[GALAXY FUNDS LOGO]
TAX-FREE BOND FUNDS REPORT
Tax-Exempt Bond Fund [bullet] New Jersey Municipal Bond Fund [bullet] New York
Municipal Bond Fund [bullet] Connecticut Municipal Bond Fund [bullet]
Massachusetts Municipal Bond Fund [bullet] Rhode Island Municipal Bond Fund
SEMI-ANNUAL
REPORT
FOR THE SIX MONTHS
ENDED APRIL 30, 1998
<PAGE>
CHAIRMAN'S
MESSAGE
Dear Shareholder:
Enclosed is your performance report for the Galaxy Tax-Free
Bond Funds, which covers the six months ended April 30, 1998. Inside, you
will find a Market Overview describing the major economic and market trends
in place during this time, as well as Portfolio Reviews explaining how Fleet
Investment Advisors Inc. took advantage of these trends. In the back of the
report, there are separate financial statements for each Fund plus a list of
Fund investments as of April 30, 1998.
During the reporting period, a tug-of war between stronger
growth and lower inflation allowed the Federal Reserve (the "Fed")to leave
interest rates unchanged. Treasury bonds traded in a narrow range, earning
returns close to historical norms. Returns for municipal bonds were more
modest, as low interest rates continued to boost supplies of new issues while
reducing investor demand.
Over the last 12 months, returns for Treasury bonds and
municipals have exceeded their historical averages. During the same time,
stocks returned four times their annual average. Given the major moves in
these markets, it is helpful to remember the time-tested strategies of
portfolio diversification and rebalancing.
When you spread your portfolio among different asset classes,
you can significantly curb investment risk. With stock valuations still at
record highs, many investors are using bonds to cushion their portfolios from
a possible market correction. If you have a long-term diversification
strategy, this may be a good time to see whether recent market changes --
especially those for stocks -- have altered your original allocations.
Although many investors rebalance their portfolios once a year, the rapid
market changes that have recently occurred may require that you rebalance
more frequently. Your investment professional can help restore your portfolio
to the allocations that suit your ultimate financial goals.
As of April 1, we have expanded the Galaxy Tax-Free Bond Funds
to include the Galaxy New Jersey Municipal Bond Fund. If you have any
questions about the new Fund, this report, or other Galaxy Funds and
services, please call the Galaxy Information Center at 1-800-628-0414.
Sincerely,
/s/ Dwight E. Vicks, Jr.
Dwight E. Vicks, Jr.
Chairman of the Board of Trustees
[SIDEBAR]
Mutual Funds:
[bullet] are not bank
deposits
[bullet] are not FDIC
insured
[bullet] are not obliga-
tions of Fleet
Bank
[bullet] are not guaran-
teed by Fleet
Bank
[bullet] are subject to
investment risk
including possible
loss of principal
amount invested
[END SIDEBAR]
<PAGE>
MARKET OVERVIEW
TAX-FREE BOND MARKET OVERVIEW
By Fleet Investment Advisors Inc.
In the six months ended April 30, 1998, further uncertainty
about inflation and interest rates caused bond prices to trade in a
relatively narrow range. During this time, inflation fell to its lowest level
since 1986 -- despite faster economic growth. With the promise of slower
growth due to economic trouble in Asia, the Federal Reserve ("the Fed") left
interest rates unchanged. Although bond yields fluctuated in this climate,
they ended the period about where they began.
Because interest rates remained low, supplies of municipal
bonds were strong and demand was weak. The reverse was true for U.S. Treasury
bonds. Although this caused municipals to underperform Treasuries for the
period, returns for municipals were about average by historical standards.
Inflation and Interest Rates Stay Low
At the start of the reporting period in November 1997, the
annual rate of inflation was about 2.2%, 30-year Treasury bonds were yielding
6.14%, and the Bond Buyer Index (a benchmark for municipal bonds) had a yield
of 5.40%. After growing at an annual rate of 3.1% in the third quarter of
1997, the gross domestic product ("GDP"), which measures U.S. goods and
services, improved by 3.7% in the fourth quarter. Although a tight labor
market put upward pressure on wages, further gains in productivity and
competitive pricing helped inflation fall to 1.7% by the end of the calendar
year.
During this time, the economic turmoil that had surfaced
earlier in Asia continued to worsen. With low inflation, and the chance that
Asia's troubles would soon slow U.S. exports and growth, the Fed kept
interest rates where they were. This, plus strong demand from foreign
investors seeking safety from Asia, pushed the yield for 30-year Treasury
bonds to 5.92% by the end of 1997. Municipal bonds also benefited from the
low interest rate environment, which reduced the Bond Buyer yield to 5.25%.
[SIDEBAR]
"Because interest rates
remained low, supplies
of municipal bonds were
strong and demand was
weak. The reverse was
true for U.S. Treasury
bonds. Although this
caused municipals to
underperform Treasuries
for the period, returns
for municipals were
about average by
historical standards."
[END SIDEBAR]
[START DESCRIPTION OF BAR CHARTS]
Performance At-A-Glance
Average Annual Returns as of April 30, 1998*
Trust Shares
Tax-Exempt Bond Fund
Inception Date 12/30/91
2.73%
8.90%
7.18%
5.74%
6.85%
New York Municipal Bond Fund
Inception Date 12/31/91
2.36%
8.62%
7.22%
5.57%
6.54%
Connecticut Municipal Bond Fund
Inception Date 3/16/93
2.45%
8.76%
7.41%
5.59%
5.58%
Massachusetts Municipal Bond Fund
Inception Date 3/12/93
2.29%
8.75%
7.18%
5.51%
5.30%
New Jersey Municipal Bond Fund
Inception Date 4/3/98
- -0.41%
Six Months* 5 Years
1 Year Life of Fund
3 Years
*Six month returns are unannualized total returns.
[END DESCRIPTION OF BAR CHARTS]
1
<PAGE>
MARKET OVERVIEW
The first quarter of 1998 found growth still accelerating, with
an estimated GDP increase of 4.2%. Inflation eased to 1.4%, however. During
January, with Asian economies still deteriorating, investors thought the Fed
might actually slice interest rates to preserve growth. This, plus news of a
federal budget surplus, drove long-term Treasury yields to an all-time low of
5.69%. Hope for a rate cut soon faded, however, as Asian economies stabilized
and U.S. growth continued to strengthen.
Although weaker corporate earnings argued against a rate hike,
the Fed became concerned that a steep rise in stock prices would
overstimulate the economy. In April 1998, the Fed suggested that a rate hike
might be necessary. This helped drive 30-year Treasury yields to 5.94% by the
close of the reporting period in April, and left the Bond Buyer Index
yielding 5.39%.
Investment Strategies
We used several strategies to increase returns for the Galaxy
Tax-Free Bond Funds in this investment climate. Towards the end of 1997, we
purchased municipals with lower coupons that were selling at discounted
prices. These issues offered good value and performed well as bonds rallied --
along with longer-term issues we added. Where possible, we bought bonds from
states where high tax rates maintained strong demand for tax-free income. As
in previous periods, we gave extra attention to municipals that could not be
called in by their issuers.
[SIDEBAR]
"During january, with
asian economies still
deteriorating, investors
thought the fed might
actually slice interest
rates to preserve
growth. This, plus news
of a federal budget
surplus, drove long-term
treasury yields to an
all-time low of 5.69%."
[END SIDEBAR]
[START DESCRIPTION OF BAR CHARTS]
Performance At-A-Glance
Average Annual Returns as of April 30, 1998*
Retail A Shares**
Tax-Exempt Bond Fund
Inception Date 12/30/91
- -1.21%
4.54%
5.56%
4.78%
6.07%
New York Municipal Bond Fund
Inception Date 12/31/91
- -1.54%
4.42%
5.64%
4.61%
5.78%
Connecticut Municipal Bond Fund
Inception Date 3/16/93
- -1.52%
4.50%
5.82%
4.63%
4.64%
Massachusetts Municipal Bond Fund
Inception Date 3/12/93
- -1.64%
4.55%
5.64%
4.57%
4.40%
Rhode Island Municipal Bond Fund
Inception Date 3/12/93
- -1.26%
4.48%
5.96%
6.78%
New Jersey Municipal Bond Fund
Inception Date 4/3/98
- -4.16%
Six Months* 5 Years
1 Year Life of Fund
3 Years
* Six months returns are unannualized total returns.
** Return figures have been restated to include the effect of the maximum 3.75%
front-end sales charge which became effective on December 1, 1995.
[END DESCRIPTION OF BAR CHARTS]
2
<PAGE>
MARKET OVERVIEW
The Funds continued to benefit from longer-term issues when
bonds rallied in January and March of 1998. We used market weakness at other
times to add higher-coupon issues that improved income. These issues also
held up well when bond prices declined in April 1998.
Slower Growth Likely
Despite the recent stability in Asia, we believe the region has
serious problems that could still take their toll on U.S. exports and growth
later this year. If that is the case, inflation should stay low and the Fed
could avoid raising interest rates.
If the Fed remains concerned about pressure from wages or
strong gains by stocks, however, a rate hike could occur. We would expect
such a hike to be modest and believe the yield for long-term Treasury bonds
will remain between 5.5% and 6.5%. If inflation is low, bonds should continue
to attract investors. The prospects for municipal bonds should improve as the
refunding of existing issues winds down and supplies start to lighten. As in
previous months, we plan to purchase high-quality issues with strong income
and good call protection.
[START DESCRIPTION OF BAR CHART]
Performance At-A-Glance
Average Annual Returns as of April 30, 1998*
Retail B Shares*
Tax Exempt Bond Fund
Inception Date 3/4/96
2.30%
- -2.68%
7.97%
2.97%
4.73%
3.40%
Six month returns before contingent deferred sales charge deducted.
Six month returns after contingent deferred sales charge deducted as if shares
were redeemed at end of period.
One year returns before contingent deferred sales charge deducted.
One year returns after contingent deferred sales charge deducted as if shares
were redeemed at end of period.
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.
* Six month returns are unannualized total returns.
** 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. Six
months returns are unannualized total returns.
[END DESCRIPTION OF BAR CHART]
3
<PAGE>
PORTFOLIO REVIEWS
GALAXY TAX-EXEMPT BOND FUND
By Daniel Rabasco
With low interest rates curbing returns for municipal bonds in
the last six months, we tried to increase income and price gains from
investments in the Galaxy Tax-Exempt Bond Fund by choosing coupons and
maturities that offered good value in the prevailing market climate. These
strategies, plus further emphasis on municipals with good call protection,
helped the Fund earn competitive returns for the period.
For the six months ended April 30, 1998 the Fund's Trust Shares
earned a total return of 2.73%. Over the same time, Retail A Shares had a
total return of 2.63% before deducting the maximum 3.75% front-end sales
charge, and Retail B Shares had a total return of 2.30% before deducting the
maximum 5.00% contingent deferred sales charge. (Please see the chart on page
2 for total returns after deducting the front-end sales charge and the chart
on page 3 for total returns after deducting the contingent deferred sales
charge.)
During this period, the average general municipal bond fund
followed by Lipper Analytical Services ("Lipper"), a mutual fund performance
tracking service, had a total return of 2.45%. During this time the Lehman
Brothers Municipal Bond Index had a total return of 2.77%.
[DESCRIPTION OF PIE CHART]
Galaxy Tax-Exempt Bond Fund
Distribution of Total Net Assets as of April 30, 1998
North Central 19%
Pacific 11%
Cash Equivalents & Net Other Assets & Liabilities 2%
East 34%
Mountain 3%
South 31%
[END DESCRIPTION OF PIE CHART]
On April 30, 1998, the Fund's Trust Shares had a 30-day
Securities and Exchange Commission ("SEC") annualized yield of 4.40%. On the
same date, Retail A Shares had a 30-day SEC annualized yield of 4.24% and
Retail B Shares had a 30-day SEC annualized yield of 4.37%. For shareholders
in the 36% federal income tax bracket, these equaled taxable yields of 6.88%,
6.25% and 6.83% respectively.
Looking for Value
Towards the end of 1997, we bought municipal bonds with low
coupons that were selling at discounted prices. Having underperformed as
rates fell earlier in the year, these issues outperformed as rates declined
in November and December. We also purchased longer-term issues, which
outperformed as rates dropped. Where supplies permitted, we emphasized issues
from states where high income tax rates supported strong demand for municipal
securities.
In the first months of 1998, with the
[START DESCRIPTION OF MOUNTAIN CHART]
Galaxy Tax-Exempt Bond Fund
Growth of $10,000 investment*
$10,000 $15,893 12/30/91 - 4/30/98
$9,625 $14,525 12/30/91 - 4/30/98
$10,000 $15,212 12/30/91 - 4/30/98
$10,000 $10,747 12/30/91 - 4/30/98
[box] Lehman Brothers Municipal Bond Index
[box] Galaxy Tax-Exempt Bond Fund-Retail A Shares
[box] Galaxy Tax-Exempt Bond Fund-Trust Shares
[box] Galaxy Tax-Exempt Bond Fund-Retail B Shares
[END DESCRIPTION OF MOUNTAIN CHART]
*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 include the
effect of the maximum 3.75% front-end sales charge. Performance figures for
Retail B Shares reflect the deduction of the maximum 5.00% contingent deferred
sales charge as if shares were redeemed on April 30, 1998. 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
extra price gains for lower-coupon issues largely exhausted, we added municipals
with higher coupons. This helped improve the Fund's income, while buffering its
shares from price declines. Although the Fund's longer maturities underperformed
when prices weakened in February and April, they outperformed as prices rallied
in January and March. In the meantime, these issues further enhanced Fund
income.
Continued Focus on Income
If the economic problems in Asia limit U.S. growth, keeping
inflation and interest rates low, the Fund should continue to benefit from
its emphasis on issues with longer maturities. Because the yield curve for
municipals is fairly flat, however, we do not expect to make additional
investments in longer maturities at the present time.
Because spreads between municipals of different credit
qualities are relatively tight, we plan to remain focused on higher-quality
issues. As before, we plan to emphasize municipals with good call protection
to enhance income and protect the value of Fund shares.
GALAXY NEW JERSEY MUNICIPAL BOND FUND
By Daniel Rabasco
The Galaxy New Jersey Municipal Bond Fund seeks a high level of
current interest income that is exempt from federal income tax and, to the
extent possible, from the New Jersey personal income tax. To achieve this
objective, the Fund invests primarily in securities issued by state and
municipal government agencies or other issuers of tax-exempt debt in New
Jersey.
Between the Fund's inception on April 3, 1998 and April 30,
1998, its Trust Shares had a total return of -0.41%. Over the same time,
Retail A Shares had return of -0.43% before deducting the maximum 3.75%
front-end sales charge. (Please see chart on page 2 for total returns after
deducting the front-end sales charge.) This compares to a total return for the
Lehman Brothers Municipal Bond Index of -.45%.
Focus on Income
In creating the Fund's portfolio, we focused on investments
that would generate strong income. With this in mind, we purchased issues
with coupons of 5% or higher and maturities of 10 to 20 years. In addition to
strong income, we felt these securities would help to shelter the value of
Fund shares if investors became nervous about inflation and bond prices
weakened.
The municipals we selected represent a diverse mix of state and
local general obligation bonds -- as well as bonds issued by education and
transportation authorities. Where possible, we chose issues in good supply
with attractive prices and yields. We also emphasized securities that could
not be called in soon by their issuers. At the end of the reporting period
the portfolio had an average credit rating of AA, and an average maturity of
about 17 years.
[START DESCRIPTION OF PIE CHART]
Galaxy New Jersey Municipal Bond Fund
Distribution of Total Net Assets as of April 30, 1998
Net Other Assets & Liabilities 2%
New Jersey 84%
Cash Equivalents 3%
Other Territories 11%
[END DESCRIPTION OF PIE CHART]
5
<PAGE>
PORTFOLIO REVIEWS
Looking Ahead
This portfolio should serve the Fund well in coming months. The
higher-coupon issues should enhance Fund income if slower growth keeps
inflation and interest rates low. Although longer-term issues would perform
well in such an environment, we do not expect to add these any time soon. We
feel the yields now available for longer maturities are not attractive enough
to outweigh the added price risk associated with those issues. Because
spreads between yields of municipals with different credit ratings are
relatively tight, we expect to remain heavily weighted in higher-quality
issues.
GALAXY NEW YORK MUNICIPAL BOND FUND
By Daniel Rabasco
As low interest rates increased supplies of municipal issues in
the last six months, supplies were particularly strong in the State of New
York. To increase income and price gains from investments in the Galaxy New
York Municipal Bond Fund, we emphasized coupons and maturities with good
value. By also focusing on investments with good call protection, we helped
the Fund earn competitive returns for the period.
[START DESCRIPTION OF BAR CHART]
Galaxy New Jersey Municipal Bond Fund
Growth of $10,000 investment*
$10,000 $9,955 4/3/98 - 4/30/98
$9,625 $9,584 4/3/98 - 4/30/98
$10,000 $9,959 4/3/98 - 4/30/98
[box] Lehman Brothers Municipal Bond Index
[box] Galaxy New Jersey Municipal Bond Fund-Retail A Shares
[box] Galaxy New Jersey Municipal Bond Fund-Trust Shares
* Since inception on 4/3/98. Performance figures for Retail A Shares include the
effect of the maximum 3.75% front-end sales charge. 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.
[END DESCRIPTION OF BAR CHART]
For the six months ended April 30, 1998, the Fund's Trust
Shares had a total return of 2.36%. During the same time, Retail A Shares
returned 2.28% before deducting the maximum 3.75% front-end sales charge.
(Please see the chart on page 2 for total returns after deducting the
front-end sales charge.)
Over this period the average New York tax-exempt bond fund
tracked by Lipper returned 2.33% and the Lehman Brothers Municipal Bond Index
returned 2.77%.
Adjusting Coupons and Maturities
In November 1997, we were trading investments with coupons near
current market rates for issues that had coupons slightly below market rates
and were selling at discounted prices. The new investments performed well as
interest rates fell. The Fund also benefited from a slight increase in
longer-term issues in the final months of the year.
Although the longer-term issues underperformed when rates edged
higher in February and April of 1998, they outperformed when rates fell in
January and March.
[START DESCRIPTION OF PIE CHART]
Galaxy New York Municipal Bond Fund
Distribution of Total Net Assets as of April 30, 1998
Net Other Assets & Liabilities 1%
Pennsylvania 1%
New York 94%
Other Territories 3%
Cash Equivalents 1%
[END DESCRIPTION OF PIE CHART]
6
<PAGE>
PORTFOLIO REVIEWS
As the extra price potential for lower-coupon issues eased, we took advantage of
the temporary periods of market weakness and ample supplies of municipals in New
York to purchase higher-coupon issues. These investments helped insulate the
value of Fund shares against later market declines, while enhancing Fund income.
Our emphasis on longer-term issues and good call protection improved income as
well.
On April 30, 1998, the Fund's Trust Shares had a 30-day SEC
annualized yield of 4.53%. On the same date, Retail A Shares had a 30-day SEC
annualized yield of 4.36%. These are the same as taxable yields of 7.08% and
6.81%, respectively, for shareholders in the 36% federal income tax bracket
who live in the State of New York.
Higher Coupons Remain Focus
We plan to stay focused on higher-coupon issues in coming
months. Should the economic trouble in Asia curb U.S. growth, as we expect,
inflation should remain modest and interest rates could edge lower. With the
municipal yield curve relatively flat, we believe improving income with
higher-coupon issues makes more sense than extending maturities at the
present time.
[START DESCRIPTION OF MOUNTAIN CHART]
Galaxy New York Municipal Bond Fund
Growth of $10,000 investment*
$10,000 $15,893 12/31/91 - 4/30/98
$9,625 $14,271 12/31/91 - 4/30/98
$10,000 $14,935 12/31/91 - 4/30/98
[box] Lehman Brothers Municipal Bond Index
[box] Galaxy New York Municipal Bond Fund-Retail A Shares
[box] Galaxy New York Municipal Bond Fund-Trust Shares
* Since inception on 12/31/91, Performance figures for Retail A Shares include
the effect of the maximum 3.75% front-end sales charge. 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.
[END DESCRIPTION OF BAR CHART]
As before, we plan to emphasize municipals with strong credit
quality - especially given the tight spreads between yields for issues of
different credit quality that currently prevail. We plan to also remain
focused on municipals with good call protection to protect the Fund's income
and the value of its shares.
Galaxy Connecticut Municipal Bond Fund
By Daniel Rabasco
Although low interest rates swelled supplies of municipal bonds
in most parts of the country, supplies remained relatively tight in
Connecticut. This supported prices of investments in the Galaxy Connecticut
Municipal Bond Fund. Over the past six months, the Fund also benefited from
our focus on coupons and maturities that offered good value, as well as our
continued emphasis on investments that could not be called in soon by their
issuers.
For the six months ended April 30, 1998, the Fund's Trust
Shares earned a total return of 2.45%. Before deducting the maximum 3.75%
front-end sales charge, Retail A
[START DESCRIPTION OF PIE CHART]
Galaxy Connecticut Municipal Bond Fund
Distribution of Total Net Assets as of April 30, 1998
Net Other Assets & Liabilities 2%
Michigan 3%
Connecticut 82%
Cash Equivalents 1%
Other Territories 12%
[END DESCRIPTION OF PIE CHART]
7
<PAGE>
PORTFOLIO REVIEWS
Shares earned a return of 2.33%. (Please see the chart on page 2 for total
returns after deducting the front-end sales charge.) During the same period, the
average Connecticut municipal bond fund tracked by Lipper returned 2.54% and the
Lehman Brothers Municipal Bond Index returned 2.77%.
On April 30, 1998, the Fund's Trust Shares had a 30-day SEC
annualized yield of 4.42%. On the same date, Retail A Shares had a SEC 30-day
annualized yield of 4.26%. These equal taxable yields of 6.91% and 6.66%,
respectively, for shareholders in the 36% federal income tax bracket who live
in the State of Connecticut.
Moving to Higher Coupons
As the period started, we were adding municipals bonds with low
coupons selling at discounted prices. After underperforming in previous rate
declines, these issues outperformed as rates fell at the end of 1997. The
Fund also benefited at this time from purchases of longer-term issues -- which
added income and price appreciation.
[START DESCRIPTION OF BAR CHART]
Galaxy Connecticut Municipal Bond Fund
Growth of $10,000 investment*
$10,000 $15,185 3/16/93 - 4/30/98
$9,625 $12,615 3/16/93 - 4/30/98
$10,000 $13,207 3/16/93 - 4/30/98
[box] Lehman Brothers Municipal Bond Index
[box] Galaxy Connecticut Municipal Bond Fund-Retail A Shares
[box] Galaxy Connecticut Municipal Bond Fund-Trust Shares
* Since inception on 3/16/93. Performance figures for Retail A Shares include
the effect of the maximum 3.75% front-end sales charge. 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. Results for the index are calculated since 3/31/93 because
the index returns are calculated at month-end only.
[END DESCRIPTION OF BAR CHART]
While these longer maturities underperformed when rates rose in
February and April of 1998, they outperformed when rates fell in January and
March. In the meantime, they continued to add income to Fund returns. With
the extra price potential for lower-coupon issues mostly exhausted, we moved
into higher-coupon securities as supplies allowed. Besides increasing income
further, these issues helped to protect the value of Fund shares during
market declines. Throughout the period we continued to emphasize municipals
that could not be called in by their issuers -- which further enhanced the
Fund's income and share price.
Investing for Low Inflation and
Interest Rates
If Asia's economic problems slow U.S. growth, keeping a lid on
inflation and interest rates, the Fund should benefit further from its
longer-maturities. Presently, we do not expect to increase positions in these
issues, as there is currently little yield incentive for doing so. Because
there is also little incentive for investing in issues with lower credit
quality, we plan to stay focused on municipals of higher quality. As in
previous months, we plan to emphasize municipals with good call protection to
protect the Fund's income and share price.
8
<PAGE>
PORTFOLIO REVIEWS
GALAXY MASSACHUSETTS
MUNICIPAL BOND FUND
By Daniel Rabasco
When low interest rates boosted municipal supplies in the last
six months, supplies in Massachusetts became especially strong. During this
time we looked for municipals with coupons and maturities that offered good
value to improve the income and share price of the Galaxy Massachusetts
Municipal Bond Fund. As in previous periods, we emphasized investments that
could not be called in soon by their issuers.
For the six months ended April 30, 1998, the Fund's Trust
Shares earned a total return of 2.29%. Over the same time, Retail A Shares
had a return of 2.20% before deducting the maximum 3.75% front-end sales
charge. (Please see the chart on page 2 for total returns after deducting the
front-end sales charge.)
These returns compared to 2.20% for the average Massachusetts
municipal bond fund tracked by Lipper and 2.77% for the benchmark Lehman
Brothers Municipal Bond Index.
[START DESCRIPTION OF PIE CHART]
Galaxy Massachusetts Municipal Bond Fund
Distribution of Total Net Assets as of April 30, 1998
Other Territories 8%
Massachusetts 89%
Cash Equivalents & Net Other Assets & Liabilities 2%
Pennsylvania 1%
[END DESCRIPTION OF PIE CHART]
On April 30, 1998, the Fund's Trust Shares had a 30-day SEC
annualized yield of 4.53% and Retail A Shares had a 30-day SEC annualized
yield of 4.39%. These equaled taxable yields of 7.08% and 6.86% for
shareholders in the 36% federal income tax bracket who live in the Commonwealth
of Massachusetts.
Longer Maturities, Higher Coupons
In November 1997, when the period started, the Fund was adding
lower-coupon issues selling at discounted prices. Having underperformed
during earlier interest rate declines, these issues outperformed as rates
fell at the end of the year. We also added longer-maturity issues, which gave
the Fund extra income and price appreciation.
The longer-term investments underperformed when interest rates
rose in February and April of 1998, but outperformed when rates declined in
January and March. Throughout this time, the longer maturities continued to
add income to Fund returns. With supplies of municipals particularly strong
in Massachusetts, we found many attractive investment opportunities. As the
added value in lower-coupon issues disappeared, we looked for higher-coupon
municipals that could enhance the Fund's income. These issues also helped
protect the price of
[START DESCRIPTION OF BAR CHART]
GALAXY MASSACHUSETTS MUNICIPAL BOND FUND
Growth of $10,000 investment*
$10,000 $15,185 3/12/93 - 4/30/98
$9,625 $12,473 3/12/93 - 4/30/98
$10,000 $13,038 3/12/93 - 4/30/98
[box] Lehman Brothers Municipal Bond Index
[box] Galaxy Massachusetts Municipal Bond Fund-Retail A Shares
[box] Galaxy Massachusetts Municipal Bond Fund-Trust Shares
*Since inception on 3/12/93. Performance figures for Retail A Shares include the
effect of the maximum 3.75% front-end sales charge, 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. Results for the index are calculated since 3/31/93
because the index returns are calculated at month-end only.
[END DESCRIPTION OF BAR CHART]
9
<PAGE>
PORTFOLIO REVIEWS
Fund shares when bond prices weakened. The Fund's income and share price further
benefited from our continued emphasis on municipals with good call protection.
Positioned for Slower Growth
We believe the Fund is well positioned for the next six-month
period. If reduced exports to Asia slow U.S. growth, keeping inflation and
interest rates low, the Fund should continue to benefit from its longer
maturities. We do not expect to increase investments in those issues for now
as we believe the yields available for longer-term municipals are not strong
enough to offset the added price risk those issues carry.
With tight spreads between yields of municipals with different
credit ratings, we plan to stay focused on higher-quality bonds. We plan to
also continue to emphasize issues with good call protection, to keep the
Fund's income and share price as strong as we can.
GALAXY RHODE ISLAND
MUNICIPAL BOND FUND
By Daniel Rabasco
By emphasizing coupons and maturities with good value in a low
interest rate environment, we helped the Galaxy Rhode Island Municipal Bond
Fund earn competitive returns for the six months ended April 30, 1998.
[START DESCRIPTION OF PIE CHART]
GALAXY RHODE ISLAND MUNICIPAL BOND FUND
Distribution of Total Net Assets as of April 30, 1998
Cash Equivalents & Net Other Assets & Liabilities 2%
Rhode Island 76%
Kansas 1%
Texas 1%
Other Territories 19%
California 1%
[END DESCRIPTION OF PIE CHART]
During the period the Fund's Retail A Shares earned a total
return of 2.63% before deducting the maximum 3.75% front-end sales charge.
(Please see chart on page 2 for total returns after deducting the front-end
sales charge.) Over the same time the average Rhode Island municipal bond fund
tracked by Lipper had a total return of 2.60%, and the Lehman Brothers
Municipal Bond Index had a total return of 2.77%.
On April 30, 1998, the Fund's Retail A Shares had a 30-day SEC
annualized yield of 4.53%. This equaled a taxable yield of 7.08% for
taxpayers in the 36% federal income tax bracket who live in the State of
Rhode Island.
Raising Maturities and Coupons
Before November 1997, when the period began, issues with lower
coupons had underperformed as interest rates fell. Selling at discounted
prices by November, these issues represented good value and we added
investments there. With further declines in interest rates, the lower-coupon
municipals outperformed and enhanced Fund returns. For additional benefit
from falling interest rates, we also purchased longer-term bonds.
[START DESCRIPTION OF BAR CHART]
GALAXY RHODE ISLAND MUNICIPAL BOND FUND
Growth of $10,000 investment*
$10,000 $12,853 12/20/94 - 4/30/98
$9,625 $12,466 12/20/94 - 4/30/98
[box] Lehman Brothers Municipal Bond Index
[box] Galaxy Rhode Island Municipal Bond Fund-Retail A Shares
* Since inception on 12/20/94 Performance figures for Retail A Shares include
the effect of the maximum 3.75% front-end sales charge. 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. Results for the index are calculated since 12/31/94
because the index returns are calculated at month-end only.
[END DESCRIPTION OF BAR CHART]
10
<PAGE>
PORTFOLIO REVIEWS
However, the Rhode Island supply of bonds was very limited, preventing the Fund
from fully pursuing this strategy. Because longer-term bonds are more sensitive
to changes in interest rates than shorter maturities are, they tend to gain more
in price when interest rates fall. In the meantime, they added income to Fund
returns.
As the added value in lower-coupon issues abated during the
first months of 1998, we made purchases of higher-coupon issues that could
provide the Fund with added income and protect the value of its share price
in times of market weakness. When bond prices fall, prices for higher-coupon
issues tend to hold up better than those for lower-coupon issues. We
continued to emphasize municipals with longer maturities, which also enhanced
Fund income. Although the prices of these issues underperformed when interest
rates rose in February and April, they outperformed when rates fell in
January and March.
Throughout the period we remained committed to municipals that
could not be called in soon by their issuers. These investments further
enhanced the Fund's income and share price.
An Investment Mix for the Future
Believing that economic problems in Asia will curb U.S. growth
and inflation, we plan to maintain this investment mix in months to come. If
interest rates remain low, the Fund should continue to benefit from income
added by its higher-coupon issues. These issues should also serve the Fund
well if near-term inflation jitters cause temporary weakness in bond prices.
The Fund's longer maturities should further enhance income. With the
municipal yield curve relatively flat, however, we do not expect to make
additional purchases of longer-term issues any time soon.
Because spreads are tight between yields for municipals with
different credit ratings, we will probably continue to emphasize
higher-quality issues. We plan to also continue to focus on municipals with
good call protection to maximize the Fund's income and the price of its
shares.
Daniel Rabasco is a member of the Tax-Exempt Investment Policy Committee of
Fleet Investment Advisors Inc. He became manager of the Galaxy Tax-Free Bond
Funds in May of 1997. He has managed fixed-income investments since 1987.
- --------------------------------------------------------------------------------
Past performance is no guarantee of future results. 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. Total return figures in this report
include changes in share price, reinvestment of dividends and capital gains
distributions and exclude the deduction of any front end or contingent deferred
sales charge where applicable unless otherwise indicated. There can be no
assurance that the Funds will be able to maintain a stable net asset value of
$1.00 per share.
11
<PAGE>
[SIDEBAR]
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
Jylanne Dunne
Vice President &
Assistant Treasurer
INVESTMENT ADVISOR
Fleet Investment
Advisors Inc.
75 State Street
Boston, MA
02109
DISTRIBUTOR
First Data
Distributors, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581
ADMINISTRATOR
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
[END SIDEBAR]
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 bank deposits or obligations of, or guaranteed or
endorsed by, Fleet Financial Group, Inc. or any of its affiliates, Fleet
Investment Advisors Inc., or any Fleet bank. Shares of the Funds are not
federally insured by, guaranteed by, obligations of or otherwise supported
by the U.S. Government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other governmental agency. Investment return and
principal value will vary as a result of market conditions or other factors
so that shares of the Funds, when redeemed, may be worth more or less than
their original cost. An investment in the Funds involves investment risks,
including the possible loss of principal amount invested.
[RECYCLE LOGO]
This report was printed on recycled paper.
12
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
MUNICIPAL SECURITIES - 102.83%
Alaska - 1.08%
$ 375,000 Alaska Municipal Bond Authority
Series B, GO
6.60%, 07/01/99
Insured: MBIA ......................................... $ 376,594
1,275,000 Anchorage Hospital Revenue
Sisters of Providence Project
6.75%, 10/01/00 ....................................... 1,348,313
-----------
1,724,907
-----------
California - 8.10%
2,500,000 California Educational Facilities
Authority, Stanford University, Series O
5.13%, 01/01/31 ....................................... 2,390,625
2,000,000 California Rural Home Mortgage
Finance Authority, Series A
6.35%, 12/01/29 ....................................... 2,172,500
2,000,000 California State, GO
5.00%, 10/01/19 ....................................... 1,920,000
1,500,000 California State Veteran Bond, GO
Series BH
5.40%, 12/01/15
Insured: FSA .......................................... 1,513,125
1,000,000 California State Veteran Bond, GO
Series BH
5.40%, 12/01/16
Insured: FSA .......................................... 1,008,750
3,000,000 Los Angeles County
Public Works Authority, Series A
5.00%, 10/01/16 ....................................... 2,913,750
1,000,000 Santa Clara County
Transportation District, Series A
5.00%, 06/01/15 ....................................... 982,500
-----------
12,901,250
-----------
Colorado - 0.46%
750,000 Colorado Health Facilities Authority
Series B
5.25%, 02/01/18 ....................................... 728,438
-----------
Connecticut - 2.87%
1,000,000 Connecticut State HEFA
Trinity College, Series F
5.50%, 07/01/21
Insured: MBIA ......................................... 1,056,250
825,000 Connecticut State Housing Finance
Authority, Housing Mortgage Finance
Program, Series A
6.10%, 05/15/13 ....................................... 867,281
1,000,000 Connecticut State Housing Finance
Authority, Housing Mortgage Finance
Program, SubSeries B-1
6.25%, 05/15/11 ....................................... 1,066,250
Value
Par Value (Note 2)
--------- --------
Connecticut (continued)
$1,000,000 Connecticut State Special Tax Obligation
Transportation Infrastructure, Series A
5.40%, 09/01/10 ....................................... $ 1,032,500
500,000 Connecticut State Special Tax Obligation
Transportation Infrastructure, Series B
6.10%, 09/01/07 ....................................... 541,250
-----------
4,563,531
-----------
Florida - 4.04%
1,000,000 Florida State Department
of Transportation, Right of Way
5.40%, 07/01/16 ....................................... 1,015,000
2,000,000 Hillsborough County
School Board, Series A
5.50%, 07/01/14
Insured: MBIA ......................................... 2,105,000
2,835,000 Miami, Dade County
Special Obligation, Series A
5.22%, 10/01/14 (A)
Insured: MBIA ......................................... 1,208,419
1,000,000 Pinellas County Resource Recovery
Revenue, Series A
6.60%, 10/01/00
Insured: MBIA ......................................... 1,058,750
1,000,000 Tampa Catholic
Health Systems, Series A-1
5.50%, 11/15/14 ....................................... 1,040,000
-----------
6,427,169
-----------
Georgia - 2.06%
2,000,000 De Kalb County
Water and Sewer, Revenue
6.25%, 10/01/06 ....................................... 2,235,000
1,000,000 Fulton County School District, GO
5.60%, 01/01/11 ....................................... 1,047,500
-----------
3,282,500
-----------
Idaho - 1.08%
500,000 Boise-Kuna Irrigation District
Lucky Peak Hydroelectric Project
6.60%, 07/01/05 ....................................... 543,125
1,160,000 Idaho Housing & Finance Assistance
Single Family Mortgage, Senior
Series G-2, AMT
5.70%, 07/01/16 ....................................... 1,181,750
-----------
1,724,875
-----------
Illinois - 4.69%
1,000,000 Cook County, GO
7.25%, 11/01/07
Insured: MBIA ......................................... 1,188,750
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Illinois (continued)
$3,000,000 Illinois Educational Facilities Authority
Wesleyan University
5.65%, 09/01/26
Insured: MBIA .......................................... $ 3,097,500
1,000,000 Illinois State, GO
5.80%, 09/01/18
Insured: FGIC .......................................... 1,053,750
1,000,000 Peoria Public Building Commission
School Building & Facilities
District No. 150 Project
6.50%, 12/01/00
Pre-refunded 12/01/09
Insured: AMBAC ......................................... 1,037,500
1,000,000 Regional Transportation Authority
Series A
6.25%, 06/01/15 ........................................ 1,088,750
-----------
7,466,250
-----------
Indiana - 1.34%
2,000,000 Indianapolis Local Public Improvement
Bond Bank, Series A
6.00%, 01/10/18 ........................................ 2,132,500
-----------
Iowa - 1.12%
1,745,000 Iowa Finance Authority Single Family
Revenue, Mortgage, Series F
5.55%, 01/01/16 ........................................ 1,782,081
-----------
Kansas - 1.05%
1,575,000 Kansas State
Department of Highway Transportation
5.50%, 09/01/14 ........................................ 1,663,594
-----------
Kentucky - 1.33%
1,000,000 Kentucky Housing Corp. Guaranteed
Series C-3
5.70%, 01/01/11 ........................................ 1,043,750
1,000,000 Kentucky State Turnpike Authority
Economic Development, Road Revenue
Revitalization Projects
7.13%, 05/15/01
Pre-refunded 05/15/00 .................................. 1,071,250
-----------
2,115,000
-----------
Maine - 1.19%
250,000 Maine Municipal Bond Bank
Series B
6.75%, 11/01/12 ........................................ 277,188
500,000 Maine Municipal Bond Bank
Sewer & Water, SRF Program, Series A
6.50%, 11/01/08 ........................................ 539,375
Value
Par Value (Note 2)
--------- --------
Maine (continued)
$1,000,000 Maine State Housing Authority
Mortgage, Series C-1
6.50%, 11/15/11 ........................................ $ 1,075,000
-----------
1,891,563
-----------
Maryland - 3.73%
2,875,000 Maryland State Community
Development Administration, Dept.
of Housing & Community Development
Series A, AMT
5.70%, 07/01/17 ........................................ 2,957,656
1,500,000 Maryland State Health & Higher
Education, Facilities Authority
Johns Hopkins University
6.00%, 07/01/10 ........................................ 1,663,125
1,250,000 Montgomery County Housing
Opportunity, Commission Single
Family Mortgage Revenue
5.75%, 07/01/13 ........................................ 1,312,500
-----------
5,933,281
-----------
Massachusetts - 7.25%
1,000,000 Massachusetts Municipal Wholesale
Electric, Copower Supply System
Series D, 6.00%, 07/01/11
Insured: MBIA .......................................... 1,066,250
1,000,000 Massachusetts State
Series A, SP OB,
5.80%, 06/01/14
Pre-refunded 06/01/04 .................................. 1,076,250
1,000,000 Massachusetts State HEFA
Milford-Whitinsville Regional Hospital
Series C
5.38%, 07/15/28 ........................................ 961,250
2,000,000 Massachusetts State HEFA
Partners Healthcare System, Series A
5.38%, 07/01/17
Insured: MBIA .......................................... 2,005,000
200,000 Massachusetts State HEFA
South Shore Hospital, Series D
6.50%, 07/01/10
Insured: MBIA .......................................... 217,250
2,000,000 Massachusetts State IFA
Tufts University, Series H
5.50%, 02/15/12
Insured: MBIA .......................................... 2,105,000
1,000,000 Massachusetts State Industrial Finance
Electric Utility Revenue
Nantucket Electric, Series A, AMT
5.88%, 07/01/17
Insured: AMBAC ......................................... 1,051,250
2,000,000 Massachusetts State Port Authority
Series A
5.38%, 07/01/18 ........................................ 2,012,500
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Massachusetts (continued)
$1,000,000 Massachusetts State
Water Resource Authority, Series B
5.50%, 08/01/15
Insured:FSA ........................................... $ 1,057,500
-----------
11,552,250
-----------
Michigan - 0.67%
1,000,000 Central Michigan University
6.00%, 10/01/13
Insured: MBIA ......................................... 1,062,500
-----------
Minnesota - 1.93%
1,000,000 Minnesota Public Facilities Authority Water
PCR, Series A
6.90%, 03/01/03
Pre-refunded 03/01/00 ................................. 1,067,500
2,000,000 Rochester Health Care Facilities
Mayo Foundation, Series A
5.50%, 11/15/27
Insured: GO of Foundation ............................. 1,990,000
-----------
3,057,500
-----------
Missouri - 3.13%
2,000,000 Missouri State HEFA
SSM Healthcare, Series A
5.00%, 06/01/18
Insured: MBIA ......................................... 1,917,500
790,000 Missouri State
Housing and Development,
Single Family, Series B-2
6.40%, 03/01/29 ....................................... 860,112
2,000,000 Sikeston Electric Revenue
6.00%, 06/01/14
Insured: MBIA ......................................... 2,205,000
-----------
4,982,612
-----------
Nebraska - 1.22%
2,000,000 Lincoln Electric Systems
Series A
5.00%, 09/01/18 ....................................... 1,935,000
-----------
Nevada - 0.67%
1,000,000 Clark County
Series A, GO & Revenue
6.00%, 06/01/16
Pre-refunded 06/01/02
Insured: AMBAC ........................................ 1,061,250
-----------
Value
Par Value (Note 2)
--------- --------
New Jersey - 2.01%
$1,000,000 Mercer County Improvement Authority
Customer Receipts, Justice Complex
6.05%,01/01/07 ........................................ $ 1,001,140
1,500,000 New Jersey Health Care Facilities
Financing, AHS Hospital Corp., Series A
6.00%, 07/01/12
Insured: AMBAC ........................................ 1,661,250
500,000 New Jersey State
Transportation Systems
Series A
5.50%, 06/15/09 ....................................... 536,250
-----------
3,198,640
-----------
New Mexico - 0.49%
750,000 Dona Ana County
Gross Receipt Tax Revenue
5.50%, 06/01/16
Insured: AMBAC ........................................ 778,125
-----------
New York - 7.27%
1,000,000 Battery Park City Authority
Senior Lien, Series A
5.50%, 11/01/10 ....................................... 1,021,250
2,165,000 Metropolitan Transportation Authority
Dedicated Tax Fund, Series C-1
5.25%, 07/01/17
Insured: FGIC ......................................... 2,154,175
1,500,000 New York City
Transitional Finance Authority
Revenue, Series C
5.00%, 05/01/26 ....................................... 1,413,750
1,000,000 New York Municipal Water Finance
Authority, Water and Sewer System
Series A
5.50%, 06/15/11 ....................................... 1,026,250
250,000 New York State, GO
6.10%, 11/15/09 ....................................... 266,874
1,000,000 New York State, GO
5.50%, 06/15/10 ....................................... 1,040,000
1,000,000 New York State, Series I, GO
6.00%, 04/15/09 ....................................... 1,077,500
255,000 New York State Dormitory Authority
University of Rochester
6.50%, 07/01/09 ....................................... 261,012
4,000,000 New York State Dormitory Authority
Capital Appreciation, State University
5.18%, 05/15/10 (A)
Insured: MBIA ......................................... 2,215,000
1,000,000 Port Authority of New York &
New Jersey, JFK International Air
Terminal, Series 6, SP OB, AMT
6.00%, 12/01/07
Insured: MBIA ......................................... 1,105,000
-----------
11,580,811
-----------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
North Carolina - 1.62%
$1,500,000 Charlotte Certificates of Participation
Convention Facility Project
6.35%, 12/01/00
Insured: AMBAC ......................................... $ 1,580,625
925,000 North Carolina Housing Finance Agency
Single Family Revenue, Series Y
6.30%, 09/01/15 ........................................ 993,218
-----------
2,573,843
-----------
Ohio - 6.64%
1,000,000 Cleveland Waterworks
First Mortgage, Series F-92 A
6.25%, 01/01/15
Insured: AMBAC ......................................... 1,068,750
1,000,000 Cleveland Waterworks
Refunding & Improvement
First Mortgage
5.50%, 01/01/10
Insured: MBIA .......................................... 1,055,000
1,460,000 Forest Hills School District, GO
6.00%, 12/01/10
Insured: MBIA .......................................... 1,620,600
1,500,000 Hamilton County Sewer System
Improvement, Series A
5.00%, 12/01/17
Insured: FGIC .......................................... 1,466,250
1,000,000 Ohio State Building Authority
State Facilities, Adult Correctional
Series A
6.00%, 04/01/06
Insured: AMBAC ......................................... 1,090,000
2,695,000 Ohio State
Capital Appreciation
2.30%, 08/01/07 (A) .................................... 1,745,012
750,000 Ohio State Public Facilities Commission
Higher Educational Facilities, Series B
6.50%, 12/01/99
Insured: AMBAC ......................................... 779,062
1,785,000 Ohio State Water Development Authority
Pollution Center, Facilities, Water Control
Loan Fund, Water Quality Series
5.00%, 12/01/15
Insured: MBIA .......................................... 1,758,225
-----------
10,582,899
-----------
Pennsylvania - 6.32%
2,000,000 Delaware Valley Regional Finance
Authority, Local Government Revenue,
Series B
5.60%, 07/01/17
Insured: AMBAC ......................................... 2,127,500
2,210,000 Elizabeth Forward School District
Capital Appreciation, Series B, GO
5.52%, 09/01/21 (A)
Insured: MBIA .......................................... 660,238
Value
Par Value (Note 2)
--------- --------
Pennsylvania (continued)
$2,210,000 Elizabeth Forward School District
Capital Appreciation, Series B, GO
5.52%, 09/01/22 (A)
Insured: MBIA .......................................... $ 621,563
1,000,000 Luzerne County, Series B, GO
6.00%, 09/15/11
Insured: FGIC .......................................... 1,030,000
1,900,000 Pennsylvania Higher Educational
Facilities Authority, Health Services
University of Pennsylvania, Series B
5.88%, 01/01/15 ........................................ 1,992,625
1,500,000 Pennsylvania Housing Finance Agency
Single Family Mortgage, Series 59-A, AMT
5.75%, 10/01/23 ........................................ 1,531,875
1,000,000 Pennsylvania State
Second Series A, GO
6.50%, 11/01/04
Pre-refunded 11/01/01
Insured: MBIA .......................................... 1,083,750
955,000 Pennsylvania State Higher Education
Assistance, Agency Student Loan
Revenue, Series A
6.80%, 12/01/00
Insured: FGIC .......................................... 1,013,494
-----------
10,061,045
-----------
Rhode Island - 3.62%
200,000 Rhode Island Clean Water Protection
Finance Agency, Revolving Fund
Pooled Loan Issue, Series A
6.75%, 10/01/13
Insured: MBIA .......................................... 220,000
1,000,000 Rhode Island Housing & Mortgage
Finance, Homeownership Opportunity
Series 19-A
5.70%, 04/01/15 ........................................ 1,023,750
700,000 Rhode Island Housing & Mortgage
Finance, Homeownership Opportunity
Series 13
6.70%, 10/01/15 ........................................ 755,125
1,500,000 Rhode Island State Health & Educational
Building Corp., Higher Education
Johnson & Wales University
6.38%, 04/01/12
Insured: Connie Lee .................................... 1,640,625
500,000 Rhode Island State Health & Educational
Building Corp., Miriam Hospital, Series B
6.50%, 04/01/13
Pre-refunded 04/01/03 .................................. 551,875
1,500,000 Rhode Island State Health & Educational
Corp., Higher Education
Johnson & Wales University, Series A
5.75%, 04/01/12
Insured: Connie Lee .................................... 1,573,125
-----------
5,764,500
-----------
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
South Carolina - 3.20%
$1,500,000 Greenville Waterworks, Revenue
5.50%, 02/01/22 ........................................ $ 1,533,750
2,100,000 Oconee County, PCR
Duke Power Co. Project
5.80%, 04/01/14 ........................................ 2,215,500
500,000 Piedmont Municipal
Power Agency Electric
6.10%, 01/01/06
Insured: MBIA .......................................... 549,375
750,000 Richland County
Certificates of Participation
6.90%, 02/01/01
Insured: FGIC .......................................... 800,625
-----------
5,099,250
-----------
South Dakota - 0.67%
1,000,000 Rapid City Sales Tax
Series B
6.20%, 06/01/12
Insured: FGIC .......................................... 1,068,750
-----------
Tennessee - 2.32%
500,000 Memphis Water Revenue
Series A
6.00%, 01/01/07 ........................................ 532,500
2,000,000 Metropolitan Government Nashville &
Davidson County, GO
5.88%, 05/15/26 ........................................ 2,097,500
1,000,000 Metropolitan Government Nashville &
Davidson County Health & Education
Facilities Board, Vanderbilt University
Series B
6.30%, 10/01/14 ........................................ 1,070,000
-----------
3,700,000
-----------
Texas - 10.90%
5,000,000 Harris County Capital Appreciation
Series A, GO & Revenue
5.18%, 08/15/07 (A)
Insured: FGIC .......................................... 3,212,500
2,000,000 Harris County Health Facilities
Development Corp., Hospital Revenue
Memorial Hospital System, Series A
6.00%, 06/01/12
Insured: MBIA .......................................... 2,195,000
2,170,000 Harris County Health Facilities
Development Corp., Memorial Hospital
System Project, Series A
6.00%, 06/01/13
Insured: MBIA .......................................... 2,378,863
4,000,000 Houston Water & Sewer System
Junior Lien, Series C
5.35%, 12/01/11 (A)
Insured: AMBAC ......................................... 2,010,000
Value
Par Value (Note 2)
--------- --------
Texas (continued)
$1,750,000 Lower Colorado River Authority
Capital Appreciation, Junior Lien
4th Supplement
5.45%, 01/01/13 (A)
Insured: FGIC .......................................... $815,938
2,000,000 Lower Neches Valley Authority, IDC
Mobil Oil Refining Project
5.80%, 05/01/22 ........................................ 2,072,500
2,000,000 New Braunfels Independent School
District, Capital Appreciation, GO
5.23%, 02/01/07 (A) .................................... 1,322,500
1,000,000 North Central Health Facilities
Development Corp., Hospital
Presbyterian Healthcare
5.90%, 06/01/21
Pre-refunded 06/01/05 .................................. 1,077,500
2,000,000 San Antonio Airport System
7.13%, 07/01/05
Insured: AMBAC ......................................... 2,260,000
-----------
17,344,801
-----------
Utah - 0.64%
1,000,000 Utah State Housing Finance Agency
Single Family Mortgage, Series D-1,
Class I
5.65%, 07/01/16 ........................................ 1,017,500
-----------
Virginia - 0.67%
1,000,000 Norfolk Industrial Development
Authority Childrens Hospital,
Kings Group
6.50%, 06/01/21
Insured: AMBAC ......................................... 1,067,500
-----------
Washington - 2.56%
1,370,000 Seattle, GO
Series A
5.50%, 03/01/11 ........................................ 1,457,338
1,500,000 Washington State Public Power Supply
System, Nuclear Project No. 1, Series A
7.25%, 07/01/99 ........................................ 1,552,500
1,000,000 Washington State Public Power Supply
System, Nuclear Project No. 2, Series C
7.30%, 07/01/00 ........................................ 1,062,500
-----------
4,072,338
-----------
West Virginia - 1.32%
2,000,000 West Virginia School Building Authority
Capital Improvement
5.50%, 07/01/11
Insured: AMBAC ......................................... 2,097,500
-----------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Other Territories - 3.57%
$2,500,000 Puerto Rico Commonwealth
Highway and Transportation Authority
Series A
5.00%, 07/01/38 ........................................ $ 2,343,750
3,000,000 Puerto Rico Electric Power Authority
Series BB
6.00%, 07/01/12
Insured: MBIA .......................................... 3,345,000
------------
5,688,750
------------
Total Municipal Securities ............................. 163,684,303
(Cost $158,891,862) ------------
Shares
------
INVESTMENT COMPANY - 0.45%
718,932 Federated Tax-Free Obligations Fund .................... 718,932
------------
Total Investment Company ............................... 718,932
(Cost $718,932) ------------
Total Investments - 103.28% ........................................ 164,403,235
(Cost $159,610,794) ------------
Net Other Assets and Liabilities - (3.28)% ......................... (5,230,669)
------------
Net Assets - 100.00% ............................................... $159,172,566
============
</TABLE>
- ------------
(A) Zero Coupon Bond. Rate shown reflects effective yield to maturity at
time of purchase.
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax - Private activity obligations whose
interest is subject to the Federal AMT for individuals.
Connie Lee College Construction Loan Association
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
HEFA Health and Educational Facilities Authority
IDC Industrial Development Corp.
IFA Industrial Finance Agency
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SP OB Special Obligation
See Notes to Financial Statements.
18
<PAGE>
THE GALAXY FUND
New Jersey Municipal Bond Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- ----------- ---------
<S> <C> <C>
MUNICIPAL SECURITIES - 94.85%
New Jersey - 83.61%
$ 235,000 Freehold Board of Education, GO
5.38%, 07/15/10
Insured: FSA ........................................... $ 245,575
250,000 Lenape Regional High School District, GO
5.00%, 04/01/08
Insured: FGIC .......................................... 256,250
50,000 Lenape Regional High School District, GO
5.00%, 04/01/12
Insured: FGIC .......................................... 50,125
250,000 Mercer County Improvement Authority
Revenue Youth Center, Series B
5.00%, 02/15/14
Insured: FGIC .......................................... 245,937
250,000 Metuchen School District, GO
5.13%, 09/15/12
Insured: FGIC .......................................... 253,124
50,000 Monmouth County Improvement Authority
Revenue Governmental Loan
5.50%, 12/01/07
Insured: AMBAC ......................................... 53,500
100,000 Morristown, GO
5.15%, 02/01/09
Insured: FSA ........................................... 104,000
75,000 New Jersey
Environmental Infrastructure
Wastewater Treatment, Series F
5.00%, 04/01/14
Insured: MBIA .......................................... 74,438
500,000 New Jersey
Environmental Infrastructure
Wastewater Treatment, Series G
5.00%, 04/01/12
Insured: FGIC .......................................... 498,750
50,000 New Jersey Health Care Facilities
Kennedy Healthcare Sytems, Series B
5.00%, 07/01/09
Insured: MBIA .......................................... 51,187
250,000 New Jersey State, GO
7.25%, 04/15/01
Pre-refunded 04/15/99 .................................. 259,005
50,000 New Jersey State, GO
7.00%, 04/01/07
Pre-refunded 04/01/01 .................................. 54,312
1,000,000 New Jersey State, GO
5.00%, 03/01/11 ........................................ 1,006,250
75,000 New Jersey State, GO
Series D
5.40%, 02/15/03 ........................................ 78,375
Value
Par Value (Note 2)
- ----------- ---------
New Jersey (continued)
$250,000 New Jersey State Building Authority
6.00%, 06/15/07 ........................................ $ 278,125
200,000 New Jersey State Building Authority
7.50%, 06/15/09
Pre-refunded 06/15/99 .................................. 211,500
250,000 New Jersey State
Educational Facilities Authority
Richard Stockton College, Series C
5.10%, 07/01/23
Insured: AMBAC ......................................... 243,750
500,000 New Jersey State
Housing and Mortgage
Finance Authority
Home Buyer, Series G
4.63%, 04/01/15
Insured: MBIA .......................................... 501,875
250,000 New Jersey State
Transportation Systems, Series A
5.50%, 06/15/09 ........................................ 268,125
50,000 Old Tappan Board of Education, GO
5.10%, 04/01/15
Insured: FGIC .......................................... 49,625
50,000 Plumstead Board of Education, GO
5.00%, 03/01/14
Insured: FGIC .......................................... 49,438
50,000 Woodbridge Sewer and Utility
6.80%, 08/01/05
Pre-refunded 08/01/00 .................................. 53,250
----------
4,886,516
----------
Other Territories - 11.24%
60,000 Puerto Rico Commonwealth, GO
7.63%, 07/01/10
Pre-refunded 07/01/00 .................................. 65,475
250,000 Puerto Rico Commonwealth, GO
6.00%, 07/01/16
Insured: MBIA .......................................... 279,688
50,000 Puerto Rico
Electric Power Authority, Series AA
5.25%, 07/01/17
Insured: MBIA .......................................... 50,375
250,000 Puerto Rico Commonwealth
Infrastructure, Series A
Financing Authority Special Tax
5.13%, 07/01/09
Insured: AMBAC ......................................... 261,563
----------
657,101
----------
Total Municipal Securities ............................. 5,543,617
(Cost $5,567,942) ----------
</TABLE>
See Notes to Financial Statements.
19
<PAGE>
THE GALAXY FUND
New Jersey Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
- ----------- ---------
<S> <C> <C>
INVESTMENT COMPANY - 3.36%
196,080 Federated Tax Exempt
Money Market Fund ...................................... $ 196,080
----------
Total Investment Company ............................... 196,080
(Cost $196,080) ----------
Total Investments - 98.21% ......................................... 5,739,697
(Cost $5,764,022) ----------
Net Assets and Other Liabilities - 1.79% ........................... 104,634
----------
Net Assets - 100.00% ............................................... $5,844,331
==========
</TABLE>
- ----------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
MBIA Municipal Bond Insurance Association
See Notes to Financial Statements.
20
<PAGE>
THE GALAXY FUND
New York Municipal Bond Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
MUNICIPAL SECURITIES - 98.23%
New York - 94.05%
$1,000,000 Albany County, GO
5.50%, 06/01/08
Insured: FGIC ...................................... $1,042,500
1,000,000 Albany County Airport Authority
5.38%, 12/15/17
Insured: FSA ....................................... 1,002,500
100,000 Canandaigua City
School District, GO
6.50%, 06/01/10
Insured: AMBAC ..................................... 114,375
150,000 Chenango, GO
6.00%, 07/15/06 .................................... 163,688
100,000 Huntington, GO, Series B
6.25%, 04/15/07
Insured: AMBAC ..................................... 108,500
1,000,000 Metropolitan Transportation Authority
Dedicated Tax Fund, Series A
5.50%, 04/01/16
Insured: MBIA ...................................... 1,025,000
1,000,000 Metropolitan Transportation Authority
Dedicated Tax Fund, Series C-1
5.25%, 07/01/17
Insured: FGIC ...................................... 995,000
750,000 Monroe County
Public Improvement, GO
6.10%, 03/01/09
Insured: MBIA ...................................... 799,344
900,000 Monroe County
Public Improvement, GO
6.10%, 06/01/14
Pre-refunded 06/01/04
Insured: AMBAC ..................................... 992,250
1,000,000 Monroe County Water Authority
Series A
6.25%, 08/01/11 .................................... 1,067,500
1,000,000 Monroe Woodbury
Central School District, GO
5.63%,05/15/18
Insured: MBIA ...................................... 1,028,750
1,500,000 Municipal Assistance Corporation
for New York, New York
Series L
6.00%, 07/01/08 .................................... 1,646,250
225,000 Nassau County, GO
6.10%, 05/15/05
Insured: MBIA ...................................... 241,875
500,000 New Castle Public Improvement, GO
5.88%, 09/15/09 .................................... 533,125
1,000,000 New York, GO, Series I
6.00%, 04/15/09 .................................... 1,077,500
2,060,000 New York City
Capital Appreciation, Series F, GO
4.59%, 08/01/08 (A)
Insured: MBIA ...................................... 1,254,025
New York (continued)
$3,500,000 New York City
Capital Appreciation, Series G, GO
4.65%, 08/01/08 (A)
Insured: MBIA ...................................... $2,117,500
1,000,000 New York, IDA
Civic Facility
Trinity Episcopal School Corp. Project
5.25%, 06/15/17
Insured: MBIA ...................................... 990,000
750,000 New York City Municipal Water
Finance Authority
Water & Sewer System, Series A
5.90%, 06/15/04 .................................... 808,125
500,000 New York City Municipal Water
Finance Authority
Water & Sewer System, Series A
6.10%, 06/15/06 .................................... 540,000
2,000,000 New York City Municipal Water
Finance Authority
Water & Sewer System, Series A
5.13%, 06/15/15 .................................... 1,997,500
1,000,000 New York City Municipal Water
Finance Authority
Water & Sewer System, Series A
6.00%, 06/15/17 .................................... 1,038,750
1,000,000 New York City Municipal Water
Finance Authority
Water & Sewer System, Series A
5.75%, 06/15/18
Insured: AMBAC ..................................... 1,043,750
750,000 New York City Municipal Water
Finance Authority
Water & Sewer System, Series B
5.75%, 06/15/13
Insured: MBIA ...................................... 791,250
1,000,000 New York City Municipal Water
Finance Authority
Water & Sewer System, Series B
5.75%, 06/15/26
Insured: MBIA ...................................... 1,053,750
4,000,000 New York City
Transitional Finance Authority
Revenue, Series C
5.00%, 05/01/26 .................................... 3,770,000
2,000,000 New York City Trust
Cultural Resources
American Museum
of National History, Series A
5.60%, 04/01/18
Insured: MBIA ...................................... 2,062,500
200,000 New York State, GO
6.70%, 03/01/07 .................................... 217,750
1,000,000 New York State, GO
6.25%, 09/15/07 .................................... 1,077,500
100,000 New York State, GO
6.90%, 02/01/08 .................................... 109,375
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
THE GALAXY FUND
New York Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
New York (continued)
$500,000 New York State, GO
6.25%, 06/15/08 .................................... $ 538,125
1,000,000 New York State, GO
6.13%, 11/15/10 .................................... 1,066,250
500,000 New York State, GO
6.00%, 11/15/11 .................................... 536,875
1,030,000 New York State Dormitory Authority
Cornell University
5.40% ,07/01/12 .................................... 1,066,050
1,000,000 New York State Dormitory Authority
Ithaca College
5.00%, 07/01/21 .................................... 955,000
500,000 New York State Dormitory Authority
New York University
6.25%, 07/01/09
Insured: FGIC ...................................... 533,750
1,000,000 New York State Dormitory Authority
New York University, Series A
6.00%, 07/01/17
Insured: MBIA ...................................... 1,102,500
2,225,000 New York State Dormitory Authority
Rochester Institute of Technology
5.30%, 07/01/17
Insured: MBIA ...................................... 2,230,563
1,500,000 New York State Dormitory Authority
Rockefeller University
5.00%, 07/01/28 .................................... 1,430,625
2,000,000 New York State Dormitory Authority
St. Johns University
5.70%, 07/01/26
Insured: MBIA ...................................... 2,077,500
1,000,000 New York State Dormitory Authority
University of Rochester
Strong Memorial Hospital
5.40%, 07/01/06 .................................... 1,053,750
150,000 New York State Dormitory Authority
University of Rochester
6.50%, 07/01/09 .................................... 153,537
1,125,000 New York State Dormitory Authority
University of Rochester, Series A
5.00%, 07/01/27
Insured: MBIA ...................................... 1,068,750
100,000 New York State Environmental
Facilities Corp., State Water
Revolving Fund, PCR
Pooled Loan, Series A
6.40%, 09/15/06 .................................... 109,625
1,000,000 New York State Environmental
Facilities Corp., State Water
Revolving Fund, PCR
Pooled Loan, Series A
5.40%, 09/15/07 .................................... 1,057,500
500,000 New York State Environmental
Facilities Corp., State Water
Revolving Fund, PCR
Pooled Loan, Series B
6.50%, 09/15/08 .................................... 550,000
New York (continued)
$100,000 New York State Environmental
Facilities Corp., State Water
Revolving Fund, PCR, Series E
6.88%, 06/15/10
Pre-refunded 06/15/01 .............................. $ 109,375
1,000,000 New York State Environmental
Facilities Corp., State Water
Subordinated Revolving Fund, PCR
Series E
5.00%, 06/15/13
Insured: MBIA ...................................... 987,500
500,000 New York State Housing
Finance Agency Multifamily Mortgage
Housing, Series A
6.95%, 08/15/12 .................................... 538,125
300,000 New York State Local Government
Assistance Corp., Series A
6.88%, 04/01/06
Pre-refunded 04/01/02 .............................. 331,875
250,000 New York State Local Government
Assistance Corp., Series B
6.00%, 04/01/07 .................................... 268,750
1,000,000 New York State Local Government
Assistance Corp., Series B
6.00%, 04/01/18 .................................... 1,055,000
1,250,000 New York State Local Government
Assistance Corp., Series C
6.00%, 04/01/07 .................................... 1,343,750
250,000 New York State Local Government
Assistance Corp., Series C
6.50%, 04/01/15 .................................... 265,313
800,000 New York State Medical Care Facilities
Finance Agency
Second Mortgage Program
Health Care Projects, Series B
6.35%, 11/01/14 .................................... 849,000
500,000 New York State Mortgage Agency
Homeowner Mortgage, Series 27
6.90%, 04/01/15 .................................... 544,375
3,000,000 New York State Mortgage Agency
Homeowner Mortgage, Series 67
5.70%, 10/01/17 .................................... 3,048,750
145,000 New York State Mortgage Agency
Revenue, 8th Series
6.88%, 04/01/17 .................................... 145,335
1,000,000 New York State Power Authority
Revenue, General Purpose, Series AA
6.38%, 01/01/12 .................................... 1,082,500
175,000 New York State Power Authority
Revenue, General Purpose, Series Z
6.63%, 01/01/12 .................................... 190,969
325,000 New York State Power Authority
Revenue, General Purpose, Series Z
6.63%, 01/01/12 .................................... 354,656
Pre-refunded 01/01/02
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
THE GALAXY FUND
New York Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
New York (continued)
$1,250,000 New York State Thruway Authority
Revenue, Series A
5.88%, 01/01/07 .................................... $ 1,317,188
500,000 Onondaga County, GO
5.88%, 02/15/10 .................................... 550,000
250,000 Orange County, GO
6.20%, 12/01/09
Pre-refunded 12/01/99 .............................. 263,125
100,000 Orange County, GO
6.20%, 12/01/10
Pre-refunded 12/01/99 .............................. 105,250
100,000 Orleans County, GO
6.50%, 09/15/08 .................................... 115,000
1,000,000 Port Authority of New York
and New Jersey
JFK International Air Terminal
6.00%, 12/01/07
Insured: MBIA ...................................... 1,105,000
200,000 Port Authority of New York
and New Jersey
Consolidated Loan, Series 71
6.90%, 07/15/09 .................................... 213,000
500,000 Port Authority of New York
and New Jersey
Consolidated Loan, Series 78
6.50%, 04/15/11 .................................... 533,125
500,000 Triborough Bridge and
Tunnel Authority, Revenue
General Purpose, Series X
6.00%, 01/01/06 .................................... 523,750
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 .................................... 347,625
750,000 Triborough Bridge and
Tunnel Authority, Revenue
General Purpose, Series Y
6.00%, 01/01/12 .................................... 823,125
100,000 Triborough Bridge and
Tunnel Authority, Revenue, SP OB
6.10%, 01/01/05
Insured: FGIC ...................................... 107,375
250,000 Triborough Bridge and
Tunnel Authority, Revenue, SP OB
6.15%, 01/01/06
Insured: FGIC ...................................... 268,438
500,000 United Nations Development Corp.
Senior Lien, Series A
6.00%, 07/01/06
Pre-refunded 07/01/03 .............................. 544,375
New York (continued)
$ 1,000,000 United Nations Development Corp.
Senior Lien, Series A
6.00%, 07/01/12
Pre-refunded 07/01/03 .............................. $1,088,750
500,000 United Nations Development Corp.
Subordinated Lien, Series B
6.20%, 07/01/11
Pre-refunded 07/01/03 .............................. 549,375
-----------
67,115,103
-----------
Pennsylvania - 0.98%
2,210,000 Elizabeth Forward School District
Capital Appreciation, Series B, GO
5.68%, 09/01/20 (A) ................................ 696,150
-----------
Other Territories - 3.20%
1,000,000 Puerto Rico Electric Power Authority
Series BB
6.00%, 07/01/12
Insured: MBIA ...................................... 1,115,000
1,250,000 Puerto Rico Commonwealth
Highway & Transportation, Series A
5.00%, 07/01/38 .................................... 1,171,875
-----------
2,286,875
-----------
Total Municipal Securities ......................... 70,098,128
(Cost $67,473,910) -----------
Shares
------
INVESTMENT COMPANY - 1.16%
824,846 New York Federated
Municipal Cash Trust ............................... 824,846
-----------
Total Investment Company ........................... 824,846
(Cost $824,846) -----------
Total Investments - 99.39% ......................................... 70,922,974
(Cost $68,298,756) -----------
Net Assets and Other Liabilities - 0.61% ........................... 436,053
-----------
Net Assets - 100.00% ............................................... $71,359,027
===========
</TABLE>
- ---------------------------------------------
(A) Zero Coupon Bond. Rate shown reflects effective yield to maturity at time
of purchase.
AMBAC American Municipal Bond Assurance Corp.
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
IDA Industrial Development Agency
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SP OB Special Obligation
See Notes to Financial Statements.
23
<PAGE>
THE GALAXY FUND
Connecticut Municipal Bond Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
MUNICIPAL SECURITIES - 96.99%
Connecticut - 81.87%
$245,000 Bolton, GO
5.10%, 06/01/06 .................................... $ 250,819
355,000 Bristol Water, GO
5.15%, 06/15/07 .................................... 371,419
175,000 Brookfield, GO
5.10%, 07/15/07 .................................... 180,906
250,000 Cheshire, GO
5.10%, 08/15/07 .................................... 257,813
885,000 Colchester, GO, Lot A
5.40%, 08/15/10
Insured: AMBAC ..................................... 946,950
400,000 Connecticut State Airport Revenue
Bradley International Airport
7.40%, 10/01/04
Insured: FGIC ...................................... 454,000
325,000 Connecticut State Clean Water Fund
5.50%, 10/01/04 .................................... 347,344
200,000 Connecticut State Clean Water Fund
6.00%, 10/01/12 .................................... 225,000
250,000 Connecticut State, GO, Series A
5.00%, 11/15/03 .................................... 258,750
250,000 Connecticut State, GO, Series A
5.10%, 11/15/04 .................................... 260,938
1,000,000 Connecticut State, GO, Series A
5.13%, 03/01/10 .................................... 1,025,000
100,000 Connecticut State, GO, Series B
6.50%, 08/01/06 .................................... 105,000
400,000 Connecticut State, GO, Series B
5.40%, 03/15/08 .................................... 423,500
1,000,000 Connecticut State, GO, Series B
5.38%, 10/01/11 .................................... 1,033,750
100,000 Connecticut State, GO, Series C
5.00%, 05/01/05 .................................... 103,375
500,000 Connecticut State, GO, Series C
5.50%, 08/15/05 .................................... 532,500
500,000 Connecticut State, GO, Series E
6.00%, 03/15/12 .................................... 556,250
500,000 Connecticut State HEFA
Backus (William W.) Hospital Issue
Series D
5.63%, 07/01/17
Insured: AMBAC ..................................... 515,000
750,000 Connecticut State HEFA
Greenwich Hospital Issue, Series A
5.30%, 07/01/08
Insured: MBIA ...................................... 790,313
250,000 Connecticut State HEFA
Hospital for Special Care Issue, Series B
5.38%, 07/01/17 .................................... 247,500
1,060,000 Connecticut State HEFA
Middlesex Hospital, Series H
5.00%, 07/01/12
Insured: MBIA ...................................... 1,058,675
Connecticut (continued)
$375,000 Connecticut State HEFA
Newington Childrens Hospital
Series A
5.65%, 07/01/05 .................................... $ 401,719
Insured: MBIA
500,000 Connecticut State HEFA
Trinity College, Series F
5.50%, 07/01/21
Insured: MBIA ...................................... 528,125
200,000 Connecticut State Housing
Finance Authority
Housing Mortgage Finance Program
Series A
5.40%, 05/15/04 .................................... 211,000
105,000 Connecticut State Housing
Finance Authority
Housing Mortgage Finance Program
Series A
5.60%, 05/15/05 .................................... 111,956
125,000 Connecticut State Housing
Finance Authority
Housing Mortgage Finance Program
Series A-1
5.85%, 11/15/16 .................................... 129,219
400,000 Connecticut State Housing
Finance Authority
Housing Mortgage Finance Program
Series B
6.25%, 11/15/05 .................................... 430,000
100,000 Connecticut State Housing
Finance Authority
Housing Mortgage Finance Program
Series B
6.20%, 05/15/12 .................................... 105,500
415,000 Connecticut State Housing
Finance Authority
Housing Mortgage Finance Program
Series F-1
5.60%, 05/15/14 .................................... 426,413
1,000,000 Connecticut State Resource
Recovery Authority
Series A
5.75%, 11/15/07 .................................... 1,085,000
300,000 Connecticut State Resource
Recovery Authority
Mid-Connecticut System, Series A
5.60%, 11/15/99 .................................... 307,875
1,000,000 Connecticut State
Special Tax Obligation, Series A
5.00%, 11/01/15 .................................... 976,250
400,000 Connecticut State
Special Tax Obligation
Transportation Infrastructure, Series A
6.80%, 06/01/99 .................................... 412,092
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
THE GALAXY FUND
Connecticut Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Connecticut (continued)
$100,000 Connecticut State
Special Tax Obligation
Transportation Infrastructure, Series A
5.00%, 09/01/03 .................................... $ 103,500
150,000 Connecticut State
Special Tax Obligation
Transportation Infrastructure, Series A
5.10%, 09/01/04 .................................... 155,813
950,000 Connecticut State
Special Tax Obligation
Transportation Infrastructure, Series A
5.13%, 09/01/05 .................................... 986,813
700,000 Connecticut State
Special Tax Obligation
Transportation Infrastructure, Series A
5.40%, 04/01/07 .................................... 736,750
1,250,000 Connecticut State
Special Tax Obligation
Transportation Infrastructure, Series A
5.25%, 09/01/07 .................................... 1,309,375
925,000 Connecticut State
Special Tax Obligation
Transportation Infrastructure, Series A
5.38%, 09/01/08 .................................... 978,187
400,000 Connecticut State
Special Tax Obligation
Transportation Infrastructure, Series B
6.13%, 09/01/12 .................................... 449,000
1,250,000 Connecticut State
Special Tax Obligation
Transportation Infrastructure, Series A
5.50%, 10/01/12 .................................... 1,329,687
200,000 Danbury, GO
5.63%, 02/01/13 .................................... 212,500
250,000 East Hampton, GO
5.10%, 06/15/05
Insured:MBIA ....................................... 259,687
1,100,000 Fairfield, GO
5.00%, 01/01/18 .................................... 1,073,875
500,000 Hamden, GO
5.50%, 08/15/14
Insured:MBIA ....................................... 520,000
250,000 Hartford County
Metropolitan District, GO
6.70%, 10/01/09 .................................... 295,312
300,000 Meriden, GO
5.75%, 10/15/04
Insured:AMBAC ...................................... 323,250
580,000 Monroe, GO
5.63%, 04/15/14
Insured:FGIC ....................................... 605,375
370,000 Montville, GO
5.30%, 12/01/09 .................................... 391,275
1,500,000 New Haven, GO
5.38%, 02/15/11
Insured:FGIC ....................................... 1,565,625
100,000 New Milford, GO
5.80%, 10/01/01 .................................... 105,500
Connecticut (continued)
$250,000 New Milford, GO
5.50%, 08/01/08 .................................... $ 267,500
1,000,000 New Milford, GO
5.00%, 05/15/15 .................................... 988,750
350,000 Norwalk, GO
5.00%, 01/15/05 .................................... 359,188
200,000 Norwalk, GO
5.00%, 01/15/06 .................................... 204,750
500,000 Norwich, GO
5.63%, 09/15/07 .................................... 535,625
330,000 Regional School District No. 5, GO
5.05%, 05/15/04 .................................... 334,950
135,000 Regional School District No. 5, GO
5.15%, 05/15/05 .................................... 138,375
225,000 South Central Regional
Water Authority
Water System, Series 11
5.75%, 08/01/12
Insured: FGIC ...................................... 239,062
175,000 South Central Regional
Water Authority
Water System, Series 12
5.13%, 08/01/07
Insured: FGIC ...................................... 180,905
100,000 Trumbull, GO
6.00%, 05/15/04 .................................... 109,000
100,000 West Hartford, GO
6.00%, 05/01/07 .................................... 110,625
250,000 West Haven, GO, Series B
5.20%, 06/01/05 .................................... 257,812
250,000 West Haven, GO, Series B
5.40%, 06/01/09 .................................... 257,500
-----------
30,455,517
-----------
Michigan - 2.70%
1,000,000 Grandville Public Schools District, GO
5.20%, 05/01/13 .................................... 1,003,750
-----------
Other Territories - 12.42%
1,000,000 Puerto Rico Commonwealth, GO
6.00%, 07/01/16
Insured: MBIA ...................................... 1,118,750
1,500,000 Puerto Rico Commonwealth, GO
5.00%, 07/01/27 .................................... 1,410,000
1,000,000 Puerto Rico Commonwealth
Public Improvement, GO
5.50%, 07/01/11 .................................... 1,061,250
1,000,000 Puerto Rico Municipal
Finance Agency, Series A
5.50%, 07/01/17
Insured: FSA ....................................... 1,030,000
-----------
4,620,000
-----------
Total Municipal Securities ......................... 36,079,267
(Cost $35,003,953) -----------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
THE GALAXY FUND
Connecticut Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
------ --------
<S> <C> <C>
INVESTMENT COMPANY - 1.11%
411,199 Connecticut Federated
Municipal Cash Trust ............................... $411,199
-----------
Total Investment Company ........................... 411,199
(Cost $411,199) -----------
Total Investments - 98.10% ......................................... 36,490,466
(Cost $35,415,152)* -----------
Net Assets and Other Liabilities - 1.90% ........................... 707,230
-----------
Net Assets - 100.00% ............................................... $37,197,696
===========
</TABLE>
- ----------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Federal Guaranty Assurance Corp.
FSA Federal Security Assurance Company
GO General Obligation
HEFA Health and Education Facilities Authority
MBIA Municipal Bond Investors Assurance
See Notes to Financial Statements.
26
<PAGE>
THE GALAXY FUND
Massachusetts Municipal Bond Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
MUNICIPAL SECURITIES - 97.87%
Massachusetts - 89.10%
$700,000 Andover, GO
5.00%, 12/01/10 .................................... $ 719,250
300,000 Attleboro,GO
5.20%, 07/01/02
Insured: AMBAC ..................................... 309,375
375,000 Billerica, GO, Lot A
5.40%, 07/15/09
Insured: MBIA ...................................... 390,937
250,000 Boston, GO
5.25%, 10/01/05 .................................... 260,625
Insured: MBIA
200,000 Boston, GO, Series A
5.00%, 02/01/03
Insured: AMBAC ..................................... 205,000
360,000 Boston, GO, Series A
5.45%, 02/01/07
Insured: AMBAC ..................................... 376,200
225,000 Boston, GO, Series A
5.55%, 02/01/08
Insured: AMBAC ..................................... 235,687
200,000 Boston Metropolitan District, GO
5.35%, 12/01/12 .................................... 204,250
200,000 Boston Water and Sewer Commission
General Purpose, Senior Series A
5.50%, 11/01/01
Insured: FSA ....................................... 207,750
230,000 Boston Water and Sewer Commission
General Purpose, Senior Series A
7.00%, 11/01/18
Pre-refunded 11/01/01
Insured: FGIC ...................................... 254,150
100,000 Brookline, GO
5.60%, 09/01/10 .................................... 105,250
250,000 Deerfield, GO
5.60%, 06/15/02 .................................... 264,062
250,000 Franklin, GO
5.50%, 11/15/02
Insured: MBIA ...................................... 261,562
100,000 Kingston, GO
5.70%, 08/01/07 .................................... 105,125
250,000 Lawrence, GO
5.13%, 09/15/03 .................................... 256,875
200,000 Lowell, GO, Series A
5.10%, 01/15/04
Insured: FSA ....................................... 206,250
265,000 Lowell, GO, Series A
5.20%, 01/15/05
Insured: FSA ....................................... 274,606
250,000 Lowell, GO
6.05%, 04/01/11
Insured: FSA ....................................... 270,937
100,000 Lynn Water and Sewer Commission
5.30%, 12/01/06
Insured: FGIC ...................................... 103,875
130,000 Massachusetts Bay Transportation
Authority, Series A
6.00%, 03/01/12 .................................... 139,425
Massachusetts (continued)
$ 200,000 Massachusetts Bay Transportation
Authority, Series A
5.75%, 03/01/22 .................................... $ 209,500
1,500,000 Massachusetts Bay Transportation
Authority, Series D
5.00%, 03/01/11 .................................... 1,503,750
1,000,000 Massachusetts Educational
Financing Authority
Revenue, Issue G, Series A
5.15%, 12/01/15
Insured:MBIA ....................................... 976,250
200,000 Massachusetts Municipal Wholesale
Electric Copower Supply System
Series A
6.50%, 07/01/02
Insured: AMBAC ..................................... 215,500
100,000 Massachusetts Municipal Wholesale
Electric Copower Supply System
Series E
5.75%, 07/01/02
Insured: AMBAC ..................................... 105,000
370,000 Massachusetts State, GO
Federal Assisted Housing
6.00%, 02/01/08 .................................... 404,688
750,000 Massachusetts State, GO, Series A
5.25%, 02/01/08 .................................... 773,438
250,000 Massachusetts State, GO, Series A
6.25%, 07/01/02 .................................... 267,812
250,000 Massachusetts State, GO, Series A
6.25%, 07/01/04 .................................... 273,750
100,000 Massachusetts State, GO, Series B
5.10%, 11/01/02 .................................... 103,000
200,000 Massachusetts State, GO, Series B
5.30%, 11/01/05 .................................... 209,250
100,000 Massachusetts State, GO, Series B
5.50%, 11/01/07 .................................... 106,250
200,000 Massachusetts State Consolidated Loan
GO, Series A
7.00%, 06/01/98 .................................... 200,422
250,000 Massachusetts State
Consolidated Loan, GO, Series A
5.75%, 02/01/15
Insured: MBIA ...................................... 267,500
250,000 Massachusetts State Consolidated Loan
GO, Series B
5.10%, 07/01/03 .................................... 258,125
100,000 Massachusetts State Consolidated Loan
GO, Series D
5.75%, 05/01/12 .................................... 106,625
100,000 Massachusetts State Convention
Center Authority
Boston Common Parking Garage
Series A
5.35%, 09/01/06 .................................... 104,500
100,000 Massachusetts State Convention
Center Authority
Boston Common Parking Garage
Series A
5.40%, 09/01/07 .................................... 104,500
</TABLE>
See Notes to Financial Statements.
27
<PAGE>
THE GALAXY FUND
Massachusetts Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Massachusetts (continued)
$ 200,000 Massachusetts State Convention
Center Authority
Hynes Convention Center, Lot A
6.00%, 09/01/99 .................................... $ 205,250
1,000,000 Massachusetts State HEFA
Amherst College, Series G
5.00%, 11/01/18 .................................... 967,500
400,000 Massachusetts State HEFA
Beth Israel Hospital, Series G
5.70%, 07/01/05
Insured: AMBAC ..................................... 421,500
1,000,000 Massachusetts State HEFA
Harvard University, Series P
5.63%, 11/01/26 .................................... 1,031,250
1,000,000 Massachusetts State HEFA
Harvard University, Series P
5.38%, 11/01/32 .................................... 1,008,750
100,000 Massachusetts State HEFA
McLean Hospital Issue, Series C
6.63%, 07/01/15
Insured: FGIC ...................................... 109,125
250,000 Massachusetts State HEFA
Medical Center of
Central Massachusetts
Series B
6.00%, 07/01/02
Insured: AMBAC ..................................... 264,375
500,000 Massachusetts State HEFA
Milford-Whitinsville Regional Hospital
Series C
5.38%, 07/15/28 .................................... 480,625
250,000 Massachusetts State HEFA
Newton-Wellesley Hospital, Series E
5.00%, 07/01/03
Insured: MBIA ...................................... 255,313
1,435,000 Massachusetts State HEFA
Partners Healthcare System, Series A
5.38%, 07/01/17
Insured: MBIA ...................................... 1,438,587
100,000 Massachusetts State HEFA
South Shore Hospital, Series E
5.40%, 07/01/07
Insured: MBIA ...................................... 103,250
325,000 Massachusetts State HEFA
South Shore Hospital, Series E
5.50%, 07/01/13
Insured: MBIA ...................................... 333,937
500,000 Massachusetts State HEFA
Williams College, Series D
5.40%, 07/01/05 .................................... 528,750
1,750,000 Massachusetts State HEFA
Williams College, Series F
5.50%, 07/01/26 .................................... 1,776,250
150,000 Massachusetts State HEFA
Youville Hospital, Series B
5.00%, 02/15/99 .................................... 151,242
Massachusetts (continued)
$ 150,000 Massachusetts State Housing
Finance Agency
Single Family, Series 41
5.25%, 06/01/01 .................................... $154,313
400,000 Massachusetts State IFA
Brooks School
5.95%, 07/01/23 .................................... 411,500
1,000,000 Massachusetts State IFA
Combined Jewish Philanthropies
Series A
6.38%, 02/01/15
Insured: AMBAC ..................................... 1,098,750
1,000,000 Massachusetts State IFA
Concord Academy
5.50%, 09/01/27 .................................... 991,250
1,000,000 Massachusetts State IFA
Groton School, Series A
5.00%, 03/01/28 .................................... 940,000
300,000 Massachusetts State IFA
Holy Cross College, Series II
5.90%, 11/01/01 .................................... 315,375
250,000 Massachusetts State IFA
Lesley College Project, Series A
6.00%, 07/01/10 .................................... 270,937
Insured: Connie Lee
1,000,000 Massachusetts State IFA
Merrimack College
5.00%, 07/01/27
Insured: MBIA ...................................... 948,750
300,000 Massachusetts State IFA
Milton Academy, Series B
5.30%, 09/01/08
Insured: MBIA ...................................... 310,500
950,000 Massachusetts State IFA
Nantucket Electric Company, Series A
AMT Bond
5.88%, 07/01/17
Insured: AMBAC ..................................... 998,687
500,000 Massachusetts State IFA
Park School
5.90%, 09/01/26 .................................... 516,875
2,000,000 Massachusetts State IFA
Phillips Academy Issue
5.38%, 09/01/23 .................................... 2,002,500
1,960,000 Massachusetts State IFA
Trustees Deerfield Academy, Revenue
5.00%, 10/01/23 .................................... 1,876,700
1,830,000 Massachusetts State IFA
Tufts University, Series H
5.50%, 02/15/13
Insured: MBIA ...................................... 1,921,500
1,300,000 Massachusetts State IFA
Worcester Polytechnic Institute
Series 2
5.25%, 09/01/14
Insured: MBIA ...................................... 1,308,125
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
THE GALAXY FUND
Massachusetts Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Massachusetts (continued)
$ 635,000 Massachusetts State Port Authority
5.63%, 07/01/12 .................................... $ 663,575
250,000 Massachusetts State Port Authority
Series B
5.30%, 07/01/01 .................................... 258,125
1,000,000 Massachusetts State Port Authority
Series C
5.13%, 07/01/16 .................................... 990,000
350,000 Massachusetts State, SP OB
and Revenue, Series A
5.80%, 06/01/00
Insured: AMBAC ..................................... 361,812
300,000 Massachusetts State, SP OB
and Revenue, Series A
7.00%, 06/01/02 .................................... 329,625
200,000 Massachusetts State, SP OB
and Revenue, Series A
6.00%, 06/01/13
Insured: AMBAC ..................................... 211,750
250,000 Massachusetts State, SP OB
and Revenue, Series A
5.80%, 06/01/14
Pre-refunded 06/01/04 .............................. 269,063
430,000 Massachusetts State
Turnpike Authority, Series A
5.00%, 01/01/13 .................................... 436,450
250,000 Massachusetts State
Water Pollution Abatement Trust
MWRA Loan Program, Series A
5.40%, 08/01/11 .................................... 258,125
250,000 Massachusetts State
Water Pollution Abatement Trust
Pooled Loan Program, Series 1
5.00%, 02/01/02 .................................... 257,188
300,000 Massachusetts State
Water Resource Authority, Series A
6.30%, 12/01/01 .................................... 320,625
100,000 Massachusetts State
Water Resource Authority, Series A
6.00%, 04/01/20 .................................... 103,500
190,000 Massachusetts State
Water Resource Authority, Series A
6.50%, 07/15/21
Pre-refunded 07/15/02 .............................. 208,763
300,000 Massachusetts State
Water Resource Authority, Series B
5.88%, 11/01/04 .................................... 323,625
1,000,000 Massachusetts State
Water Resource Authority, Series B
5.50%, 08/01/10
Insured: FSA ....................................... 1,062,500
1,165,000 Massachusetts State
Water Resource Authority, Series B
5.50%, 08/01/15
Insured: FSA ....................................... 1,231,988
1,000,000 Massachusetts State
Water Resource Authority, Series B
5.00%, 08/01/16 .................................... 972,500
Massachusetts (continued)
$ 200,000 Massachusetts State
Water Resource Authority, Series C
5.00%, 12/01/03 .................................... $ 206,750
1,000,000 Methuen, GO
5.63%, 11/15/14
Insured: FSA ....................................... 1,042,500
220,000 Nantucket Island Land Bank
GO and Revenue, Series E
7.25%, 07/01/19 .................................... 240,900
450,000 New England Education
Loan Marketing Corp.
Massachusetts Student
Loan Revenue, Issue A
5.80%, 03/01/02 .................................... 471,938
200,000 Northampton, GO
5.30%, 09/01/10
Insured: AMBAC ..................................... 206,000
150,000 Salem, GO
5.80%, 07/15/06
Insured: AMBAC ..................................... 159,188
100,000 Salem, GO
5.90%, 07/15/07
Insured: AMBAC ..................................... 106,375
200,000 Sandwich, GO
5.40%, 11/01/07
Insured: AMBAC ..................................... 209,250
125,000 Sandwich Water District, GO
5.60%, 05/15/13 .................................... 128,438
110,000 Southbridge, GO
5.80%, 01/01/03
Insured: AMBAC ..................................... 116,325
1,000,000 Southeastern Massachusetts
University Building Authority
Project Revenue, Series A
5.75%, 05/01/16
Insured: AMBAC ..................................... 1,043,750
200,000 Southern Berkshire
Regional School District, GO
5.38%, 04/15/10
Insured: MBIA ...................................... 206,750
1,500,000 Springfield Municipal Purpose Loan, GO
5.00%, 09/01/15 .................................... 1,470,000
400,000 Taunton, GO
8.00%, 02/01/01 .................................... 436,500
250,000 University of Lowell
Building Authority
Fifth Series A
6.75%, 11/01/03
Insured: AMBAC ..................................... 278,125
200,000 University of Massachusetts
Building Authority, Series A
5.50%, 05/01/03
Insured: MBIA ...................................... 209,500
100,000 Woods Hole
Martha's Vineyard and Nantucket
Steamship Bonds, Series B
6.00%, 03/01/02 .................................... 106,625
</TABLE>
See Notes to Financial Statements.
29
<PAGE>
THE GALAXY FUND
Massachusetts Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Massachusetts (continued)
$1,000,000 Worcester, Series A
5.00%, 07/01/14
Insured: FSA ....................................... $ 983,750
-----------
50,364,395
-----------
Other Territories - 7.40%
500,000 Puerto Rico Commonwealth
Infrastructure Financing Authority
Special Tax Revenue, Series A
5.13%, 07/01/09 .................................... 523,125
1,000,000 Puerto Rico Commonwealth
Public Improvement, GO
5.50%, 07/01/13 .................................... 1,045,000
500,000 Puerto Rico Commonwealth, GO
5.00%, 07/01/27 .................................... 470,000
1,000,000 Puerto Rico Electric Power Authority
Series BB
6.00%, 07/01/12
Insured: MBIA ...................................... 1,115,000
1,000,000 Puerto Rico Municipal
Finance Agency, Series A
5.50%, 07/01/17
Insured: FSA ....................................... 1,030,000
-----------
4,183,125
-----------
Pennsylvania - 1.37%
2,500,000 Berks County
Capital Appreciation, GO
5.54%, 11/15/20 (A)
Insured: FGIC ...................................... 775,000
-----------
Total Municipal Securities ......................... 55,322,520
(Cost $54,239,564) -----------
Shares
------
INVESTMENT COMPANY - 2.96%
$1,673,887 Massachusetts Federated
Municipal Cash Trust ............................... $ 1,673,887
-----------
Total Investment Company ........................... 1,673,887
(Cost $1,673,887) -----------
Total Investments - 100.83% ........................................ 56,996,407
(Cost $55,913,451) -----------
Net Assets and Other Liabilities - (0.83)% ......................... (473,249)
-----------
Net Assets - 100.00% ............................................... $56,523,158
===========
</TABLE>
- ----------------------------
(A) Zero Coupon Bond. Rate shown reflects effective yield to
maturity at time of purchase.
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax - Private activity obligations whose
interest is subject to the Federal AMT for individuals.
Connie Lee College Construction Loan Association
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
HEFA Health and Educational Facilities Authority
IFA Industrial Finance Agency
MBIA Municipal Bond Insurance Association
MWRA Massachusetts Water Resource Authority
SP OB Special Obligation
See Notes to Financial Statements.
30
<PAGE>
THE GALAXY FUND
Rhode Island Municipal Bond Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
MUNICIPAL SECURITIES - 98.04%
California - 1.00%
$200,000 Los Angeles California
Regional Airport Improvement Corp.
Lease Revenue, American Airlines
4.25%, 12/01/24
LOC: Wachovia Bank of Georgia ...................... $ 200,000
-----------
Kansas - 1.23%
250,000 Kansas State
Development Finance Authority
Revenue, Sisters of Charity Leavenworth
5.00%, 12/01/14
Insured: MBIA ...................................... 245,625
-----------
Rhode Island - 75.76%
500,000 Bristol County Water Authority
Revenue, General, Series A
5.00%, 07/01/16
Insured: MBIA ...................................... 489,375
200,000 Burrillville, GO
5.85%, 05/01/14
Insured: FGIC ...................................... 211,500
500,000 Convention Center Authority, Series A
6.38%, 05/15/23
Insured: MBIA ...................................... 538,125
700,000 Lincoln, GO
5.50%, 08/15/10
Insured: MBIA ...................................... 732,375
400,000 Pawtucket, GO
5.75%, 04/15/11
Insured: FGIC ...................................... 420,000
300,000 Pawtucket, GO
5.63%, 04/15/07 .................................... 318,000
500,000 Providence, GO
5.45%, 01/15/10
Insured: FSA ....................................... 525,625
225,000 Providence, GO
6.75%, 01/15/10
Pre-refunded 01/15/00
Insured: MBIA ...................................... 238,781
500,000 Providence, GO
5.70%, 01/15/06
Insured: MBIA ...................................... 525,625
250,000 Rhode Island
Clean Water Protection
Finance Agency
Wastewater Treatment System
Cranston
5.80%, 09/01/22
Insured: MBIA ...................................... 257,813
Rhode Island (continued)
$ 150,000 Rhode Island
Clean Water Protection
Finance Agency
Revenue, Safe Drinking Water
Providence, Series A
6.20%, 01/01/06
Insured: AMBAC ..................................... $ 164,438
100,000 Rhode Island
Clean Water Protection
Finance Agency
Revenue, Safe Drinking Water
Providence, Series A
6.70%, 01/01/15
Insured: AMBAC ..................................... 111,250
500,000 Rhode Island
Depositors Economic Protection Corp.
SP OB, Series A
5.75%, 08/01/21 .................................... 544,375
500,000 Rhode Island
Depositors Economic Protection Corp.
SP OB, Series B
5.25%, 08/01/21
Insured: MBIA ...................................... 511,875
500,000 Rhode Island
Housing and Mortgage Finance Corp.
Revenue, Homeownership
Opportunity Series 19-A
5.70%, 04/01/15 .................................... 511,875
500,000 Rhode Island
Housing and Mortgage Finance Corp.
Revenue, Homeownership
Opportunity, Series 22-A
5.55%, 04/01/17 .................................... 506,250
300,000 Rhode Island
Housing and Mortgage Finance Corp.
Revenue, Homeownership
Opportunity Series 17-A
6.25%, 04/01/17 .................................... 315,750
500,000 Rhode Island
Housing and Mortgage Finance Corp.
Revenue, Multifamily Housing
Series A
5.60%, 07/01/10
Insured: AMBAC ..................................... 527,500
500,000 Rhode Island
Housing and Mortgage Finance Corp.
Multifamily Housing, Series A
6.15%, 07/01/17
Insured: AMBAC ..................................... 528,750
250,000 Rhode Island
Housing and Mortgage Finance Corp.
Revenue, Rental Housing Program
Series A
5.65%, 10/01/07 .................................... 259,375
</TABLE>
See Notes to Financial Statements.
31
<PAGE>
THE GALAXY FUND
Rhode Island Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Rhode Island (continued)
$ 150,000 Rhode Island State, GO, Series A
6.25%, 06/15/07
Pre-refunded 06/15/02
Insured: FGIC ...................................... $ 162,750
200,000 Rhode Island State, GO, Series A
6.10%, 06/15/03
Insured: FGIC ...................................... 216,000
150,000 Rhode Island State, GO, Series A
6.25%, 06/15/07
Insured: FGIC ...................................... 162,000
360,000 Rhode Island State
Consolidated Capital Development
Loan GO, Series A
5.50%, 08/01/10 .................................... 371,700
100,000 Rhode Island State
Consolidated Capital Development
Loan GO, Series B
6.00%, 05/15/98 .................................... 100,055
130,000 Rhode Island State
Health and Educational Building Corp.
Revenue, Higher Education Facility
Brown University
6.75%, 09/01/16 .................................... 137,150
500,000 Rhode Island State
Health and Educational Building Corp.
Revenue, Higher Education Facility
Brown University
6.00%, 09/01/20 .................................... 534,375
1,000,000 Rhode Island State
Health and Educational Corp.
Revenue, Higer Education Facility
Brown University
5.00%, 09/01/23 .................................... 950,000
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 ...................................... 299,406
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 ................................ 499,343
300,000 Rhode Island State
Health and Educational Building Corp.
Revenue, Higher Education Facility
Providence College
5.60%, 11/01/09
Insured: MBIA ...................................... 314,250
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 ...................................... 518,125
Rhode Island (continued)
$ 500,000 Rhode Island State
Health and Educational Building Corp.
Revenue, Higher Education Facility
Roger Williams
6.50%, 11/15/24
Insured: Connie Lee ................................ $ 540,000
260,000 Rhode Island State
Health and Educational Building Corp.
Revenue, Higher Education Facility
Salve Regina
6.25%, 03/15/13
Insured: Connie Lee ................................ 278,850
500,000 Rhode Island State
Health and Educational Building Corp.
Revenue, Miriam Hospital Issue
Series B
6.60%, 04/01/19 .................................... 553,750
300,000 Rhode Island State
Health and Educational Building Corp.
Revenue, Saint Antoine
6.75%, 11/15/18
LOC: Allied Irish Banks NY.......................... 324,375
500,000 Rhode Island State
Industrial Facilities Corp., Revenue
Marine Terminal, Mobil Oil Refining
6.00%, 11/01/14 .................................... 530,625
100,000 South Kingstown, GO, Series B
5.50%, 06/15/10
Insured: FSA ....................................... 106,000
100,000 Warwick, GO
7.00%, 11/15/02
Insured: FGIC ...................................... 106,250
140,000 Westerly, GO
6.00%, 09/15/14
Insured: AMBAC ..................................... 150,150
-----------
15,093,811
-----------
Texas - 1.26%
250,000 San Antonio Electric & Gas
Revenue
4.60%, 02/01/04 .................................... 251,563
-----------
Other Territories - 18.79%
250,000 Puerto Rico Commonwealth, GO
6.00%, 07/01/16
Insured: MBIA ...................................... 279,688
1,000,000 Puerto Rico Commonwealth
Highway and Transportation
Revenue, Series A
5.00%, 07/01/38 .................................... 937,500
500,000 Puerto Rico Commonwealth
Special Tax Revenue, Series A
Infrastructure Finance Authority
5.00%, 07/01/16
Insured: AMBAC ..................................... 493,125
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
THE GALAXY FUND
Rhode Island Municipal Bond Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Other Territories (continued)
$250,000 Puerto Rico Electric Power Authority
Revenue, Series DD
5.00%, 07/01/11
Insured: FSA ....................................... $ 254,687
500,000 Puerto Rico Electric Power Authority
Revenue, Series EE
5.25%, 07/01/15
Insured: MBIA ...................................... 511,250
400,000 Puerto Rico Municipal
Finance Agency, Series A
6.00%, 07/01/14
Insured: FSA ....................................... 430,500
315,000 Puerto Rico Municipal
Finance Agency, Series A
5.50%, 07/01/17
Insured: FSA ....................................... 324,450
500,000 Puerto Rico Public Buildings Authority
Government Facilities, Series A
5.50%, 07/01/21
Insured: AMBAC ..................................... 512,500
-----------
3,743,700
-----------
Total Municipal Securities ......................... 19,534,699
(Cost $18,908,010) -----------
Shares
------
Investment Company - 0.48%
95,698 Federated Tax-Free Obligations Fund ................ 95,698
-----------
Total Investment Company ........................... 95,698
(Cost $95,698) -----------
Total Investments - 98.52% ......................................... 19,630,397
(Cost $19,003,708) -----------
Net Other Assets and Liabilities - 1.48% ........................... 294,587
-----------
Net Assets - 100.00% ............................................... $19,924,984
===========
</TABLE>
- ------------------------------
AMBAC American Municipal Bond Assurance Corp.
Connie Lee College Construction Loan Association
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Investors Assurance
SP OB Special Obligation
See Notes to Financial Statements.
33
<PAGE>
THE GALAXY FUND
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
New Jersey New York
Tax-Exempt Municipal Municipal
Bond Fund Bond Fund Bond Fund
------------ ---------- ------------
<S> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost ................................... $159,610,794 $5,764,022 $ 68,298,756
Net unrealized appreciation (depreciation) ............ 4,792,441 (24,325) 2,624,218
------------ ---------- ------------
Total investments at value ............................ 164,403,235 5,739,697 70,922,974
Cash ................................................... -- -- 83,302
Receivable for investments sold ........................ 2,989,306 -- 4,007,732
Receivable for shares sold ............................. 115,372 56,505 470,124
Interest and dividend receivables ...................... 2,262,285 59,260 886,829
Receivable from Investment Advisor (Note 4) ............ 1,401 3,592 1,030
Deferred organizational expense (Note 2) ............... -- 24,616 --
------------ ---------- ------------
Total Assets .......................................... 169,771,599 5,883,670 76,371,991
------------ ---------- ------------
LIABILITIES:
Dividends payable ...................................... 330,006 9,068 136,760
Payable for investments purchased ...................... 9,895,634 -- 4,796,710
Payable to Custodian ................................... 23,550 -- --
Payable for shares repurchased ......................... 221,811 90 24,628
Advisory fee payable (Note 3) .......................... 72,341 751 32,204
Payable to Fleet affiliates (Note 3) ................... 4,558 17 4,724
Payable to Administrator (Note 3) ...................... 17,364 515 5,317
Trustees' fees and expenses payable (Note 3) ........... 2,957 5 1,351
Accrued expenses and other payables .................... 30,812 28,893 11,270
------------ ---------- ------------
Total Liabilities ..................................... 10,599,033 39,339 5,012,964
------------ ---------- ------------
NET ASSETS .............................................. $159,172,566 $5,844,331 $ 71,359,027
============ ========== ============
NET ASSETS consist of:
Par value (Note 5) ..................................... $ 14,461 $ 587 $ 6,431
Paid-in capital in excess of par value ................. 153,306,522 5,867,048 69,763,623
Undistributed net investment income (loss) ............. 34,106 21 (3,733)
Accumulated net realized gain (loss) on
investments sold ...................................... 1,025,036 -- (1,031,512)
Net unrealized appreciation (depreciation)
of investments ........................................ 4,792,441 (24,325) 2,624,218
------------ ---------- ------------
TOTAL NET ASSETS ........................................ $159,172,566 $5,844,331 $ 71,359,027
============ ========== ============
Retail A Shares:
Net Assets ............................................. $ 25,538,477 $ 246,959 $ 39,782,532
Shares of beneficial interest outstanding .............. 2,320,187 24,813 3,585,161
NET ASSET VALUE and redemption price per share ......... $ 11.01 $ 9.95 $ 11.10
Sales charge - 3.75% of offering price ................. 0.43 0.39 0.43
------------ ---------- ------------
Maximum offering price per share ....................... $ 11.44 $ 10.34 $ 11.53
============ ========== ============
Retail B Shares:
Net Assets ............................................. $ 2,419,696 N/A N/A
Shares of beneficial interest outstanding .............. 219,834 N/A N/A
------------ ---------- ------------
NET ASSET VALUE, offering and
redemption price per share* ........................... $ 11.01 N/A N/A
============ ========== ============
Trust Shares:
Net Assets ............................................. $131,214,393 $5,597,372 $ 31,576,495
Shares of beneficial interest outstanding .............. 11,921,002 562,349 2,845,641
------------ ---------- ------------
NET ASSET VALUE, offering and
redemption price per share ............................ $ 11.01 $ 9.95 $ 11.10
============ ========== ============
</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.
34
<PAGE>
<TABLE>
<CAPTION>
Connecticut Massachusetts Rhode Island
Municipal Municipal Municipal
Bond Fund Bond Fund Bond Fund
------------ ------------ ------------
<S> <C> <C>
$ 35,415,152 $ 55,913,451 $ 19,003,708
1,075,314 1,082,956 626,689
------------ ------------ ------------
36,490,466 56,996,407 19,630,397
-- 11,866 133
-- 1,582,758 --
340,462 177,905 52,055
522,194 833,225 300,047
-- -- --
163 -- 5,163
------------ ------------ ------------
37,353,285 59,602,161 19,987,795
------------ ------------ ------------
63,155 94,484 40,588
-- 2,912,109 --
58,254 917 --
527 22,858 --
10,668 16,149 5,722
3,048 4,624 --
7,450 10,195 4,387
662 912 331
11,825 16,755 11,783
------------ ------------ ------------
155,589 3,079,003 62,811
------------ ------------ ------------
$ 37,197,696 $ 56,523,158 $ 19,924,984
============ ============ ============
$ 3,544 $ 5,514 $ 1,822
37,013,611 56,092,686 19,251,370
(14,615) (44,868) (24,875)
(880,158) (613,130) 69,978
1,075,314 1,082,956 626,689
------------ ------------ ------------
$ 37,197,696 $ 56,523,158 $ 19,924,984
============ ============ ============
$ 25,058,465 $ 38,880,849 $ 19,924,984
2,387,086 3,792,932 1,822,318
$ 10.50 $ 10.25 $ 10.93
0.41 0.40 0.43
------------ ------------ ------------
$ 10.91 $ 10.65 $ 11.36
============ ============ ============
N/A N/A N/A
N/A N/A N/A
------------ ------------ ------------
N/A N/A N/A
============ ============ ============
$ 12,139,231 $ 17,642,309 $ --
1,156,432 1,721,030 --
------------ ------------ ------------
$ 10.50 $ 10.25 $ --
============ ============ ============
</TABLE>
35
<PAGE>
THE GALAXY FUND
STATEMENTS OF OPERATIONS
For the six months ended April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
New Jersey New York
Tax-Exempt Municipal Municipal
Bond Fund Bond Fund* Bond Fund
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2) .................................. $ 4,112,885 $ 11,694 $ 1,774,855
Dividends (Note 2) ................................. 56,667 534 18,179
----------- ----------- -----------
Total investment income .......................... 4,169,552 12,228 1,793,034
----------- ----------- -----------
EXPENSES:
Investment advisory fee (Note 3) ................... 578,358 2,252 256,486
Administration fee (Note 3) ........................ 62,330 241 27,624
Custodian fee ...................................... 7,332 668 4,669
Fund accounting fee (Note 3) ....................... 29,251 3,257 26,870
Legal fee (Note 3) ................................. 3,402 77 1,854
Audit fee .......................................... 7,832 1,212 7,479
Transfer agent fee (Note 3) ........................ 11,167 675 13,682
12b-1 fee (Note 3) ................................. 6,466 -- --
Shareholder servicing fee (Note 3) ................. 20,960 17 29,296
Trustees' fees and expenses (Note 3) ............... 1,691 33 747
Amortization of organization costs (Note 2) ........ -- 384 --
Reports to shareholders ............................ 7,453 437 9,315
Insurance .......................................... 706 16 308
Miscellaneous ...................................... 12,901 2,187 6,991
----------- ----------- -----------
Total expenses before reimbursement/waiver ....... 749,849 11,456 385,321
----------- ----------- -----------
Less: reimbursement/waiver (Note 4) .............. (166,655) (8,694) (108,659)
----------- ----------- -----------
Total expenses net of reimbursement/waiver ....... 583,194 2,762 276,662
----------- ----------- -----------
NET INVESTMENT INCOME .................................. 3,586,358 9,466 1,516,372
----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (NOTE 2):
Net realized gain on investments sold .............. 1,024,483 -- 301,768
Net change in unrealized depreciation of investments (614,287) (24,325) (357,183)
----------- ----------- -----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS ......................... 410,196 (24,325) (55,415)
----------- ----------- -----------
NET INCREASE(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS .......................... $ 3,996,554 $ (14,859) $ 1,460,957
=========== =========== ===========
</TABLE>
- ---------------------------------------
* The New Jersey Municipal Bond Fund commenced operations on April 3, 1998.
See Notes to Financial Statements.
36
<PAGE>
<TABLE>
<CAPTION>
Connecticut Massachusetts Rhode Island
Municipal Municipal Municipal
Bond Fund Bond Fund Bond Fund
--------- ----------- --------
<S> <C> <C>
$ 868,711 $ 1,303,459 $478,916
10,629 14,661 6,038
--------- ----------- --------
879,340 1,318,120 484,954
--------- ----------- --------
133,325 192,696 67,611
14,359 20,752 7,285
6,717 5,560 4,729
22,017 24,647 14,987
733 1,031 380
8,366 8,366 7,378
9,171 5,698 2,480
-- -- --
18,283 26,989 --
364 513 190
763 753 1,696
6,330 3,415 1,498
143 203 74
4,831 5,480 4,119
--------- ----------- --------
225,402 296,103 112,427
--------- ----------- --------
(82,734) (119,199) (41,820)
--------- ----------- --------
142,668 176,904 70,607
--------- ----------- --------
736,672 1,141,216 414,347
--------- ----------- --------
148,672 96,068 56,207
(137,480) (213,009) (17,166)
--------- ----------- --------
11,192 (116,941) 39,041
--------- ----------- --------
$ 747,864 $ 1,024,275 $453,388
========= =========== ========
</TABLE>
37
<PAGE>
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
New Jersey New York
Tax-Exempt Bond Fund Municipal Bond Fund* Municipal Bond Fund
---------------------------- -------------------- ------------------------------
Six months Year Period Six months Year
ended ended ended ended ended
April 30, 1998 October 31, April 30, 1998 April 30, 1998 October 31,
(unaudited) 1997 (unaudited) (unaudited) 1997
------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSETS at beginning of period .............. $ 149,372,871 $ 132,288,859 $ 20 $ 65,995,842 $ 63,915,925
------------- ------------- ------------- ------------- -------------
Increase in Net Assets
resulting from operations:
Net investment income ...................... 3,586,358 6,889,204 9,466 1,516,372 2,943,627
Net realized gain (loss) on investments sold 1,024,483 1,296,888 -- 301,768 564,735
Net change in unrealized appreciation
(depreciation) of investments ............ (614,287) 2,503,907 (24,325) (357,183) 1,436,259
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations ................ 3,996,554 10,689,999 (14,859) 1,460,957 4,944,621
------------- ------------- ------------- ------------- -------------
Dividends to shareholders from:
Retail A Shares:
Net investment income .................... (582,207) (1,214,501) (315) (850,957) (1,750,144)
Dividends in excess of net investment income -- -- -- -- --
Net realized gain on investments ......... (209,501) (16,116) -- -- --
------------- ------------- ------------- ------------- -------------
Total Dividends ........................ (791,708) (1,230,617) (315) (850,957) (1,750,144)
------------- ------------- ------------- ------------- -------------
Retail B Shares:
Net investment income .................... (37,716) (47,668) N/A N/A N/A
Net realized gain on investments ......... (14,256) (462) N/A N/A N/A
------------- ------------- ------------- ------------- -------------
Total Dividends ........................ (51,972) (48,130) N/A N/A N/A
------------- ------------- ------------- ------------- -------------
Trust Shares:
Net investment income .................... (2,972,356) (5,646,255) (9,130) (664,998) (1,197,633)
Net realized gain on investments ......... (1,015,710) (63,205) -- -- --
------------- ------------- ------------- ------------- -------------
Total Dividends ........................ (3,988,066) (5,709,460) (9,130) (664,998) (1,197,633)
------------- ------------- ------------- ------------- -------------
Total Dividends to shareholders ........ (4,831,746) (6,988,207) (9,445) (1,515,955) (2,947,777)
------------- ------------- ------------- ------------- -------------
Net increase from share transactions(1) ........ 10,634,887 13,382,220 5,868,615 5,418,183 83,073
------------- ------------- ------------- ------------- -------------
Net increase in net assets ................. 9,799,695 17,084,012 5,844,311 5,363,185 2,079,917
------------- ------------- ------------- ------------- -------------
NET ASSETS at end of period (including line A) . $ 159,172,566 $ 149,372,871 $ 5,844,331 $ 71,359,027 $ 65,995,842
============= ============= ============= ============= =============
(A) Undistributed (overdistributed) net
investment income .......................... $ 34,106 $ 40,027 $ 21 $ (3,733) $ (4,150)
============= ============= ============= ============= =============
</TABLE>
- --------------------------------------
* The New Jersey Municipal Bond Fund commenced operations on April 3, 1998.
(1) For detail on share transactions by series, see Statements of Changes in
Net Assets - Capital Stock Activity on pages 40 and 41.
See Notes to Financial Statements.
38
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal Rhode Island Municipal
Bond Fund Bond Fund Bond Fund
--------------------------- --------------------------- ---------------------------
Six months Year Six months Year Six months Year
ended ended ended ended ended ended
April 30, 1998 October 31, April 30, 1998 October 31, April 30, 1998 October 31,
(unaudited) 1997 (unaudited) 1997 (unaudited) 1997
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 33,221,284 $ 29,592,030 $ 47,304,792 $ 37,321,817 $ 17,134,415 $ 14,899,739
------------ ------------ ------------ ------------ ------------ ------------
736,672 1,303,267 1,141,216 1,813,708 414,347 677,105
148,672 (82,263) 96,068 66,828 56,207 37,141
(137,480) 1,036,480 (213,009) 1,298,792 (17,166) 416,740
------------ ------------ ------------ ------------ ------------ ------------
747,864 2,257,484 1,024,275 3,179,328 453,388 1,130,986
------------ ------------ ------------ ------------ ------------ ------------
(496,180) (984,379) (788,144) (1,277,846) (413,915) (704,462)
-- -- -- -- -- --
-- -- -- -- (23,370) (58,722)
------------ ------------ ------------ ------------ ------------ ------------
(496,180) (984,379) (788,144) (1,277,846) (437,285) (763,184)
------------ ------------ ------------ ------------ ------------ ------------
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
------------ ------------ ------------ ------------ ------------ ------------
N/A N/A N/A N/A N/A N/A
------------ ------------ ------------ ------------ ------------ ------------
(240,814) (337,583) (352,350) (600,444) -- --
-- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
(240,814) (337,583) (352,350) (600,444) -- --
------------ ------------ ------------ ------------ ------------ ------------
(736,994) (1,321,962) (1,140,494) (1,878,290) (437,285) (763,184)
------------ ------------ ------------ ------------ ------------ ------------
3,965,542 2,693,732 9,334,585 8,681,937 2,774,466 1,866,874
------------ ------------ ------------ ------------ ------------ ------------
3,976,412 3,629,254 9,218,366 9,982,975 2,790,569 2,234,676
------------ ------------ ------------ ------------ ------------ ------------
$ 37,197,696 $ 33,221,284 $ 56,523,158 $ 47,304,792 $ 19,924,984 $ 17,134,415
============ ============ ============ ============ ============ ============
$ (14,615) $ (14,293) $ (44,868) $ (45,590) $ (24,875) $ (25,307)
============ ============ ============ ============ ============ ============
</TABLE>
39
<PAGE>
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS -
Capital Stock Activity
<TABLE>
<CAPTION>
New Jersey New York
Tax-Exempt Bond Fund Municipal Bond Fund* Municipal Bond Fund
--------------------------- ----------- --------------------------
Six months Year Period Six months Year
ended ended ended ended ended
April 30, 1998 October 31, April 30, 1998 April 30, 1998 October 31,
(unaudited) 1997 (unaudited) (unaudited) 1997
----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold .............................................. $ 2,075,754 $ 2,646,111 $ 248,238 $ 3,687,453 $ 4,874,717
Issued to shareholders in reinvestment of dividends 477,613 885,221 377 613,602 1,251,447
Repurchased ....................................... (2,354,350) (7,050,231) -- (2,946,894) (9,033,566)
----------- ------------ ----------- ----------- -----------
Net increase (decrease) in shares outstanding ..... $ 199,017 $ (3,518,899) $ 248,615 $ 1,354,161 $(2,907,402)
=========== ============ =========== =========== ===========
Retail B Shares:
Sold .............................................. $ 764,278 $ 970,301 N/A N/A N/A
Issued to shareholders in reinvestment of dividends 29,350 17,346 N/A N/A N/A
Repurchased ....................................... (46,573) (123,614) N/A N/A N/A
----------- ------------ ----------- ----------- -----------
Net increase in shares outstanding ................ $ 747,055 $ 864,033 N/A N/A N/A
=========== ============ =========== =========== ===========
Trust Shares:
Sold .............................................. $12,140,342 $ 27,034,670 $ 5,620,000 $ 5,294,810 $ 6,640,097
Issued to shareholders in reinvestment of dividends 1,953,356 1,908,816 -- 92,323 158,550
Repurchased ....................................... (4,404,883) (12,906,400) -- (1,323,111) (3,808,172)
----------- ------------ ----------- ----------- -----------
Net increase in shares outstanding ................ $ 9,688,815 $ 16,037,086 $ 5,620,000 $ 4,064,022 $ 2,990,475
=========== ============ =========== =========== ===========
SHARE ACTIVITY
Retail A Shares:
Sold .............................................. 186,391 241,746 24,775 328,539 448,266
Issued to shareholders in reinvestment of dividends 54,389 81,401 38 54,764 114,934
Repurchased ....................................... (222,914) (649,802) -- (262,863) (833,825)
----------- ------------ ----------- ----------- -----------
Net increase (decrease) in shares outstanding ..... 17,866 (326,655) 24,813 120,440 (270,625)
=========== ============ =========== =========== ===========
Retail B Shares:
Sold .............................................. 68,600 89,576 N/A N/A N/A
Issued to shareholders in reinvestment of dividends 2,642 1,593 N/A N/A N/A
Repurchased ....................................... (4,197) (11,358) N/A N/A N/A
----------- ------------ ----------- ----------- -----------
Net increase in shares outstanding ................ 67,045 79,811 N/A N/A N/A
=========== ============ =========== =========== ===========
Trust Shares:
Sold .............................................. 1,090,905 2,493,761 562,349 476,079 610,447
Issued to shareholders in reinvestment of dividends 175,882 175,380 -- 8,239 14,549
Repurchased ....................................... (395,879) (1,189,272) -- (123,278) (350,861)
----------- ------------ ----------- ----------- -----------
Net increase in shares outstanding ................ 870,908 1,479,869 562,349 361,040 274,135
=========== ============ =========== =========== ===========
</TABLE>
- -----------------------
* The New Jersey Municipal Bond Fund commenced operations on April 3, 1998.
(1) As of April 30, 1998, the Rhode Island Municipal Bond Fund had not issued
Trust Shares.
See Notes to Financial Statements.
40
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal Rhode Island Municipal
Bond Fund Bond Fund Bond Fund(1)
--------------------------- --------------------------- --------------------------
Six months Year Six months Year Six Months Year
ended ended ended ended ended ended
April 30, 1998 October 31, April 30, 1998 October 31, April 30, 1998 October 31,
(unaudited) 1997 (unaudited) 1997 (unaudited) 1997
------------ ------------ ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 5,297,231 $ 3,252,075 $ 9,074,283 $ 11,981,846 $4,791,909 $5,083,499
365,460 702,784 360,333 957,093 204,372 311,919
(3,986,825) (4,550,082) (3,821,060) (6,781,712) (2,221,815) (3,528,544)
------------ ------------ ------------ ------------ ---------- ----------
$ 1,675,866 $ (595,223) $ 5,613,556 $ 6,157,227 $2,774,466 $1,866,874
============ ============ ============ ============ ========== ==========
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
------------ ------------ ------------ ------------ ---------- ----------
N/A N/A N/A N/A N/A N/A
============ ============ ============ ============ ========== ==========
$ 5,243,686 $ 5,259,690 $ 5,160,556 $ 4,805,492 $ -- $ --
1,477 17,100 125 451 -- --
(2,955,487) (1,987,835) (1,439,652) (2,281,233) -- --
------------ ------------ ------------ ------------ ---------- ----------
$ 2,289,676 $ 3,288,955 $ 3,721,029 $ 2,524,710 $ -- $ --
============ ============ ============ ============ ========== ==========
499,189 315,384 876,267 1,185,033 435,140 472,719
34,538 68,408 59,398 95,167 18,572 29,036
(377,046) (444,610) (392,884) (672,810) (202,531) (329,120)
------------ ------------ ------------ ------------ ---------- ----------
156,681 (60,818) 542,781 607,390 251,181 172,635
============ ============ ============ ============ ========== ==========
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
------------ ------------ ------------ ------------ ---------- ----------
N/A N/A N/A N/A N/A N/A
============ ============ ============ ============ ========== ==========
493,301 507,333 495,767 478,517 -- --
141 1,664 12 44 -- --
(279,256) (192,523) (139,059) (225,905) -- --
------------ ------------ ------------ ------------ ---------- ----------
214,186 316,474 356,720 252,656 -- --
============ ============ ============ ============ ========== ==========
</TABLE>
41
<PAGE>
THE GALAXY FUND
Tax-Exempt Bond Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended
Six months ended October 31,
April 30, 1998 -----------------------------------------
(unaudited) 1997 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ..................... $ 11.06 $ 10.78 $ 10.78 $ 9.99
----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income (A) ............................ 0.25 0.50 0.50 0.52
Net realized and unrealized gain (loss) on investments 0.04 0.29 -- 0.79
----------- ----------- ----------- -----------
Total from Investment Operations: ................ 0.29 0.79 0.50 1.31
----------- ----------- ----------- -----------
Less Dividends:
Dividends from net investment income ................. (0.25) (0.50) (0.50) (0.52)
Dividends from net realized capital gains ............ (0.09) (0.01) -- --
Dividends in excess of net realized capital gains .... -- -- -- --
----------- ----------- ----------- -----------
Total Dividends: ................................... (0.34) (0.51) (0.50) (0.52)
----------- ----------- ----------- -----------
Net increase (decrease) in net asset value ............... (0.05) 0.28 -- 0.79
----------- ----------- ----------- -----------
Net Asset Value, End of Period ........................... $ 11.01 $ 11.06 $ 10.78 $ 10.78
=========== =========== =========== ===========
Total Return(3) .......................................... 2.73%** 7.49% 4.77% 13.40%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ........................ $ 26,173 $ 25,465 $ 28,339 $ 31,609
Ratios to average net assets:
Net investment income including reimbursement/waiver . 4.47%* 4.60% 4.68% 4.99%
Operating expenses including reimbursement/waiver .... 0.94%* 0.95% 0.93% 0.91%
Operating expenses excluding reimbursement/waiver .... 1.15%* 1.18% 1.18% 1.24%
Portfolio Turnover Rate .................................. 34%** 78% 15% 11%
<CAPTION>
Years ended
October 31,
--------------------------
1994 1993(1)
----------- -----------
<S> <C> <C>
Net Asset Value, Beginning of Period ..................... $ 11.12 $ 10.11
----------- -----------
Income from Investment Operations:
Net investment income (A) ............................ 0.53 0.54
Net realized and unrealized gain (loss) on investments (1.04) 1.01
----------- -----------
Total from Investment Operations: ................ (0.51) 1.55
----------- -----------
Less Dividends:
Dividends from net investment income ................. (0.53) (0.54)
Dividends from net realized capital gains ............ -- --
Dividends in excess of net realized capital gains .... (0.09) --
----------- -----------
Total Dividends: ................................... (0.62) (0.54)
----------- -----------
Net increase (decrease) in net asset value ............... (1.13) 1.01
----------- -----------
Net Asset Value, End of Period ........................... $ 9.99 $ 11.12
=========== ===========
Total Return(3) .......................................... (4.75)% 15.63%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ........................ $ 35,911 $ 144,048
Ratios to average net assets:
Net investment income including reimbursement/waiver . 5.01% 5.00%
Operating expenses including reimbursement/waiver .... 0.80% 0.64%
Operating expenses excluding reimbursement/waiver .... 1.03% 1.08%
Portfolio Turnover Rate .................................. 17% 38%
</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 the effect of any sales charge for Retail A
Shares and Retail B Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the six
months ended April 30, 1998 and the years ended October 31, 1997, 1996,
1995, 1994 and 1993 were $0.24, $0.47, $0.48, $0.48, $0.50 and $0.49,
respectively. Net investment income per share before reimbursement/waiver
of fees by the Investment Advisor and/or Administrator for Trust Shares for
the six months ended April 30, 1998 and the years ended October 31, 1997,
1996, 1995, 1994 and 1993 were $0.25, $0.51, $0.51, $0.51, $0.50 and $0.49,
respectively. Net investment income per share before reimbursement/waiver
of fees by the Investment Advisor and/or Administrator for Retail B Shares
for the six months ended April 30, 1998, the year ended October 31, 1997
and the period ended October 31, 1996 were $0.20, $0.40 and $0.25,
respectively.
See Notes to Financial Statements.
42
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended Years ended
Six months ended October 31, Six months ended October 31,
April 30, 1998 ------------------------------------------------------------------------ April 30, 1998 -------------------
(unaudited) 1997 1996 1995 1994 1993(1) (unaudited) 1997 1996(2)
-------- -------- -------- ------- ------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 11.06 $ 10.78 $ 10.78 $ 9.99 $ 11.12 $ 10.11 $11.06 $10.78 $10.94
-------- -------- -------- ------- ------- -------- ------ ------ ------
0.26 0.53 0.53 0.54 0.53 0.54 0.21 0.43 0.27
0.04 0.29 -- 0.79 (1.04) 1.01 0.04 0.29 (0.16)
-------- -------- -------- ------- ------- -------- ------ ------ ------
0.30 0.82 0.53 1.33 (0.51) 1.55 0.25 0.72 0.11
-------- -------- -------- ------- ------- -------- ------ ------ ------
(0.26) (0.53) (0.53) (0.54) (0.53) (0.54) (0.21) (0.43) (0.27)
(0.09) (0.01) -- -- -- -- (0.09) (0.01) --
-- -- -- -- (0.09) -- -- -- --
-------- -------- -------- ------- ------- -------- ------ ------ ------
(0.35) (0.54) (0.53) (0.54) (0.62) (0.54) (0.30) (0.44) (0.27)
-------- -------- -------- ------- ------- -------- ------ ------ ------
(0.05) 0.28 -- 0.79 (1.13) 1.01 (0.05) 0.28 (0.16)
-------- -------- -------- ------- ------- -------- ------ ------ ------
$ 11.01 11.06 $ 10.78 $ 10.78 $ 9.99 $ 11.12 $11.01 $11.06 $10.78
======== ======== ======== ======= ======= ======== ====== ====== ======
2.63%** 7.75% 5.03% 13.62% (4.75)% 15.63% 2.30%** 6.83% 1.08%**
$127,328 $122,218 $103,163 $91,740 $91,647 $144,048 $2,006 $1,690 $ 787
4.70%* 4.85% 4.91% 5.18% 5.01% 5.00% 3.86%* 3.95% 4.08%*
0.71%* 0.70% 0.70% 0.72% 0.78% 0.64% 1.55%* 1.60% 1.57%*
0.92%* 0.96% 0.95% 0.97% 1.00% 1.08% 1.76%* 1.83% 1.77%*
34%** 78% 15% 11% 17% 38% 34%** 78% 15%
</TABLE>
43
<PAGE>
THE GALAXY FUND
New Jersey Municipal Bond Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout the period.
Retail A Shares
<TABLE>
<CAPTION>
Period ended
April 30, 1998(1)
(unaudited)
-----------------
<S> <C>
Net Asset Value, Beginning of Period ................... $ 10.00
-------
Income from Investment Operations:
Net investment income (A) .......................... 0.02
Net realized and unrealized (loss) on investments .. (0.05)
-------
Total from Investment Operations: .............. (0.03)
-------
Less Dividends:
Dividends from net investment income ............... (0.02)
Dividends from net realized capital gains .......... --
-------
Total Dividends: ................................. (0.02)
-------
Net (decrease) in net asset value ...................... (0.05)
-------
Net Asset Value, End of Period ......................... $ 9.95
=======
Total Return(2) ........................................ (0.43)%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ...................... $ 247
Ratios to average net assets:
Net investment income including reimbursement/waiver 3.15%*
Operating expenses including reimbursement/waiver .. 0.92%*
Operating expenses excluding reimbursement/waiver .. 9.67%*
Portfolio Turnover Rate ................................ 0%**
</TABLE>
- --------------------------
* Annualized.
** Not Annualized.
(1) The Fund commenced operations on April 3, 1998.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the period
ended April 30, 1998 was $(0.03). Net investment income per share before
reimbursement/waiver of fees by the Investment Advisor and/or Administrator
for Trust Shares for the period ended April 30, 1998 was $0.01.
See Notes to Financial Statements.
44
<PAGE>
TRUST SHARES
<TABLE>
<CAPTION>
Period ended
April 30, 1998(1)
(unaudited)
-----------------
<S> <C>
$10.00
------
0.02
(0.05)
------
(0.03)
------
(0.02)
--
------
(0.02)
------
(0.05)
------
$9.95
======
(0.41)%**
$5,597
3.15%*
0.92%*
3.59%*
0%**
</TABLE>
45
<PAGE>
THE GALAXY FUND
New York Municipal Bond Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended
Six months ended October 31,
April 30, 1998 -------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993(1)
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ..................... $ 11.09 $ 10.75 $ 10.78 $ 9.89 $ 11.04 $ 10.00
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (A) ............................ 0.24 0.49 0.48 0.49 0.49 0.50
Net realized and unrealized gain (loss) on investments 0.01 0.34 (0.03) 0.89 (1.15) 1.04
------- ------- ------- ------- ------- -------
Total from Investment Operations: ................ 0.25 0.83 0.45 1.38 (0.66) 1.54
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income ................. (0.24) (0.49) (0.48) (0.49) (0.49) (0.50)
Dividends from net realized capital gains ............ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Dividends: ................................... (0.24) (0.49) (0.48) (0.49) (0.49) (0.50)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value ............... 0.01 0.34 (0.03) 0.89 (1.15) 1.04
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period ........................... $ 11.10 $ 11.09 $ 10.75 $ 10.78 $ 9.89 $ 11.04
======= ======= ======= ======= ======= =======
Total Return(2) .......................................... 2.28%* 7.93% 4.31% 14.03% (6.14)% 15.66%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ........................ $39,783 $38,434 $40,154 $42,870 $42,451 $70,242
Ratios to average net assets:
Net investment income including reimbursement/waiver.. 4.38%* 4.52% 4.50% 4.73% 4.64% 4.54%
Operating expenses including reimbursement/waiver .... 0.88%* 0.94% 0.95% 0.92% 0.87% 0.87%
Operating expenses excluding reimbursement/waiver .... 1.22%* 1.26% 1.35% 1.31% 1.10% 1.19%
Portfolio Turnover Rate .................................. 22%** 61% 12% 5% 18% 3%
</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) Calculation does not include the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the six
months ended April 30, 1998 and the years ended October 31, 1997, 1996,
1995, 1994 and 1993 were $0.22, $0.45, $0.44, $0.44, $0.46 and $0.47,
respectively. Net investment income per share before reimbursement/waiver
of fees by the Investment Advisor and/or Administrator for Trust Shares for
the six months ended April 30, 1998 and the years ended October 31, 1997,
1996, 1995, 1994 and 1993 were $0.23, $0.49, $0.47, $0.48, $0.47 and $0.47,
respectively.
See Notes to Financial Statements.
46
<PAGE>
Trust Shares
<TABLE>
<CAPTION>
Years ended
Six months ended October 31,
April 30, 1998 --------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993(1)
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$ 11.09 $ 10.75 $ 10.78 $ 9.89 $ 11.04 $ 10.00
------- ------- ------- ------- ------- -------
0.25 0.52 0.51 0.51 0.49 0.50
0.01 0.34 (0.03) 0.89 (1.15) 1.04
------- ------- ------- ------- ------- -------
0.26 0.86 0.48 1.40 (0.66) 1.54
------- ------- ------- ------- ------- -------
(0.25) (0.52) (0.51) (0.51) (0.49) (0.50)
-- -- -- -- -- --
------- ------- ------- ------- ------- -------
(0.25) (0.52) (0.51) (0.51) (0.49) (0.50)
------- ------- ------- ------- ------- -------
0.01 0.34 (0.03) 0.89 (1.15) 1.04
------- ------- ------- ------- ------- -------
$ 11.10 $ 11.09 $ 10.75 $ 10.78 $ 9.89 $ 11.04
======= ======= ======= ======= ======= =======
2.36%** 8.17% 4.55% 14.23% (6.14)% 15.66%
$31,576 $27,562 $23,762 $23,077 $24,209 $70,242
4.51%* 4.75% 4.75% 4.91% 4.64% 4.54%
0.73%* 0.71% 0.70% 0.74% 0.87% 0.87%
1.00%* 1.02% 1.10% 1.07% 1.08% 1.19%
22%** 61% 12% 5% 18% 3%
</TABLE>
47
<PAGE>
THE GALAXY FUND
Connecticut Municipal Bond Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Six months ended Years ended October 31,
April 30, 1998 -------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993(2)
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ..................... $ 10.47 $ 10.14 $ 10.13 $ 9.22 $ 10.32 $ 10.00
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (A) ............................ 0.21 0.45 0.42 0.44 0.46 0.25
Net realized and unrealized gain (loss) on investments 0.03 0.33 0.01 0.91 (1.10) 0.32
------- ------- ------- ------- ------- -------
Total from Investment Operations: ................ 0.24 0.78 0.43 1.35 (0.64) 0.57
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income ................. (0.21) (0.45) (0.42) (0.44) (0.46) (0.25)
Dividends from net realized capital gains ............ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Dividends: ................................... (0.21) (0.45) (0.42) (0.44) (0.46) (0.25)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value ............... 0.03 0.33 0.01 0.91 (1.10) 0.32
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period ........................... $ 10.50 $ 10.47 $ 10.14 $ 10.13 $ 9.22 $ 10.32
======= ======= ======= ======= ======= =======
Total Return (3) ......................................... 2.33%** 7.86% 4.32% 14.94% (6.39)% 5.80%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ........................ $25,059 $23,355 $23,244 $18,066 $18,229 $18,771
Ratios to average net assets:
Net investment income including reimbursement/waiver . 4.07%* 4.30% 4.13% 4.53% 4.66% 4.30%*
Operating expenses including reimbursement/waiver .... 0.87%* 0.70% 0.70% 0.68% 0.25% 0.00%*
Operating expenses excluding reimbursement/waiver .... 1.34%* 1.31% 1.38% 1.48% 1.42% 1.73%*
Portfolio Turnover Rate .................................. 20%** 42% 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 the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the six
months ended April 30, 1998, the years ended October 31, 1997, 1996, 1995
and 1994 and the period ended October 31, 1993 were $0.19, $0.38, $0.35,
$0.37, $0.34 and $0.15, respectively. Net investment income per share
before reimbursement/waiver of fees by the Investment Advisor and/or
Administrator for Trust Shares for the six months ended April 30, 1998, the
years ended October 31, 1997, 1996, 1995 and 1994 and the period ended
October 31, 1993 were $0.21, $0.41, $0.37, $0.38, $0.35 and $0.15,
respectively.
See Notes to Financial Statements.
48
<PAGE>
Trust Shares
<TABLE>
<CAPTION>
Years ended
Six months ended October 31,
April 30, 1998 ------------------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993(2)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 10.47 $10.14 $10.13 $ 9.22 $10.32 $ 10.00
------- ------ ------ ------ ------ -------
0.23 0.47 0.44 0.46 0.46 0.25
0.03 0.33 0.01 0.91 (1.10) 0.32
------- ------ ------ ------ ------ -------
0.26 0.80 0.45 1.37 (0.64) 0.57
------- ------ ------ ------ ------ -------
(0.23) (0.47) (0.44) (0.46) (0.46) (0.25)
-- -- -- -- -- --
------- ------ ------ ------ ------ -------
(0.23) (0.47) (0.44) (0.46) (0.46) (0.25)
------- ------ ------ ------ ------ -------
0.03 0.33 0.01 0.91 (1.10) 0.32
------- ------ ------ ------ ------ -------
$ 10.50 $10.47 $10.14 $10.13 $ 9.22 $ 10.32
======= ====== ====== ====== ====== =======
2.45%** 8.06% 4.54% 15.21% (6.37)% 5.80%**
$12,139 $9,866 $6,348 $4,083 $4,419 $18,771
4.29%* 4.51% 4.34% 4.76% 4.66% 4.30%*
0.65%* 0.49% 0.49% 0.45% 0.23% 0.00%*
1.12%* 1.10% 1.17% 1.24% 1.41% 1.73%*
20%** 42% 3% 7% 4% 7%**
</TABLE>
49
<PAGE>
THE GALAXY FUND
Massachusetts Municipal Bond Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Six months ended Years ended October 31,
April 30, 1998 -------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993(2)
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ..................... $ 10.25 $ 9.94 $ 9.98 $ 9.12 $ 10.24 $ 10.00
------- ------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (A) ............................ 0.23 0.45 0.43 0.44 0.47 0.29
Net realized and unrealized gain (loss) on investments -- 0.32 (0.04) 0.86 (1.12) 0.24
------- ------- ------- ------- ------- -------
Total from Investment Operations: ................ 0.23 0.77 0.39 1.30 (0.65) 0.53
------- ------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income ................. (0.23) (0.46) (0.43) (0.44) (0.47) (0.29)
Dividends from net realized capital gains ............ -- -- -- -- -- --
------- ------- ------- ------- ------- -------
Total Dividends: ................................... (0.23) (0.46) (0.43) (0.44) (0.47) (0.29)
------- ------- ------- ------- ------- -------
Net increase (decrease) in net asset value ............... -- 0.31 (0.04) 0.86 (1.12) 0.24
------- ------- ------- ------- ------- -------
Net Asset Value, End of Period ........................... $ 10.25 $ 10.25 $ 9.94 $ 9.98 $ 9.12 $ 10.24
======= ======= ======= ======= ======= =======
Total Return (3) ......................................... 2.20% 7.92% 4.05% 14.52% (6.46)% 5.42%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ........................ $38,880 $33,318 $26,275 $16,113 $15,966 $20,121
Ratios to average net assets:
Net investment income including reimbursement/waiver . 4.39% 4.38% 4.42% 4.56% 4.89% 4.87%*
Operating expenses including reimbursement/waiver .... 0.74% 0.63% 0.66% 0.70% 0.33% 0.05%*
Operating expenses excluding reimbursement/waiver .... 1.21% 1.20% 1.32% 1.58% 1.43% 1.82%*
Portfolio Turnover Rate .................................. 18% 48% 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 the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the six
months ended April 30, 1998, the years ended October 31, 1997, 1996, 1995
and 1994 and the period ended October 31, 1993 were $0.21, $0.39, $0.37,
$0.36, $0.37 and $0.18, respectively. Net investment income per share
before reimbursement/waiver of fees by the Investment Advisor and/or
Administrator for Trust Shares for the six months ended April 30, 1998, the
years ended October 31, 1997, 1996, 1995 and 1994 and the period ended
October 31, 1993 were $0.21, $0.40, $0.40, $0.38, $0.38 and $0.18,
respectively.
See Notes to Financial Statements.
50
<PAGE>
Trust Shares
<TABLE>
<CAPTION>
Years ended
Six months ended October 31,
April 30, 1998 ------------------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993(2)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
$ 10.25 $ 9.94 $ 9.98 $ 9.12 $ 10.24 $ 10.00
------- ------- ------- ------ ------- -------
0.23 0.46 0.46 0.45 0.48 0.29
0.01 0.32 (0.04) 0.86 (1.12) 0.24
------- ------- ------- ------ ------- -------
0.24 0.78 0.42 1.31 (0.64) 0.53
------- ------- ------- ------ ------- -------
(0.24) (0.47) (0.46) (0.45) (0.48) (0.29)
-- -- -- -- -- --
------- ------- ------- ------ ------- -------
(0.24) (0.47) (0.46) (0.45) (0.48) (0.29)
------- ------- ------- ------ ------- -------
-- 0.31 (0.04) 0.86 (1.12) 0.24
------- ------- ------- ------ ------- -------
$ 10.25 $ 10.25 $ 9.94 $ 9.98 $ 9.12 $ 10.24
======= ======= ======= ====== ======= =======
2.29% 8.06% 4.27% 14.72% (6.46)% 5.42%**
$17,642 $13,986 $11,047 $7,607 $ 5,617 $20,121
4.57% 4.57% 4.60% 4.73% 4.89% 4.87%*
0.56% 0.44% 0.48% 0.52% 0.33% 0.05%*
1.03% 1.01% 1.14% 1.31% 1.41% 1.82%*
18% 48% 16% 19% 11% 0%**
</TABLE>
51
<PAGE>
THE GALAXY FUND
Rhode Island Municipal Bond Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Six months ended Years ended October 31, Period ended
April 30, 1998 ------------------------- October 31,
(unaudited) 1997 1996 1995(1)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................... $ 10.91 $ 10.65 $ 10.67 $ 10.00
------- ------- ------- -------
Income from Investment Operations:
Net investment income (A) .......................... 0.25 0.48 0.51 0.44
Net realized and unrealized gain on investments .... 0.04 0.32 0.03 0.67
------- ------- ------- -------
Total from Investment Operations: ................ 0.29 0.80 0.54 1.11
------- ------- ------- -------
Less Dividends:
Dividends from net investment income ............... (0.25) (0.50) (0.51) (0.44)
Dividends from net realized capital gains .......... (0.02) (0.04) (0.05) --
------- ------- ------- -------
Total Dividends: ................................ (0.27) (0.54) (0.56) (0.44)
------- ------- ------- -------
Net increase (decrease) in net asset value ............. 0.02 0.26 (0.02) 0.67
------- ------- ------- -------
Net Asset Value, End of Period ......................... $ 10.93 $ 10.91 $ 10.65 $ 10.67
======= ======= ======= =======
Total Return (2) ....................................... 2.63%** 7.78% 5.22% 11.29%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ...................... $19,925 $17,134 $14,900 $10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.60%* 4.50% 4.78% 5.13%*
Operating expenses including reimbursement/waiver .. 0.78%* 0.83% 0.77% 0.40%*
Operating expenses excluding reimbursement/waiver .. 1.25%* 1.34% 1.34% 2.25%*
Portfolio Turnover Rate ................................ 19%** 19% 13% 34%**
</TABLE>
- -----------------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 20, 1994.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for the six months ended April 30,
1998, the years ended October 31, 1997 and 1996 and the period ended
October 31, 1995 were $0.22, $0.43, $0.45 and $0.28, respectively.
See Notes to Financial Statements.
52
<PAGE>
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
1. Organization
The Galaxy Fund, a Massachusetts business trust (the "Trust"), is registered
under the Investment Company Act of 1940, as amended, as an open-end
management investment company. As of the date of this report, the Trust
offered twenty-six managed investment portfolios. The accompanying financial
statements and financial highlights are those of the Tax-Exempt Bond, New
Jersey Municipal Bond, New York Municipal Bond, Connecticut Municipal Bond,
Massachusetts Municipal Bond and Rhode Island Municipal Bond Funds
(individually, a "Fund", collectively, the "Funds") only.
Each Fund is authorized to issue two series of shares (Trust Shares and
Retail A Shares), except for the Tax-Exempt Bond Fund, which is authorized to
issue three series of shares (Trust Shares, Retail A Shares and Retail B
Shares). As of April 30, 1998, 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 and/or
shareholder servicing fees and transfer agency charges. Six years after
purchase, Retail B Shares will convert automatically to Retail A Shares.
2. Significant Accounting Policies
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of 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 approximates 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 and
dividend 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 continue 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: The Funds may engage in repurchase agreement
transactions with institutions that the Trust's investment advisor 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. The Funds require that the securities collateralizing
a repurchase
53
<PAGE>
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (continued) (unaudited)
agreement transaction be transferred to the Trust's custodian in a manner that
is intended to enable the Funds to obtain those securities in the event of a
counterparty default. The value of the collateral securities 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.
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.
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 Trust's custodian will set aside cash or liquid portfolio
securities equal to the amount of the when-issued commitment in a separate
account.
3. Investment Advisory, Administration, Distribution
Shareholder Services and Other Fees
The Trust and Fleet Investment Advisors Inc. (the "Investment Advisor" or
"Fleet"), an indirect wholly-owned subsidiary of Fleet Financial Group, Inc.,
are parties to an investment advisory agreement under which the Investment
Advisor 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. ("Investor Services
Group"), a wholly-owned subsidiary of First Data Corporation, are parties to
an administration agreement under which Investor Services Group (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 statements are provided in separate reports),
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, Investor Services Group also provides certain fund accounting,
custody administration and transfer agency services pursuant to certain fee
arrangements. Pursuant to such fee arrangements, Investor Services Group
compensates The Chase Manhattan Bank, the Trust's custodian bank, for its
services.
First Data Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of Investor Services Group and an indirect wholly-owned subsidiary of First
Data Corporation, serves as the exclusive distributor of the Trust's shares.
The Trust has adopted a shareholder services plan ("Services Plan") with
respect to Retail A Shares and Trust 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
54
<PAGE>
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (continued) (unaudited)
the average daily net asset value of the outstanding Retail A Shares
beneficially owned by such customers. No fees were charged under the Services
Plan with respect to the Rhode Island Municipal Bond Fund for the six months
ended April 30, 1998.
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 primarily 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 under
the 12b-1 Plan for distribution services are being made solely to
broker-dealer affiliates of Fleet Bank and payments under the 12b-1 Plan for
shareholder liaison and shareholder administrative support services 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 of the Fund's outstanding Retail B Shares. The
fees for shareholder liaison services and/or administrative support services
may not exceed the annual rates of 0.15% and 0.15%, respectively, of the
average daily net assets attributable to the Fund's outstanding Retail B
Shares owned of record or beneficially by customers of institutions. 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 customers of institutions. For the six months ended April 30,
1998, the Funds paid fees under the Services Plan and 12b-1 Plan as follows:
<TABLE>
<CAPTION>
12b-1 Plan
Services ----------
Fund Plan Services Distribution
---- ---- -------- ------------
<S> <C> <C> <C>
Tax-Exempt Bond .............. $20,960 $1,492 $4,974
New Jersey Municipal Bond .... 17 N/A N/A
New York Municipal Bond ...... 29,296 N/A N/A
Connecticut Municipal Bond ... 18,283 N/A N/A
Massachusetts Municipal Bond . 26,989 N/A N/A
Rhode Island Municipal Bond .. -- N/A N/A
</TABLE>
Retail A Shares, Retail B Shares and Trust Shares of the Funds each bear
series specific transfer agent charges based upon the number of shareholder
accounts for each series. For the six months ended April 30, 1998, transfer
agent charges for each series were as follows:
<TABLE>
<CAPTION>
Fund Retail A Retail B Trust
- ---- -------- -------- -----
<S> <C> <C> <C>
Tax-Exempt Bond ................ $10,714 $373 $ 80
New Jersey Municipal Bond ...... 673 N/A 2
New York Municipal Bond ........ 13,626 N/A 56
Connecticut Municipal Bond ..... 9,136 N/A 35
Massachusetts Municipal Bond ... 5,666 N/A 32
Rhode Island Municipal Bond .... 2,480 N/A --
</TABLE>
Certain officers of the Trust may be officers of the Administrator. Such
officers receive no compensation from the Trust for serving in their
respective roles. No officer, director or employee of the Investment Advisor
serves as an officer, trustee or employee of the Trust. Effective March 5,
1998, each Trustee is entitled to receive for services as a trustee of the
Trust, The Galaxy VIP Fund ("VIP") and Galaxy Fund II ("Galaxy II") an
aggregate fee of $40,000 per annum plus certain other fees for attending or
participating in meetings as well as reimbursement for expenses incurred in
attending meetings. Prior to March 5, 1998, each Trustee was entitled to
receive for services as a trustee of the Trust, VIP and 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.
Each Trustee is eligible to participate in The Galaxy Fund/The Galaxy VIP
Fund/Galaxy Fund II 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 six months ended April 30, 1998 include legal fees paid to
Drinker Biddle & Reath LLP. A partner of that firm is Secretary to the Trust.
4. Waiver of Fees and Reimbursement of Expenses
Fleet and/or its affiliates and/or Investor Services Group voluntarily
agreed to waive a portion of their fees
55
<PAGE>
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (continued) (unaudited)
and/or reimburse the Funds for certain expenses so that total expenses would not
exceed certain expense limitations established for each Fund. The respective
parties, at their discretion, may revise or discontinue the voluntary fee
waivers and/or expense reimbursements at any time. For the period ended April
30, 1998, the Investment Advisor and Administrator waived fees and/or reimbursed
expenses with respect to the Funds are as follows:
<TABLE>
<CAPTION>
Fund Fees Waived
---- -----------
<S> <C>
Tax-Exempt Bond ...................... $154,229
New Jersey Municipal Bond ............ 5,102
New York Municipal Bond .............. 107,874
Connecticut Municipal Bond ........... 82,734
Massachusetts Municipal Bond ......... 119,199
Rhode Island Municipal Bond .......... 41,820
</TABLE>
<TABLE>
<CAPTION>
Expenses
Fund Reimbursed
---- -----------
<S> <C>
Tax-Exempt Bond ...................... $12,426
New Jersey Municipal Bond ............ 3,592
New York Municipal Bond .............. 1,785
Connecticut Municipal Bond ........... --
</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-seven 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 Y - Series 1 shares
(Trust Shares) and Class Y - Series 2 shares (Retail A Shares) - New Jersey
Municipal 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, Retail B Shares bear the expense
of payments under the 12b-1 Plan and Trust Shares, Retail A Shares and Retail
B Shares each bear 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, other than
short-term investments, for the six months ended April 30, 1998 were as
follows:
<TABLE>
<CAPTION>
Fund Purchases Sales
- ---- --------- -----
<S> <C> <C>
Tax-Exempt Bond ...................... $67,868,770 $53,219,130
New Jersey Municipal Bond ............ 5,568,601 --
New York Municipal Bond .............. 19,026,005 12,762,212
Connecticut Municipal Bond ........... 12,044,900 7,163,711
Massachusetts Municipal Bond ......... 19,343,910 9,395,196
Rhode Island Municipal Bond .......... 6,698,244 3,394,025
</TABLE>
The aggregate gross unrealized appreciation and depreciation, net unrealized
appreciation (depreciation), and cost for all securities as computed on a
federal income tax basis at April 30, 1998 for each Fund is as follows:
<TABLE>
<CAPTION>
Fund Appreciation (Depreciation)
- ---- ------------ --------------
<S> <C> <C>
Tax-Exempt Bond ...................... $5,223,462 $ (431,021)
New Jersey Municipal Bond ............ 6,384 (30,709)
New York Municipal Bond .............. 2,896,271 (272,053)
Connecticut Municipal Bond ........... 1,179,976 (104,662)
Massachusetts Municipal Bond ......... 1,285,402 (202,446)
Rhode Island Municipal Bond .......... 695,104 (68,415)
</TABLE>
<TABLE>
<CAPTION>
Fund Net Cost
- ---- --- ----
<S> <C> <C>
Tax-Exempt Bond ...................... $ 4,792,441 $159,610,794
New Jersey Municipal Bond ............ (24,325) 5,764,022
New York Municipal Bond .............. 2,624,218 68,298,756
Connecticut Municipal Bond ........... 1,075,314 35,415,152
Massachusetts Municipal Bond ......... 1,082,956 55,913,451
Rhode Island Municipal Bond .......... 626,689 19,003,708
</TABLE>
At October 31, 1997, the following Funds had capital loss carryforwards:
<TABLE>
<CAPTION>
Fund Amount Expiration
- ---- -------- ----------
<S> <C> <C>
New York Municipal Bond .............. $640,235 2002
676,456 2003
16,589 2004
Connecticut Municipal Bond ........... 178,995 2001
82,181 2002
685,391 2003
90,957 2005
Massachusetts Municipal Bond ......... 221,579 2002
487,619 2003
</TABLE>
56
<PAGE>
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (continued) (unaudited)
7. Concentration of Credit
The New Jersey Municipal Bond, 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 Jersey, 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 state's specific municipal securities
than are municipal bond funds that are not concentrated in these issuers to
the same extent.
8. Results of Special Meeting of Shareholders of the Tax-Exempt Bond Fund
At a special meeting of shareholders of the Galaxy Tax-Exempt Bond Fund held
on February 26, 1998, shareholders of the Fund approved a change in the
Fund's fundamental investment limitation with respect to commodities and
commodities contracts to permit the Fund to invest in municipal bond index
futures contracts and interest rate futures contracts. The results of the
shareholder vote were as follows:
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
11,947,353 shares 29,281 shares 84,112 shares
</TABLE>
57
<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.
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 at no cost (as long as you exchange
within the same share class).
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, Fleet Gold,
or a Fleet Private Banking Account, your Galaxy Fund information can be added
to these statements.
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
1-800-628-0414 Option 1.
- --------------------------------------------------------------------------------
Certain shareholder services may not be available for Trust Share investors.
Please consult your Fund Prospectus.
* Shares of the Funds are distributed through First Data Distributors, Inc.
Member NASD and SIPC. Investment Specialists are registered representatives of
FIS Securities, Inc., Fleet Enterprises, Inc., Or Quick & Reilly, Inc., members
NASD and SIPC.
[SIDEBAR]
"A well-balanced
asset allocation
plan may help to
control your risk
while pursuing
your goals."
[END SIDEBAR]
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<PAGE>
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FUNDS
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