, 06/01/10........................ 1,516,125
1,800,000 General Motors Acceptance Corp.,
MTN
7.50%, 06/01/99........................ 1,854,000
350,000 Great Western Financial Corp.
6.13%, 06/15/98........................ 351,312
525,000 Great Western Financial Corp.
6.38%, 07/01/00........................ 524,344
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........................ 996,250
</TABLE>
Finance (continued)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ------------ ----------
<S> <C> <C>
$ 1,000,000 Norwest Financial, Inc.
6.88%, 06/15/00........................ $1,017,500
600,000 NZI Capital Corp.
8.25%, 03/15/97........................ 605,471
1,000,000 Pitney Bowes Credit Corp., MTN
6.54%, 07/15/99........................ 1,010,000
250,000 Textron Financial Corp., MTN
9.45%, 04/10/01........................ 275,938
300,000 Travelers Group, Inc.
6.13%, 06/15/00........................ 295,875
250,000 Travelers Group, Inc.
6.63%, 09/15/05........................ 246,250
1,000,000 Travelers Group, Inc.
6.88%, 06/01/25........................ 1,003,750
620,000 United States Leasing International, Inc.
8.75%, 12/01/01........................ 679,675
180,000 USL Capital Corp.
8.13%, 02/15/00........................ 188,550
----------
23,827,677
----------
Utilities - 12.65%
500,000 Alabama Power Co.
6.38%, 08/01/99........................ 503,125
300,000 Baltimore Gas & Electric Co.
8.40%, 10/15/99........................ 317,625
1,000,000 Baltimore Gas & Electric Co.
8.38%, 08/15/01........................ 1,078,750
1,000,000 Cincinnati Gas & Electric Co.
5.80%, 02/15/99........................ 990,000
300,000 Consumers Power Co.
8.75%, 02/15/98........................ 309,750
1,080,000 Cox Communications, Inc.
6.38%, 06/15/00........................ 1,077,300
383,000 Cox Communications, Inc.
6.50%, 11/15/02........................ 380,606
1,000,000 Florida Power & Light Co.
5.50%, 07/01/99........................ 981,250
455,000 GTE California, Inc.
6.75%, 03/15/04........................ 455,569
350,000 GTE Corp.
9.38%, 12/01/00........................ 385,437
500,000 GTE Florida, Inc.
6.25%, 11/15/05........................ 481,875
400,000 GTE South, Inc., Series B, Debenture
7.25%, 08/01/02........................ 414,500
1,500,000 GTE Southwest, Inc.
6.00%, 01/15/06........................ 1,415,625
600,000 Hydro-Quebec
11.75%, 02/01/12....................... 831,750
150,000 Kansas Gas & Electric Co.
6.50%, 08/01/05........................ 145,500
100,000 Orange & Rockland Utilities, Inc.
9.38%, 03/15/00........................ 108,500
300,000 Orange & Rockland Utilities, Inc.,
Debenture
6.50%, 10/15/97........................ 301,875
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
Corporate Bond Fund
[LOGO OF FLEET GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
APPEARS HERE] October 31, 1996
Value
Par Value (Note 2)
- ------------ ----------
<TABLE>
<CAPTION>
<S> <C> <C>
Utilities (continued)
$ 180,000 Peco Energy Corp.
9.25%, 10/01/99........................ $ 193,950
200,000 Public Service Electric & Gas Co.,
Series II
7.63%, 02/01/00........................ 207,000
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........................ 330,750
1,000,000 Texas Utilities Electric Co.
5.75%, 07/01/98........................ 996,250
250,000 Unicom Corp.
9.38%, 02/15/00........................ 270,625
500,000 Virginia Electric & Power Co.
6.25%, 08/01/98........................ 502,500
250,000 Virginia Electric & Power Co., MTN
9.40%, 05/27/99........................ 266,590
300,000 Virginia Electric & Power Co.,
Series 1992 D
7.63%, 07/01/07........................ 316,125
------------
13,630,108
------------
Transportation - 6.01%
250,000 Atchinson, Topeka & Santa Fe
Railway Co., Series X
6.00%, 07/01/00........................ 246,875
800,000 Carnival Corp.
5.75%, 03/15/98........................ 799,000
500,000 Carnival Corp.
6.15%, 10/01/03........................ 487,500
300,000 CSX Corp.
9.50%, 08/01/00........................ 331,125
200,000 Federal Express Corp.
10.00%, 04/15/99....................... 216,250
1,000,000 Hertz Corp.
9.75%, 02/01/98........................ 1,046,250
150,000 Hertz Corp.
6.00%, 02/01/01........................ 147,000
1,100,000 Lockheed Martin Corp.
5.88%, 03/15/98........................ 1,100,000
500,000 Southwest Airlines Co.
9.40%, 07/01/01........................ 554,375
300,000 Southwest Airlines Co.
8.00%, 03/01/05........................ 318,750
250,000 Union Pacific Corp.
7.60%, 05/01/05........................ 262,187
1,000,000 Union Pacific Corp.
6.40%, 02/01/06........................ 970,000
------------
6,479,312
------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ----------- ----------
<S> <C> <C>
Manufacturing - 5.71%
$ 500,000 Crown Cork & Seal, Inc.
8.38%, 01/15/05........................ $ 539,375
1,375,000 Georgia-Pacific Corp.
9.95%, 06/15/02........................ 1,577,813
1,000,000 International Paper Co.
7.63%, 08/01/04........................ 1,045,000
500,000 Loral Corp.
7.63%, 06/15/04........................ 518,125
1,500,000 Raytheon Co.
6.50%, 07/15/05........................ 1,477,500
1,000,000 Snap-On, Inc.
6.63%, 10/01/05........................ 997,500
----------
6,155,313
----------
Consumer Staples - 4.69%
250,000 American Home Products Corp.
7.90%, 02/15/05....................... 267,500
150,000 Becton Dickinson & Co.
8.80%, 03/01/01....................... 163,125
400,000 Champion International Corp.
7.10%, 09/01/05....................... 401,000
1,000,000 Dillard Department Stores, Inc.
7.38%, 06/15/99....................... 1,026,250
1,000,000 Lilly (Eli) & Co.
7.13%, 06/01/25....................... 987,500
300,000 Limited, Inc.
9.13%, 02/01/01....................... 323,625
250,000 Penney (J.C.) & Co., Inc.
9.05%, 03/01/01....................... 274,062
1,000,000 Penney (J.C.) & Co., Inc., MTN
6.38%, 09/15/00....................... 998,750
300,000 Seagram Ltd., Debenture
6.50%, 04/01/03....................... 297,750
300,000 Sears Roebuck & Co., Series V, MTN
9.31%, 07/24/98....................... 316,125
----------
5,055,687
----------
Banking - 3.46%
305,000 Bank of New York, Inc.
7.88%, 11/15/02...................... 324,444
1,000,000 Bank One Milwaukee
National Association, MTN
6.35%, 03/19/01...................... 998,750
1,000,000 Branch Banking & Trust Co., Sr. Note
5.70%, 02/01/01...................... 973,750
1,000,000 National City Bank of Kentucky
6.30%, 02/15/11...................... 920,000
500,000 Wachovia Corp.
7.00%, 12/15/99...................... 512,500
----------
3,729,444
----------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
[LOGO OF THE GALAXY FUND APPEARS HERE]
Corporate Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ----------- ----------
<S> <C> <C>
Insurance - 3.01%
$ 210,000 American General Corp.
9.63%, 07/15/00.............. $ 231,525
341,000 Chubb Corp., Debenture
8.75%, 11/15/99.............. 363,591
1,000,000 ITT Hartford Group, Inc.
6.38%, 11/01/02.............. 985,000
750,000 Progressive Corp., Ohio
10.00%, 12/15/00............. 841,875
150,000 Progressive Corp., Ohio
6.60%, 01/15/04.............. 148,125
300,000 Torchmark Corp.
9.63%, 05/01/98.............. 314,625
340,000 Transamerica Corp.
9.88%, 01/01/98.............. 354,875
-----------
3,239,616
-----------
Oil, Gas and Petroleum - 3.00%
300,000 Anadarko Petroleum Corp., Debenture
6.75%, 03/15/03.............. 302,250
500,000 Atlantic Richfield Co., Debenture
10.88%, 07/15/05............. 628,125
1,000,000 Burlington Resources, Inc., Debenture
6.88%, 02/15/26.............. 923,750
300,000 Enron Corp.
10.00%, 06/01/98............. 316,875
100,000 Occidental Petroleum Corp.
10.13%, 11/15/01............. 114,375
300,000 Phillips Petroleum Co.
9.00%, 06/01/01.............. 328,875
300,000 Sun Co., Inc.
7.13%, 03/15/04.............. 302,250
150,000 Texaco Capital, Inc.
8.65%, 01/30/98.............. 155,063
150,000 Unocal Corp., Series A, MTN
9.25%, 08/02/99.............. 161,063
----------
3,232,626
----------
Basic Materials - 2.47%
560,000 Alcan Aluminum, Ltd.
5.88%, 04/01/00.............. 552,300
400,000 Cyprus Amax Minerals Co.
10.13%, 04/01/02............. 458,500
360,000 Reynolds Metals Co., Debenture
9.38%, 06/15/99.............. 386,100
1,000,000 Weyerhaeuser Co.
8.38%, 02/15/07.............. 1,116,250
150,000 Weyerhaeuser Co., Debenture
7.13%, 07/15/23.............. 145,313
----------
2,658,463
----------
Processed Foods - 2.37%
$ 1,600,000 CPC International, Inc.
6.15%, 01/15/06.............. $1,532,000
1,000,000 Sysco Corp.
7.00%, 05/01/06.............. 1,018,750
----------
2,550,750
----------
Consumer Cyclicals - 2.21%
600,000 Armstrong World Industries, Inc.
9.75%, 04/15/08.............. 718,500
100,000 Comdisco, Inc.
9.75%, 01/15/97.............. 100,774
100,000 Comdisco, Inc.
6.50%, 06/15/00.............. 100,000
1,000,000 New York Times Co.
7.63%, 03/15/05.............. 1,060,000
150,000 Times Mirror Co., Debenture
7.50%, 07/01/23.............. 152,625
100,000 Whitman Corp.
7.50%, 08/15/01.............. 103,000
150,000 Whitman Corp.
6.50%, 02/01/06.............. 143,438
----------
2,378,337
----------
Technology - 1.40%
1,500,000 International Business Machines Corp.
6.38%, 06/15/00.............. 1,503,750
----------
Industrial - 0.67%
726,000 Fischbach Corp.
4.75%, 04/01/97.............. 723,046
----------
Capital Goods - 0.11%
104,000 Alco Standard Corp.
8.88%, 04/15/01.............. 112,970
----------
Total Corporate Notes and Bonds 75,277,099
----------
(Cost $75,175,887)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 11.99%
Federal National Mortgage Association - 4.55%
25,756 8.00%, 01/01/99, Pool #145891.... 26,424
223,162 7.50%, 11/07/07, Pool #188629.... 226,928
168,085 5.00%, 08/01/10, Series A-1, CMO. 154,953
1,954 12.50%, 12/01/13, Pool #2443..... 2,225
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
Corporate Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
[LOGO OF THE GALAXY October 31, 1996
FUND APPEARS HERE]
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
----------- ----------
<S> <C> <C>
Federal National
Mortgage Association (continued)
$ 3,885,036 6.00%, 11/01/23, Pool #50940................. $ 3,620,368
907,024 6.50%, 12/01/23, Pool #50946................. 868,191
---------------
4,899,089
---------------
U.S. Treasury Notes - 2.72%
500,000 6.00%, 12/31/97.............................. 502,570
1,086,000 8.88%, 11/15/98.............................. 1,150,366
750,000 6.38%, 01/15/99.............................. 759,652
500,000 7.13%, 02/29/00.............................. 517,439
---------------
2,930,027
---------------
U.S. Treasury Bonds - 2.66%
2,000,000 11.63%, 11/15/02............................. 2,546,478
300,000 7.25%, 05/15/16.............................. 317,817
---------------
2,864,295
---------------
Federal Home Loan
Mortgage Corporation - 1.63%
57,512 8.75%, 08/01/01, Pool #220011................ 59,256
127,810 7.00%, 06/01/04, Pool #189683................ 125,773
117,944 7.50%, 08/01/08, Pool #181313................ 118,424
40,326 7.00%, 05/01/16, Pool #272046................ 39,683
225,339 7.00%, 02/01/17, Pool #289284................ 221,747
142,130 8.90%, 05/15/19, Series 82,
Class C, CMO................................. 143,712
165,880 8.00%, 07/01/21, Pool #C00068................ 169,664
88,665 8.00%, 10/01/21, Pool #D11045................ 90,688
265,462 7.00%, 10/01/22, Pool # C00184............... 261,231
268,677 7.00%, 02/01/23, Pool #C00213................ 264,394
283,630 6.00%, 09/01/23, Pool #D41208................ 264,662
---------------
1,759,234
---------------
Government National
Mortgage Association - 0.43%
149,951 9.00%, 09/15/04, Pool #003669................ 158,666
75,282 9.00%, 12/15/08, Pool #027562................ 79,658
226,678 8.00%, 05/15/22, Pool #319062................ 231,920
---------------
470,244
---------------
Total U.S. Government and
Agency Obligations.......................... 12,922,889
---------------
(Cost $13,007,014)
ASSET-BACKED SECURITIES - 8.90%
$ 1,000,000 Chemical Master Credit Card Trust I,
Series 1996-1, Class A
5.55%, 09/15/03.............................. $ 973,925
1,000,000 Ford Credit Auto Loan Master Trust,
Series 1995-1, Class A
6.50%, 08/15/02.............................. 1,006,100
1,000,000 Ford Credit Owner Trust
Series 1996-A, Class A-3
6.50%, 11/15/99.............................. 1,010,653
1,489,361 Guaranteed Export Trust Certificates
Series 1993-D, Class A
5.23%, 05/15/05.............................. 1,429,783
750,000 Guaranteed Trade Trust
Series 1993-A, Class A
4.86%, 04/01/98.............................. 747,186
1,000,000 NationsBank Auto Owner Trust
Series 1996-A, Class A-3
6.38%, 07/15/00.............................. 1,006,563
1,000,000 Premier Auto Trust
Series 1996-3, Class A-3
6.50%, 03/06/00.............................. 1,009,097
600,000 Standard Credit Card Trust, Series 1990-3
Class A
9.50%, 05/10/97.............................. 612,029
1,800,000 Standard Credit Card Master Trust I,
Series 1995-10 Participation Certificate,
Class A
5.90%, 02/07/01.............................. 1,791,727
---------------
Total Asset-Backed Securities 9,587,063
---------------
(Cost $9,562,220)
FOREIGN BONDS - 5.76%
1,000,000 Korea Development Bank
6.25%, 05/01/00.............................. 992,500
300,000 Manitoba Province of Canada,
Series BM, Debenture
9.13%, 01/15/18.............................. 363,375
300,000 Manitoba Province of Canada,
Debenture
8.80%, 01/15/20.............................. 354,375
1,000,000 Province of Newfoundland
7.32%, 10/13/23.............................. 983,750
3,300,000 Republic of Indonesia
7.80%, 10/15/22.............................. 3,516,150
---------------
Total Foreign Bonds.......................... 6,210,150
---------------
(Cost $6,383,834)
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
Corporate Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
[LOGO OF THE GALAXY October 31, 1996
FUND APPEARS HERE]
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ----------- ----------
<S> <C> <C>
REPURCHASE AGREEMENT - 2.29%
$ 2,463,354 Chase Securities, Inc.
5.45%, 11/01/96, Dated 10/31/96
Repurchase Price $2,463,726
(Collateralized by U.S. Treasury Bond
7.25% Due 05/15/2016;
Total Par Value $2,315,000;
Total Market Value $2,529,987)............... $ 2,463,354
---------------
Total Repurchase Agreement................... 2,463,354
---------------
(Cost $2,463,354)
Total Investments - 98.82%...................................... 106,460,555
---------------
(Cost $106,592,309)
Net Other Assets and Liabilities - 1.18%........................ 1,267,233
---------------
Net Assets - 100.00%............................................ $ 107,727,788
===============
</TABLE>
- -----------------------------------------
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
See Notes to Financial Statements.
17
<PAGE>
[Logo of Gateway Fund High Quality Bond Fund
appears here.] PORTFOLIO OF INVESTMENTS
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ----------- ----------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 58.07%
U.S. Treasury Bonds - 25.10%
$ 5,000,000 8.38%, 08/15/08.............................. $ 5,576,845
1,700,000 9.88%, 11/15/15.............................. 2,280,276
11,500,000 7.50%, 11/15/16.............................. 12,479,225
2,000,000 9.00%, 11/15/18.............................. 2,517,620
4,500,000 7.88%, 02/15/21.............................. 5,099,715
1,700,000 8.13%, 05/15/21.............................. 1,978,290
6,800,000 8.13%, 08/15/21.............................. 7,916,832
1,000,000 8.00%, 11/15/21.............................. 1,150,000
6,000,000 7.25%, 08/15/22.............................. 6,363,294
---------------
45,362,097
---------------
U.S. Treasury Notes - 16.82%
2,500,000 6.13%, 05/15/98.............................. 2,517,550
1,500,000 6.00%, 09/30/98.............................. 1,507,679
2,000,000 8.88%, 02/15/99.............................. 2,129,740
2,000,000 6.88%, 07/31/99.............................. 2,049,078
3,500,000 6.63%, 06/30/01.............................. 3,576,051
2,000,000 6.50%, 08/31/01.............................. 2,033,660
1,500,000 7.88%, 11/15/04.............................. 1,647,164
5,000,000 6.50%, 05/15/05.............................. 5,055,195
3,000,000 6.50%, 08/15/05.............................. 3,033,600
2,200,000 5.88%, 11/15/05.............................. 2,130,348
4,500,000 7.00%, 07/15/06.............................. 4,702,275
---------------
30,382,340
---------------
Federal National
Mortgage Association - 7.62%
500,000 8.15%, 05/11/98.............................. 517,149
6,013,143 6.50%, 12/01/02.............................. 5,986,836
1,000,000 7.86%, 05/25/04, MTN......................... 1,024,269
2,000,000 7.85%, 09/10/04.............................. 2,052,938
1,000,000 8.18%, 09/22/04, MTN......................... 1,013,949
3,000,000 8.50%, 08/01/05.............................. 3,173,637
---------------
13,768,778
---------------
Government National
Mortgage Association - 4.16%
7,201,098 8.00%, 02/15/08, Pool #780424................ 7,520,647
---------------
Federal Home Loan
Mortgage Corporation - 3.11%
592,681 6.50%, 07/01/99, Pool #L73248................ 598,608
2,866,757 5.50%, 08/01/99, Pool #G50195................ 2,835,402
2,167,349 6.50%, 09/01/99, Pool #G50194................ 2,189,023
---------------
5,623,033
---------------
U.S. Government Backed Bonds - 1.26%
$ 500,000 Farm Credit System
Financial Assistance Corp.
9.45%, 11/21/03.............................. $ 531,875
1,800,000 Israel Aid
5.45%, 02/15/01.............................. 1,741,500
---------------
2,273,375
---------------
Total U.S. Government
and Agency Obligations...................... 104,930,270
---------------
(Cost $102,722,380)
CORPORATE NOTES AND BONDS - 29.67%
Finance - 20.65%
2,000,000 Associates Corp. of North America
6.63%, 05/15/01.............................. 2,015,000
4,000,000 Associates Corp. of North America
MTN
6.00%, 03/15/99.............................. 4,000,000
2,000,000 Associates Corp. of North America,
MTN
7.40%, 05/03/02.............................. 2,082,500
4,000,000 Bank One Milwaukee,
National Association, MTN
6.35%, 03/19/01.............................. 3,995,000
200,000 Chubb Corp., Debenture
8.75%, 11/15/99.............................. 213,250
3,800,000 CIT Group Holdings, Inc.
6.75%, 04/30/98.............................. 3,847,500
4,520,000 CIT Group Holdings, Inc., MTN
6.20%, 04/15/98.............................. 4,542,600
250,000 General Electric Capital Corp.
8.30%, 09/20/09.............................. 282,812
1,000,000 General Electric Capital Corp., MTN
8.13%, 02/01/99.............................. 1,043,750
4,500,000 National Rural Utilities
Cooperative Finance Corp.
7.30%, 09/15/06.............................. 4,635,000
3,000,000 Norwest Financial, Inc.
8.50%, 08/15/98.............................. 3,131,250
4,500,000 Paccar Financial Corp., MTN
6.06%, 03/15/99.............................. 4,494,375
3,000,000 Pitney Bowes Credit Corp., MTN
6.54%, 07/15/99.............................. 3,030,000
---------------
37,313,037
---------------
Consumer Staples - 7.04%
2,500,000 Anheuser Busch Cos.
6.90%, 10/01/02.............................. 2,521,875
3,600,000 Coca-Cola Enterprises, Inc.
7.00%, 11/15/99.............................. 3,681,000
</TABLE>
See Notes to Financial Statements.
18
<PAGE>
High Quality Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
October 31, 1996
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ----------- ----------
<S> <C> <C>
Consumer Staples (continued)
$ 3,000,000 General Electric Co.
7.88%, 09/15/98.............................. $ 3,105,000
250,000 Procter & Gamble Co.
8.50%, 08/10/09.............................. 286,875
3,000,000 Sara Lee Corp., MTN
7.40%, 03/22/02.............................. 3,131,250
---------------
12,726,000
---------------
Technology - 1.44%
2,500,000 International Business Machines Corp.
7.25%, 11/01/02.............................. 2,596,875
---------------
Utilities - 0.54%
1,000,000 New England Telephone & Telegraph Co.
5.05%, 10/01/98.............................. 981,250
---------------
Total Corporate Notes and Bonds.............. 53,617,162
---------------
(Cost $52,663,352)
ASSET-BACKED SECURITIES - 8.69%
4,168,775 Banc One Auto Grantor Trust
1996-A Certificate, Class A
6.10%, 10/15/02.............................. 4,181,065
5,500,000 Discover Card Trust
1993-A Credit Card Pass-thru Certificate,
Class A
6.25%, 08/16/00.............................. 5,513,315
3,000,000 NationsBank Auto Owner Trust
Series 1996-A, Class A-3
6.38%, 07/15/00.............................. 3,019,689
3,000,000 Sears Credit Account Master Trust II
1996-1 Certificate, Class A
6.20%, 02/16/06.............................. 2,994,582
---------------
Total Asset-Backed Securities................ 15,708,651
---------------
(Cost $15,620,224)
FOREIGN BOND - 1.74%
$ 3,000,000 Province of Ontario
7.38%, 01/27/03.............................. $ 3,138,750
---------------
Total Foreign Bond........................... 3,138,750
---------------
(Cost $2,994,750)
REPURCHASE AGREEMENT - 1.72%
3,113,332 Chase Securities, Inc.
5.45%, 11/01/96, Dated 10/31/96
Repurchase Price $3,113,803
(Collateralized by U.S. Treasury Bond 7.25%
Due 05/15/2016; Total Par Value $2,925,000;
Total Market Value $3,196,636)............... 3,113,332
---------------
Total Repurchase Agreement................... 3,113,332
---------------
(Cost $3,113,332)
Total Investments - 99.89%...................................... 180,508,165
---------------
(Cost $177,114,038)
Net Other Assets and Liabilities - 0.11%........................ 196,727
---------------
Net Assets - 100.00%............................................ $ 180,704,892
</TABLE>
- -----------------------------------
MTN Medium Term Note
See Notes to Financial Statements.
19
<PAGE>
[LOGO OF THE GALAXY STATEMENTS OF ASSETS AND LIABILITIES
FUND APPEARS HERE] October 31, 1996
<TABLE>
<CAPTION>
Intermediate
Short-Term Government Corporate High Quality
Bond Fund Income Fund Bond Fund Bond Fund
---------- ------------ --------- ------------
ASSETS:
<S> <C> <C> <C> <C>
Investments (Note 2):
Investments at cost........................................ $ 87,647,257 $ 287,817,750 $ 104,128,955 $ 174,000,706
Repurchase agreements...................................... 3,114,281 3,333,250 2,463,354 3,113,332
Net unrealized appreciation (depreciation)................. 506,452 2,097,130 (131,754) 3,394,127
------------- ------------- ------------- ------------
Total investments at value.............................. 91,267,990 293,248,130 106,460,555 180,508,165
Receivable for investments sold.............................. -- -- 9,215 --
Receivable for shares sold................................... 111,200 38,645 16,929 59,795
Interest and dividend receivables............................ 1,069,322 3,200,089 1,892,507 2,753,459
Receivable from Investment Adviser (Note 4).................. 2,858 1,146 16,233 617
Deferred organizational expense (Note 2)..................... 600 -- 12,263 880
------------- ------------- ------------- -------------
Total Assets............................................. 92,451,970 296,488,010 108,407,702 183,322,916
------------- ------------- ------------- -------------
LIABILITIES:
Dividends payable............................................ 182,967 916,149 267,522 303,358
Payable for investments purchased............................ -- 1,500,859 -- 2,054,938
Payable to Custodian......................................... -- 12,604 3,669 3,116
Payable for shares redeemed.................................. 258,303 285,691 213,064 87,032
Advisory fee payable (Note 3)................................ 42,583 140,244 49,563 82,354
Payable to Fleet and affiliates (Note 3)..................... 5,759 12,294 18,121 17,212
Payable to FDISG (Note 3).................................... 35,171 64,310 28,005 24,279
Trustees' fees and expenses payable (Note 3)................. 1,180 5,371 8,391 2,396
Accrued expenses and other payables.......................... 50,553 59,679 91,579 43,339
------------- ------------- ------------- -------------
Total Liabilities........................................ 576,516 2,997,201 679,914 2,618,024
------------- ------------- ------------- -------------
NET ASSETS.................................................... $ 91,875,454 $ 293,490,809 $ 107,727,788 $ 180,704,892
============= ============= ============= =============
NET ASSETS consist of:
Par value (Note 5)........................................... $ 9,194 $ 29,164 $ 10,229 $ 17,264
Paid-in capital in excess of par value....................... 97,258,093 319,175,117 110,066,489 181,791,367
Undistributed net investment income.......................... 130,065 525,316 224,825 121,385
Accumulated net realized gain (loss) on investments sold..... (6,028,350) (28,335,918) (2,442,001) (4,619,251)
Net unrealized appreciation (depreciation) of investments.... 506,452 2,097,130 (131,754) 3,394,127
------------- ------------- ------------- -------------
TOTAL NET ASSETS.............................................. $ 91,875,454 $ 293,490,809 $ 107,727,788 $ 180,704,892
============= ============= ============= =============
Retail A Shares:
Net Assets................................................... $ 33,387,721 $ 79,740,652 $ -- $ 30,984,198
Shares of beneficial interest outstanding.................... 3,341,269 7,923,739 -- 2,960,244
NET ASSET VALUE and redemption
price per share............................................ $ 9.99 $ 10.06 $ -- $ 10.47
Sales charge -- 3.75% of offering price...................... 0.39 0.39 -- 0.41
------------- ------------- ------------- -------------
Maximum offering price per share............................. $ 10.38 $ 10.45 $ -- $ 10.88
============= ============= ============= =============
Retail B Shares:
Net Assets................................................... $ 260,068 $ -- $ -- $ 646,349
Shares of beneficial interest outstanding.................... 26,023 -- -- 61,751
NET ASSET VALUE and offering
price per share*........................................... $ 9.99 $ -- $ -- $ 10.47
============= ============= ============= =============
Trust Shares:
Net Assets................................................... $ 58,227,665 $ 213,750,157 $ 107,727,788 $ 149,074,345
Shares of beneficial interest outstanding.................... 5,826,883 21,239,771 10,228,835 14,242,458
NET ASSET VALUE, offering and redemption
price per share*........................................... $ 9.99 $ 10.06 $ 10.53 $ 10.47
============= ============= ============= =============
</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>
[LOGO OF THE GALAXY STATEMENTS OF OPERATIONS
FUND APPEARS HERE] For the year ended October 31, 1996
<TABLE>
<CAPTION>
Intermediate
Short-Term Government Corporate High Quality
Bond Fund Income Fund Bond Fund Bond Fund
---------- ------------ --------- ------------
INVESTMENT INCOME:
<S> <C> <C> <C> <C>
Interest (Note 2).................................. $ 6,101,390 $ 20,251,099 $ 7,635,846 $ 11,446,222
Dividends (Note 2)................................. 17,209 25,551 37,220 --
----------- ------------ ----------- ------------
Total Investment income........................ 6,118,599 20,276,650 7,673,066 11,446,222
----------- ------------ ----------- ------------
EXPENSES:
Investment advisory fee (Note 3)................... 724,764 2,262,188 824,075 1,271,428
Administration fee (Note 3)........................ 82,440 256,059 93,185 143,905
Custodian fee...................................... 20,993 21,360 19,596 20,971
Fund accounting fee (Note 3)....................... 56,208 66,100 47,479 54,748
Legal fee (Note 3)................................. 3,864 14,655 5,225 7,649
Audit fee.......................................... 19,605 20,030 11,160 15,199
Transfer agent fee (Note 3)........................ 80,371 210,596 104,198 229,684
12b-1 fee (Note 3)................................. 822 -- -- 1,580
Shareholder servicing fee (Note 3)................. 54,786 122,781 -- 46,303
Trustees' fees and expenses (Note 3)............... 2,989 10,083 1,772 5,550
Amortization of organization costs (Note 2)........ 3,649 -- 3,949 785
Reports to shareholders............................ 38,267 80,119 6,208 35,098
Registration fees.................................. 47,115 18,831 33,986 26,457
Insurance.......................................... 2,950 6,571 95 3,293
Miscellaneous...................................... 5,414 13,824 1,966 3,336
----------- ------------ ----------- ------------
Total expenses before reimbursement/waiver..... 1,144,237 3,103,197 1,152,894 1,865,986
Less: reimbursement/waiver (Note 4)............ (234,077) (608,385) (219,753) (342,003)
----------- ------------ ----------- ------------
Total expenses net of reimbursement/waiver..... 910,160 2,494,812 933,141 1,523,983
----------- ------------ ----------- ------------
NET INVESTMENT INCOME............................... 5,208,439 17,781,838 6,739,925 9,922,239
----------- ------------ ----------- ------------
NET REALIZED AND UNREALIZED
GAIN(LOSS) ON INVESTMENTS (Note 2):
Net realized gain (loss) on investments sold....... 112,054 (2,311,334) 1,258,135 1,020,018
Net change in unrealized appreciation
(depreciation) of investments.................... (568,149) (3,748,553) (2,341,149) (3,640,756)
----------- ------------ ----------- ------------
NET REALIZED AND UNREALIZED LOSS
ON INVESTMENTS..................................... (456,095) (6,059,887) (1,083,014) (2,620,738)
----------- ------------ ----------- ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.......................... $ 4,752,344 $ 11,721,951 $ 5,656,911 $ 7,301,501
=========== ============ =========== ============
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
[LOGO OF THE GALAXY STATEMENTS OF CHANGES IN NET ASSETS
FUND APPEARS HERE]
<TABLE>
<CAPTION>
Intermediate Government
Short-Term Bond Fund Income Fund
----------------------------- ------------------------------
Years ended October 31,
--------------------------------------------------------------
1996 1995 1996 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 in Net Assets resulting from operations:
Net investment income.................................... 5,208,439 3,704,119 17,781,838 17,527,248
Net realized gain (loss) on investments sold............. 112,054 (421,060) (2,311,334) (2,953,843)
Net change in unrealized appreciation (depreciation)
of investments......................................... (568,149) 2,480,497 (3,748,553) 19,422,871
------------- ------------- ------------- -------------
Net increase in net assets resulting from operations... 4,752,344 5,763,556 11,721,951 33,996,276
------------- ------------- ------------- -------------
Dividends to shareholders from:
Retail A Shares:
Net investment income.................................... (1,899,771) (1,667,283) (4,849,267) (4,989,851)
------------- ------------- ------------- -------------
Total Dividends........................................ (1,899,771) (1,667,283) (4,849,267) (4,989,851)
------------- ------------- ------------- -------------
Retail B Shares:
Net investment income.................................... (5,986) -- N/A N/A
------------- ------------- ------------- -------------
Total Dividends........................................ (5,986) -- N/A N/A
------------- ------------- ------------- -------------
Trust Shares:
Net investment income.................................... (3,302,682) (2,036,836) (12,933,355) (12,537,397)
------------- ------------- ------------- -------------
Total Dividends........................................ (3,302,682) (2,036,836) (12,933,355) (12,537,397)
------------- ------------- ------------- -------------
Total Dividends to shareholders.......................... (5,208,439) (3,704,119) (17,782,622) (17,527,248)
------------- ------------- ------------- -------------
Net increase (decrease) from share transactions /(1)/...... 25,701,726 (9,333,719) 33,956,268 (57,686,918)
------------- ------------- ------------- -------------
Net increase (decrease) in net assets.................. 25,245,631 (7,274,282) 27,895,597 (41,217,890)
------------- ------------- ------------- -------------
NET ASSETS at end of period (including line A)............ $ 91,875,454 $ 66,629,823 $ 293,490,809 $ 265,595,212
============= ============= ============= =============
(A) Undistributed net investment income.................... $ 130,065 $ 19,340 $ 525,316 $ 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>
[LOGO OF THE GALAXY STATEMENTS OF CHANGES IN NET ASSETS
FUND APPEARS HERE]
<TABLE>
<CAPTION>
Corporate Bond Fund High Quality Bond Fund
----------------------------- -------------------------------
Years ended October 31,
----------------------------------------------------------------
1996 1995/(1)/ 1996 1995
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period $ 37,390,970 $ -- $ 164,723,305 $ 145,429,196
-------------- ------------- -------------- -------------
Increase in Net Assets resulting from operations:
Net investment income................................. 6,739,925 2,067,947 9,922,239 9,372,737
Net realized gain (loss) on investments sold.......... 1,258,135 281,758 1,020,018 (2,232,295)
Net change in unrealized appreciation (depreciation)
of investments...................................... (2,341,149) 2,209,395 (3,640,756) 18,291,500
-------------- ------------- -------------- -------------
Net increase in net assets resulting
from operations..................................... 5,656,911 4,559,100 7,301,501 25,431,942
-------------- ------------- -------------- -------------
Dividends to shareholders from:
Retail A Shares:
Net investment income................................ -- -- (1,722,962) (1,631,664)
Dividends in excess of net investment income......... -- -- -- (3,143)
-------------- ------------- -------------- -------------
Total Dividends..................................... -- -- (1,722,962) (1,634,807)
-------------- ------------- -------------- -------------
Retail B Shares:
Net investment income................................ N/A N/A (12,988) --
-------------- ------------- -------------- -------------
Total Dividends..................................... N/A N/A (12,988) --
-------------- ------------- -------------- -------------
Trust Shares:
Net investment income................................. (6,740,091) (2,067,947) (8,186,289) (7,723,052)
Dividends in excess of net investment income.......... -- -- -- (14,878)
Net realized gain on investments...................... (269,505) -- -- --
-------------- ------------- -------------- -------------
Total Dividends..................................... (7,009,596) (2,067,947) (8,186,289) (7,737,930)
-------------- ------------- -------------- -------------
Total Dividends to shareholders................... (7,009,596) (2,067,947) (9,922,239) (9,372,737)
-------------- ------------- -------------- -------------
Net increase from share transactions/(2)/.............. 71,689,503 34,899,817 18,602,325 3,234,904
-------------- ------------- -------------- -------------
Net increase in net assets........................ 70,336,818 37,390,970 15,981,587 19,294,109
-------------- ------------- -------------- -------------
NET ASSETS at end of period (including line A)......... $ 107,727,788 $ 37,390,970 $ 180,704,892 $ 164,723,305
============== ============= ============== =============
(A) Undistributed net investment income................ $ 224,825 $ 12,253 $ 121,385 $ 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>
[LOGO OF THE GALAXY STATEMENTS OF CHANGES IN NET ASSETS -
FUND APPEARS HERE] Capital Stock Activity
<TABLE>
<CAPTION>
Short-Term Bond Fund Intermediate Government Income Fund
---------------------------- ------------------------------------
Years ended October 31,
--------------------------------------------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold........................... $ 9,555,879 $ 8,050,740 $ 10,050,205 $ 8,076,188
Issued in connection with
acquisition (Note 7)......... 7,787,792 -- 10,486,443 --
Issued to shareholders in
reinvestment of dividends.... 1,599,869 1,308,564 3,514,752 3,456,642
Repurchased..................... (16,939,526) (12,823,541) (22,121,133) (31,399,298)
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding........... $ 2,004,014 $ (3,464,237) $ 1,930,267 $(19,866,468)
============ ============ ============ ============
Retail B Shares:
Sold........................... $ 301,660 -- N/A N/A
Issued to shareholders in
reinvestment of dividends.... 5,137 -- N/A N/A
Repurchased.................... (47,553) -- N/A N/A
------------ ------------ ------------ ------------
Net increase in
shares outstanding........... $ 259,244 -- N/A N/A
============ ============ ============ ============
Trust Shares:
Sold........................... $ 42,871,945 $ 10,145,423 $ 34,811,806 $ 22,701,923
Issued in connection with
acquisition (Note 7)......... 30,804,627 -- 46,190,350 --
Issued to shareholders in
reinvestment of dividends.... 1,175,479 1,360,406 3,100,671 4,002,421
Repurchased.................... (51,413,583) (17,375,311) (52,076,826) (64,524,794)
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding........... $ 23,438,468 $ (5,869,482) $ 32,026,001 $(37,820,450)
============ ============ ============ ============
SHARE ACTIVITY
Retail A Shares:
Sold........................... 972,793 809,377 1,020,915 804,775
Issued in connection with
acquisition (Note 7)......... 769,928 -- 1,010,018 --
Issued to shareholders in
reinvestment of dividends.... 160,014 132,385 347,896 346,569
Repurchased.................... (1,697,523) (1,305,939) (2,195,110) (3,194,928)
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding........... 205,212 (364,177) 183,719 (2,043,584)
============ ============ ============ ============
Retail B Shares:
Sold........................... 30,291 -- N/A N/A
Issued to shareholders in
reinvestment of dividends.... 517 -- N/A N/A
Repurchased.................... (4,785) -- N/A N/A
------------ ------------ ------------ ------------
Net increase in
shares outstanding........... 26,023 -- N/A N/A
============ ============ ============ ============
Trust Shares:
Sold........................... 4,305,171 1,020,628 3,525,379 2,266,661
Issued in connection with
acquisition (Note 7)......... 3,042,900 -- 4,449,125 --
Issued to shareholders in
reinvestment of dividends.... 117,626 137,810 306,699 401,560
Repurchased.................... (5,127,353) (1,764,334) (5,140,526) (6,493,207)
------------ ------------ ------------ ------------
Net increase (decrease) in
shares outstanding........... 2,338,344 (605,896) 3,140,677 (3,824,986)
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
[LOGO OF THE GALAXY STATEMENTS OF CHANGES IN NET ASSETS -
FUND APPEARS HERE] Capital Stock Activity (continued)
<TABLE>
<CAPTION>
Corporate Bond Fund High Quality Bond Fund
---------------------------- ----------------------------
Years ended October 31,
--------------------------------------------------------------
1996 1995 1996 1995
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold........................... N/A N/A $ 11,663,127 $ 8,003,866
Issued to shareholders in
reinvestment of dividends.... N/A N/A 1,325,701 1,132,273
Repurchased.................... N/A N/A (11,581,369) (8,535,985)
------------ ----------- ------------ ------------
Net increase in
shares outstanding........... N/A N/A $ 1,407,459 $ 600,154
============ =========== ============ ============
Retail B Shares:
Sold........................... N/A N/A $ 650,504 $ --
Issued to shareholders in
reinvestment of dividends.... N/A N/A 11,298 --
Repurchased.................... N/A N/A (25,139) --
------------ ----------- ------------ ------------
Net increase in
shares outstanding........... N/A N/A $ 636,663 $ --
============ =========== ============ ============
Trust Shares:
Sold........................... $ 20,658,393 $39,666,165 $ 49,925,801 $ 36,501,865
Issued in connection with
acquisition (Note 7)......... 88,144,360 -- -- --
Issued to shareholders in
reinvestment of dividends.... 3,047,222 2,040,905 5,272,956 5,380,120
Repurchased.................... (40,160,472) (6,807,253) (38,640,554) (39,247,235)
------------ ----------- ------------ ------------
Net increase in
shares outstanding........... $ 71,689,503 $34,899,817 $ 16,558,203 $ 2,634,750
============ =========== ============ ============
SHARE ACTIVITY
Retail A Shares:
Sold........................... N/A N/A 1,104,626 788,979
Issued to shareholders in
reinvestment of dividends.... N/A N/A 126,818 112,202
Repurchased.................... N/A N/A (1,101,738) (864,201)
------------ ----------- ------------ ------------
Net increase in
shares outstanding........... N/A N/A 129,706 36,980
============ =========== ============ ============
Retail B Shares:
Sold........................... N/A N/A 63,032 --
Issued to shareholders in
reinvestment of dividends.... N/A N/A 1,098 --
Repurchased.................... N/A N/A (2,379) --
------------ ----------- ------------ ------------
Net increase in
shares outstanding........... N/A N/A 61,751 --
============ =========== ============ ============
Trust Shares:
Sold........................... 2,097,643 3,956,883 4,770,415 3,623,670
Issued in connection with
acquisition (Note 7)......... 8,188,057 -- -- --
Issued to shareholders in
reinvestment of dividends.... 289,501 195,224 504,257 534,027
Repurchased.................... (3,827,076) (671,397) (3,695,189) (3,943,913)
------------ ----------- ------------ ------------
Net increase in
shares outstanding........... 6,748,125 3,480,710 1,579,483 213,784
============ =========== ============ ============
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
Short-Term Bond Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------------
1996 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).............................. 0.52 0.55 0.44 0.47 0.42
Net realized and unrealized gain (loss)
on investments........................................ (0.07) 0.33 (0.51) 0.22 0.09
------- ------- ------- ------- --------
Total from Investment Operations:..................... 0.45 0.88 (0.07) 0.69 0.51
------- ------- ------- ------- --------
Less Dividends:
Dividends from net investment income................... (0.52) (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:...................................... (0.52) (0.55) (0.50) (0.48) (0.42)
-------- ------- ------- ------- --------
Net increase (decrease) in net asset value............... (0.07) 0.33 (0.57) 0.21 0.09
-------- ------- ------- ------- --------
Net Asset Value, End of Period........................... $ 9.99 $ 10.06 $ 9.73 $ 10.30 $ 10.09
======== ======= ======= ======= ========
Total Return/(4)/........................................ 4.63% 9.28% (0.68)% 6.98% 5.21%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)........................ $33,388 $31,542 $34,061 $85,211 $ 57,403
Ratios to average net assets:
Net investment income including reimbursement/waiver... 5.22% 5.54% 4.43% 4.51% 5.77%*
Operating expenses including reimbursement/waiver...... 1.11% 0.99% 0.93% 0.86% 0.90%*
Operating expenses excluding reimbursement/waiver...... 1.35% 1.32% 1.14% 1.06% 1.20%*
Portfolio Turnover Rate.................................. 214% 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 Shares 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>
as follows:
Years ended October 31,
-----------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(2)/
---- ---- ---- -------- ---------
<S> <C> <C> <C> <C> <C>
Retail A Shares $0.50 $0.52 $0.42 $ 0.45 $ 0.40
Trust Shares 0.53 0.54 0.42 0.45 0.40
Retail B Shares 0.29 -- -- -- --
</TABLE>
See Notes to Financial Statements.
26
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31,
------------------------------------------------------------------------------
1996 1995 1994 1993/(2)/ 1992/(1)(2)/ 1996/(3)/
----------- ------------ ----------- ---------- ------------ -------------
<S> <C> <C> <C> <C> <C>
$ 10.06 $ 9.73 $ 10.30 $ 10.09 $ 10.00 $ 10.09
----------- ------------ ----------- ---------- ---------- -------------
0.55 0.57 0.44 0.47 0.42 0.31
(0.07) 0.33 (0.51) 0.22 0.09 (0.10)
----------- ------------ ----------- ---------- ---------- -------------
0.48 0.90 (0.07) 0.69 0.51 0.21
----------- ------------ ----------- ---------- ---------- -------------
(0.55) (0.57) (0.44) (0.47) (0.42) (0.31)
-- -- -- (0.01) -- --
-- -- (0.06) -- -- --
---------- ------------ ----------- ---------- ---------- -------------
(0.55) (0.57) (0.50) (0.48) (0.42) (0.31)
---------- ------------ ----------- ---------- ---------- -------------
(0.07) 0.33 (0.57) 0.21 0.09 (0.10)
---------- ------------ ----------- ---------- ---------- -------------
$ 9.99 $ 10.06 $ 9.73 $10.30 $10.09 $ 9.99
========== ============ =========== ========== ========== =============
4.91% 9.55% (0.66)% 6.98% 5.21%** 2.12%**
$ 58,227 $ 35,088 $ 39,843 $ 85,211 $ 57,403 $ 260
5.49% 5.79% 4.45% 4.51% 5.77%* 4.73%*
0.84% 0.74% 0.91% 0.86% 0.90%* 1.77%*
1.08% 1.02% 1.11% 1.06% 1.20%* 1.98%*
214% 289% 233% 100% 114%** 214%
</TABLE>
<PAGE>
Intermediate Government Income Fund
[LOGO OF FLEET GALAXY FINANCIAL HIGHLIGHTS
APPEARS HERE] For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period........... $ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46
--------- --------- --------- --------- ---------
Income from Investment Operations:
Net investment income (A)..................... 0.57 0.61 0.57 0.65 0.71
Net realized and unrealized gain (loss)
on investments.............................. (0.22) 0.60 (1.03) 0.10 0.40
--------- --------- --------- --------- ---------
Total from Investment Operations:........... 0.35 1.21 (0.46) 0.75 1.11
--------- --------- --------- --------- ---------
Less Dividends:
Dividends from net investment income.......... (0.57) (0.61) (0.56) (0.64) (0.74)
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:............................ (0.57) (0.61) (0.58) (0.86) (0.74)
--------- --------- --------- --------- ---------
Net increase (decrease) in net asset value..... (0.22) 0.60 (1.04) (0.11) 0.37
--------- --------- --------- --------- ---------
Net Asset Value, End of Period................. $ 10.06 $ 10.28 $ 9.68 $ 10.72 $ 10.83
========= ========= ========= ========= =========
Total Return/(2)/.............................. 3.58% 12.85% (4.42)% 7.06% 10.95%
Ratios/Supplemental Data:
Net Assets, End of Period (000's).............. $ 79,741 $ 79,558 $ 94,669 $ 447,359 $ 199,135
Ratios to average net assets:
Net investment income including
reimbursement/waiver........................ 5.69% 6.10% 5.58% 6.03% 6.52%
Operating expenses including
reimbursement/waiver........................ 1.04% 1.02% 0.78% 0.80% 0.80%
Operating expenses excluding
reimbursement/waiver........................ 1.24% 1.26% 0.99% 1.00% 0.94%
Portfolio Turnover Rate........................ 235% 145% 124% 153% 103%
</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 Shares
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:
Years ended October 31,
------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
-------- -------- -------- -------- --------
Retail A Shares $ 0.55 $ 0.58 $ 0.54 $ 0.63 $ 0.70
Trust Shares 0.58 0.62 0.54 0.63 0.70
See Notes to Financial Statements.
28
<PAGE>
Trust Shares
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
$ 10.28 $ 9.68 $ 10.72 $ 10.83 $ 10.46
-------- -------- -------- -------- --------
0.60 0.64 0.57 0.65 0.71
(0.22) 0.60 (1.03) 0.10 0.40
-------- -------- -------- -------- --------
0.38 1.24 (0.46) 0.75 1.11
-------- -------- -------- -------- --------
(0.60) (0.64) (0.56) (0.64) (0.74)
-- -- (0.01) (0.03) --
-- -- -- (0.19) --
-- -- (0.01) -- --
-------- -------- -------- -------- --------
(0.60) (0.64) (0.58) (0.86) (0.74)
-------- -------- -------- -------- --------
(0.22) 0.60 (1.04) (0.11) 0.37
-------- -------- -------- -------- --------
$ 10.06 $ 10.28 $ 9.68 $ 10.72 $ 10.83
======== ======== ======== ======== ========
3.88% 13.18% (4.39)% 7.06% 10.95%
$213,750 $186,037 $212,144 $447,359 $199,135
5.98% 6.39% 5.61% 6.03% 6.52%
0.75% 0.73% 0.75% 0.80% 0.80%
0.95% 0.94% 0.95% 1.00% 0.94%
235% 145% 124% 153% 103%
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
Corporate Bond Fund
[LOGO OF GALAXY FINANCIAL HIGHLIGHTS
APPEARS HERE] For a Share outstanding throughout each period.
Trust Shares
<TABLE>
<CAPTION>
Year ended Period ended
October 31, 1996 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)..................................... 0.64 0.61
Net realized and unrealized gain (loss) on investments........ (0.13) 0.74
------------- --------------
Total from Investment Operations:........................... 0.51 1.35
------------- --------------
Less Dividends:
Dividends from net investment income.......................... (0.64) (0.61)
Dividends from net realized capital gains..................... (0.08) --
------------- --------------
Total Dividends:............................................ (0.72) (0.61)
------------- --------------
Net increase (decrease) in net asset value..................... (0.21) 0.74
------------- --------------
Net Asset Value, End of Period................................. $ 10.53 $ 10.74
============= ==============
Total Return................................................... 5.00% 13.85%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's).............................. $107,728 $ 37,391
Ratios to average net assets:
Net investment income including
reimbursement/waiver........................................ 6.13% 6.61%*
Operating expenses including
reimbursement/waiver........................................ 0.85% 1.06%*
Operating expenses excluding
reimbursement/waiver........................................ 1.05% 1.26%*
Portfolio Turnover Rate........................................ 84% 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 year ended October 31, 1996
and for the period ended October 31, 1995 were $0.62 and $0.57,
respectively.
See Notes to Financial Statements.
30
<PAGE>
High Quality Bond Fund
[LOGO OF GALAXY FINANCIAL HIGHLIGHTS
APPEARS HERE] For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/
--------- --------- --------- --------- ---------
<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) 0.59 0.62 0.64 0.66 0.68
Net realized and unrealized gain (loss)
on investments ............................. (0.16) 1.09 (1.56) 0.93 0.36
--------- --------- --------- --------- ---------
Total from Investment Operations: ......... 0.43 1.71 (0.92) 1.59 1.04
--------- --------- --------- --------- ---------
Less Dividends:
Dividends from net investment income ........ (0.59) (0.62) (0.64) (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: ...................... (0.59) (0.62) (0.91) (0.82) (0.79)
--------- --------- --------- --------- ---------
Net increase (decrease) in net asset value .... (0.16) 1.09 (1.83) 0.77 0.25
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ................ $ 10.47 $ 10.63 $ 9.54 $ 11.37 $ 10.60
========= ========= ========= ========= =========
Total Return/(2)/ ............................. 4.24% 18.46% (8.41)% 15.63% 10.32%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ............. $ 30,984 $ 30,093 $ 26,654 $ 162,594 $ 108,774
Ratios to average net assets:
Net investment income including
reimbursement/waiver ....................... 5.66% 6.16% 6.25% 5.98% 6.55%
Operating expenses including
reimbursement/waiver ....................... 1.07% 1.02% 0.81% 0.76% 0.87%
Operating expenses excluding
reimbursement/waiver ....................... 1.28% 1.26% 1.02% 0.96% 0.94%
Portfolio Turnover Rate ....................... 163% 110% 108% 128% 121%
</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 Shares
and Trust Shares.
(2) 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 years ended October 31, 1996, 1995, 1994, 1993 and 1992 were $0.57,
$0.59, $0.62, $0.63 and $0.67, respectively.
See Notes to Financial Statements.
31
<PAGE>
High Quality Bond Fund
[LOGO OF GALAXY FINANCIAL HIGHLIGHTS
APPEARS HERE] For a Share outstanding throughout each period.
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31,
----------------------------------------------------------------------------------
1996 1995 1994 1993/(1)/ 1992/(1)/ 1996/(2)/
--------- --------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.......... $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.35 $ 10.72
--------- --------- --------- --------- --------- ------------
Income from Investment Operations:
Net investment income (A & B)................ 0.62 0.64 0.65 0.66 0.68 0.36
Net realized and unrealized gain (loss)
on investments............................. (0.16) 1.09 (1.56) 0.93 0.36 (0.25)
--------- --------- --------- --------- --------- ------------
Total from Investment Operations:........ 0.46 1.73 (0.91) 1.59 1.04 0.11
--------- --------- --------- --------- --------- ------------
Less Dividends:
Dividends from net investment income......... (0.62) (0.64) (0.65) (0.66) (0.71) (0.36)
Dividends from net realized capital gains.... -- -- -- (0.16) (0.08) --
Dividends in excess of
net realized capital gains................. -- -- (0.27) -- -- --
--------- --------- --------- --------- --------- ------------
Total Dividends:......................... (0.62) (0.64) (0.92) (0.82) (0.79) (0.36)
--------- --------- --------- --------- --------- ------------
Net increase (decrease) in net asset value.... (0.16) 1.09 (1.83) 0.77 0.25 (0.25)
--------- --------- --------- --------- --------- ------------
Net Asset Value, End of Period................ $ 10.47 $ 10.63 $ 9.54 $ 11.37 $ 10.60 $ 10.47
========= ========= ========= ========= ========= ============
Total Return/(3)/............................. 4.46% 18.66% (8.39)% 15.63% 10.32% 1.14%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)............. $149,075 $134,631 $118,776 $162,594 $108,774 $ 646
Ratios to average net assets:
Net investment income including
reimbursement/waiver....................... 5.88% 6.33% 6.28% 5.98% 6.55% 5.34%*
Operating expenses including
reimbursement/waiver....................... 0.85% 0.85% 0.78% 0.76% 0.87% 1.60%*
Operating expenses excluding
reimbursement/waiver....................... 1.06% 1.07% 0.98% 0.96% 0.94% 1.81%*
Portfolio Turnover Rate....................... 163% 110% 108% 128% 121% 163%
- --------------------------------------------------
</TABLE>
* Annualized
** Not Annualized
(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
Shares and Trust Shares.
(2) The Fund began offering Retail B Shares on March 4, 1996.
(3) 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 years ended October 31, 1996, 1995, 1994, 1993 and
1992 were $ 0.60, $0.62, $0.63, $0.63 and $0.67, 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 year ended October 31, 1996 was $ 0.34.
See Notes to Financial Statements.
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Galaxy Fund
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, 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) series
specific expenses (distribution and shareholder servicing fees and transfer
agent fees) are borne by the specific series of shares to which they relate. 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 income 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 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 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 or excise tax
provision is recorded.
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 transac-
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
[LOGO OF THE GALAXY
FUND APPEARS HERE]
tion is recorded at cost. Each Fund requires that the securities purchased in a
repurchase agreement transaction be transferred to the Trust's custodian (or
sub-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 securities,
including accrued interest, is monitored daily to ensure that the value of the
collateral, including accrued interest, equals or exceeds amounts due under the
repurchase agreement. 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 attributable 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 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 each Fund (See Note 4).
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 (the "Administrator") provides
services for a fee, 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 (whose financial reports are disclosed
under a separate cover), 0.085% of the next $2.5 billion of combined average
daily net assets and 0.075% of combined average daily net assets over $5
billion.
Prior to September 5, 1996, FDISG was entitled to receive administration
fees, 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 (whose financial reports are disclosed under a
separate cover), 0.085% of the next $2.5 billion of the 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 these fee arrangements, FDISG compensates Chase
Manhattan Bank, N.A., the Trust's custodian bank, for its services. Prior to
March 31, 1995, the fund 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
March 31, 1995, FDISG acquired substantially all of the assets of 440 Financial
Group of Worcester, Inc.
440 Financial Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of FDISG and an indirect wholly-owned subsidiary of First Data
Corporation, serves 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.
On 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
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
[LOGO OF THE GALAXY
FUND APPEARS HERE]
Funds' Trust Shares. The Services Plan provides compensation to institutions
(including and currently limited to Fleet Bank and its affiliates) which provide
administrative and support services to their customers who beneficially own
Retail A Shares at an aggregate 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 aggregate 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 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. Currently, payments are being
made solely to Fleet Bank and its affiliates. 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, under the direction
of the Board of Trustees, is currently limiting each Fund's 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 year ended October 31, 1996, the Funds paid shareholder servicing fees
and/or distribution 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..................... $ 54,596 $190 $ 822
Intermediate Government Income...... 122,781 -- --
Corporate Bond...................... N/A N/A N/A
High Quality Bond................... 45,938 365 1,580
</TABLE>
Effective October 1, 1994, with respect to Retail A Shares and Trust
Shares, and effective March 1, 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 Bank, 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
year ended October 31, 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........... $ 58,166 $136 $ 22,069
Intermediate
Government Income...... 150,600 -- 59,996
Corporate Bond............ -- -- 104,198
High Quality Bond......... 58,870 151 170,663
</TABLE>
Certain officers of the Trust may be officers of the Administrator and/or
Distributor. Such officers receive no compensation from the Trust for serving in
their respective roles. No officer, director or employee of the Investment
Adviser serves as an officer, Trustee or employee of the Trust. For the period
covered by this report, each Trustee was 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 as
well as reimbursement for expenses incurred in attending meetings. The Chairman
of the Boards of Trustees of the Trust and VIPand the President and Treasurer of
the Trust and VIP were entitled to additional annual fees for their services in
these capacities. Effective November 1, 1996, each Trustee is entitled to
receive for services as a trustee of the Trust, VIP and Galaxy Fund II ("Galaxy
II") an aggregate fee of $29,000 per annum plus certain other fees for attending
or participating in meetings as well as reimbursement for expenses incurred in
attending meetings. The Chairman of the Boards of Trustees, and the President
and Treasurer of the Trust, VIP and Galaxy II are also entitled to additional
fees for their services in these capacities. These fees are allocated among the
funds of the Trust, VIP and Galaxy II based on their relative net assets. In
addition, effective March 1, 1996, each Trustee became eligible to participate
in the Trust's Deferred Compensation Plan (the "Plan"), an unfunded, non-
qualified 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 year ended October 31, 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
35
<PAGE>
[LOGO OF FLEET GALAXY
FUND APPEARS HERE]
NOTES TO FINANCIAL STATEMENTS (continued)
expenses so that total expenses would not exceed certain expense limitations
established for each series. The Investment Adviser may revise or discontinue
the voluntary fee waivers and expense reimbursements at any time. For the year
ended October 31, 1996, the Investment Adviser waived fees and/or reimbursed
expenses with respect to the Funds in the following amounts:
<TABLE>
<CAPTION>
Fees Waived Reimbursement
by by
Investment Investment
Fund Adviser Adviser
- ---- ----------- -------------
<S> <C> <C>
Short-Term Bond........... $193,702 $40,375
Intermediate
Government Income....... 608,385 --
Corporate Bond............ 219,753 --
High Quality Bond......... 339,047 2,956
</TABLE>
5. Shares of Beneficial Interest
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest, each with a par value of
$0.001. Shares of the Trust are currently classified into twenty-four classes of
shares 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 year ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
Fund
Purchases Government Other
- ---------
<S> <C> <C>
Short-Term Bond $ 95,918,232 $ 87,710,291
Intermediate
Government Income 542,168,990 173,867,382
Corporate Bond 58,289,733 94,953,838
High Quality Bond 219,349,433 69,085,749
Sales
- -----
Short-Term Bond $130,096,341 $ 42,665,493
Intermediate
Government Income 521,134,240 147,814,739
Corporate Bond 54,110,444 29,897,130
High Quality Bond 234,251,920 35,776,213
</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 October 31, 1996 for each Fund is as follows:
<TABLE>
<CAPTION>
Fund Appreciation (Depreciation)
- ---- ------------- --------------
<S> <C> <C>
Short-Term Bond........... $ 651,094 $ (147,005)
Intermediate Government
Income.................. 2,871,760 (837,130)
Corporate Bond............ 1,593,911 (1,725,665)
High Quality Bond......... 3,793,524 (401,584)
Fund Net Cost
- ---- --- ----
Short-Term Bond........... $ 504,089 $ 90,763,901
Intermediate Government
Income.................. 2,034,630 291,213,500
Corporate Bond............ (131,754) 106,592,309
High Quality Bond......... 3,391,940 177,116,225
</TABLE>
At October 31, 1996 the following Funds had capital loss carryforwards:
<TABLE>
<CAPTION>
Fund Amount Expiration
- ---- ------ ----------
<S> <C> <C>
Short-Term Bond........... $ 166,802 2000
1,797,977 2001
2,843,359 2002
1,206,932 2003
10,917 2004
Intermediate Government
Income.................. 1,515,799 2001
20,986,933 2002
3,291,626 2003
2,479,060 2004
Corporate Bond............ 73,972 2001
1,153,008 2002
1,309,536 2003
High Quality Bond......... 1,618,642 2002
2,998,422 2003
</TABLE>
36
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
[LOGO OF THE GALAXY
FUND APPEARS HERE]
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 Retail A and Trust Shares of the Galaxy Short-Term
Bond Fund, Retail A and Trust Shares of the Galaxy Intermediate Government
Income Fund and Trust Shares of the Galaxy Corporate Bond Fund, respectively.
Accordingly, the net assets of the Shawmut Limited-Term Income Fund, the Shawmut
Intermediate Government Income Fund and the Shawmut Fixed Income Fund,
respectively were exchanged for 769,928 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 Income Fund and 8,188,057
Trust Shares of the Galaxy Corporate Bond Fund, respectively. In related
transactions, the assets and liabilities of the other Shawmut portfolios were
transferred to corresponding Galaxy portfolios in exchange for shares in such
Galaxy portfolios. The reorganization, which qualified as a tax-free
reorganization for federal income tax purposes, was completed on December 4,
1995 following approval of the reorganization by The Shawmut Fund shareholders.
Certain share registration fees incurred in connection with the reorganization
were borne by the Trust. The following is a summary of the Net Assets, Shares
Outstanding, Net Asset Values 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 A 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
Before Acquisition After Acquisition
----------------------------- -----------------
Galaxy Shawmut Galaxy
Intermediate Intermediate Intermediate
Government Government Government
Income Income Income
------------- ------------ ---------------
Net Assets $268,704,491 $56,676,793 $325,381,284
Shares outstanding 25,878,466 5,718,050 31,337,609
Retail A and Trust Net Asset Value, per share $ 10.38 $ 9.91 $ 10.38
Unrealized Appreciation $ 8,182,521 $ 1,253,530
Before Acquisition After Acquisition
---------------------------- -----------------
Galaxy Shawmut Galaxy
Corporate Fixed Corporate
Bond Income Bond
------------ ----------- -----------------
Net Assets $ 37,891,079 $88,144,360 $126,035,439
Shares outstanding 3,518,577 8,818,538 11,706,634
Retail A 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
<PAGE>
[LOGO OF THE GALAXY
FUND APPEARS HERE]
Tax Information (unaudited):
During the fiscal year ended October 31, 1996, the following Funds earned
income from direct obligations of the U.S. Government:
U.S. Government
Fund Income
- ---- ---------------
Short-Term Bond 47.02%
Intermediate Government Income 66.58%
Corporate Bond 29.28%
High Quality Bond 64.57%
Appropriate tax information detailing the government income percentages on a
calendar year basis will accompany your year end statement. As each state's
rules on the exemption of this income differs, please consult your tax advisor
regarding specific tax treatment.
38
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Shareholders and the Board of Trustees of
The Galaxy Fund:
We have audited the accompanying statements of assets and liabilities of
the Short-Term Bond Fund, Corporate Bond Fund, Intermediate Government Income
Fund and High Quality Bond Fund (four series of The Galaxy Fund), including the
portfolios of investments, as of October 31, 1996, and the related statements of
operations, the statements of changes in net assets, and financial highlights
for each of the periods indicated therein. These financial statements and
financial highlights are the responsibility of The Galaxy Fund's management.
Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
aforementioned series of The Galaxy Fund as of October 31, 1996, the results of
their operations, the changes in their net assets, and their financial
highlights for each of the periods indicated therein, in conformity with
generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
December 16, 1996
<PAGE>
[LOGO OF THE GALAXY
FUND APPEARS HERE]
"A well-balanced asset allocation plan may help to control your risk while
pursuing your goals."
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, Fleet Enterprises, Inc., member NASD and SIPC,
or MDS Securities Inc., member NASD and SIPC.
<PAGE>
Trustees
and Officers
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
Neil Forrest
Vice President &
Assistant Treasurer
Investment Adviser
Fleet Investment
Advisors Inc.
75 State Street
Boston, Massachusetts
02109
Distributor
440 Financial
Distributors, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
Administrator
First Data Investor
Services Group, Inc.
4400 Computer Drive
Westborough,
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 APPEARS HERE]
This report was printed on recycled paper.
<PAGE>
[LOGO OF THE GALAXY FUND APPEARS HERE]
4400 Computer Drive BULK RATE
Box 5108 U. S. POSTAGE PAID
Westborough, MA 01581-5108 PERMIT NO. 105
NORTH READING, MA
