[Front Cover]
[logo GALAXY FUNDS]
MONEY MARKET FUNDS REPORT
Money Market Fund [bullet] Government Fund [bullet] Tax-Exempt Fund
[bullet] U.S. Treasury Fund [bullet] Connecticut Municipal Money Market Fund
[bullet] Massachusetts Municipal Money Market 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 Money Market
Funds, which covers the six months ended April 30, 1998. The report includes a
Market Overview explaining the primary economic and market trends at work during
the previous six months plus Portfolio Reviews that describe how Fleet
Investment Advisors Inc. managed the Funds to make the most of this environment.
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.
The last six months have been relatively quiet for the money
markets. From time to time investors worried that the economy would strengthen
enough to create higher inflation, which caused slight fluctuations in money
market yields. Inflation declined during the period, however, allowing the
Federal Reserve to keep the Fed funds rate at 5.50%. This left money market
yields trading in a narrow range.
Of course, money market investments are only part of a
well-diversified portfolio. With low inflation and moderate economic growth,
stock prices continued to break new highs during the period and earned returns
more than four times the average of the last 70 years. This helped give the
Standard & Poor's 500 Composite Stock Price Index a total cumulative return of
130% for the 36 months ended April 30, 1998 - a three-year return not seen in
the 53 years since World War II. Returns for bonds were slightly above historic
averages.
In this mixed investment climate, you may find it useful to keep
in mind the time-tested portfolio strategies of diversification and rebalancing.
By spreading your portfolio among different types of assets, you can attempt to
limit your investment risk. As stock valuations continue to exceed historic
highs, many investors are using bonds and money market investments to attempt to
reduce the impact of possible stock corrections on their portfolios.
If you have a long-term diversification strategy in place, this
may be a good time to check whether recent market changes, particularly those
for stocks, have changed your original allocations. Many investment
professionals suggest that you rebalance your portfolio at least once a year.
However, when market values change rapidly, as they have in recent months, you
may need to rebalance more often. Your investment professional can help you
return your portfolio to the allocations you want.
Should you have questions about this report, or want more
information about any Galaxy Funds or services, please call the Galaxy
Information Center at 1-800-628-0414.
Sincerely,
/s/ Dwight E. Vicks, Jr.
Dwight E. Vicks, Jr.
Chairman
Mutual Funds:
[bullet] are not bank deposits
[bullet] are not FDIC insured
[bullet] are not obligations of Fleet Bank
[bullet] are not guaranteed by Fleet Bank
[bullet] are subject to investment risk including possible loss of principal
amount invested
<PAGE>
MARKET OVERVIEW
MONEY MARKET OVERVIEW
BY FLEET INVESTMENT ADVISORS INC.
During the six months ended April 30, 1998, the Federal Reserve
("the Fed") left short-term interest rates unchanged, and money market yields
traded in a narrow range -- fluctuating only slightly with changing outlooks for
interest rates. Although economic growth was unexpectedly strong, which
historically has meant higher inflation and interest rates, inflation actually
declined during the period. As yields fluctuated, we adjusted maturities of
investments in the Galaxy Money Market Funds to optimize current yield and take
advantage of any increase in yields that might occur.
Declining Inflation
In November 1997, when the period began, three-month Treasury
bills were yielding about 5.2%, and the annual rate of inflation was about 2.2%.
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, increased by
3.7% in the fourth quarter. Even though a tight labor market put upward pressure
on wages and productivity continued to improve, inflation actually fell to 1.7%
during the same period.
During this time there was a worsening in Asian economic problems
that had surfaced several months earlier. With low inflation and the chance that
Asia's problems could slow U.S. exports and growth in months to come, the Fed
found it unnecessary to raise interest rates. Meanwhile, the trouble in Asia
created a flight to quality that increased demand for U.S. securities. In this
environment, Treasury bill yields edged lower until late in December - when
heavy sales by foreign investors needing liquidity put upward pressure on
yields.
In the first quarter of 1998, GDP growth accelerated to an
estimated 4.2% annual rate. However, inflation continued to fall reaching 1.4%.
In January, with further deterioration in Asia, and signs of slower earnings for
U.S. firms, investors believed the Fed might slice interest rates. This drove
money market yields lower again.
Rising wages, robust housing activity, and greater stability in
Asia dampened these expectations later in the quarter. Meanwhile continued
demand for Treasury bills, plus news that a federal budget surplus might cut
new-issue supplies, caused short-term rates to edge lower. Yield curves for
commercial paper and issues of U.S. government agencies were flat during most of
the first four months of 1998.
In April, following a rapid rise in stock prices, the Fed
indicated that it might have to raise interest rates to keep stock gains from
overstimulating the economy. Money market yields edged slightly higher on the
news. At the end of April, the yield for three-month Treasuries stood at 4.97%.
[CALLOUT]
"Although economic growth was unexpectedly strong, which historically has meant
higher inflation and interest rates, inflation actually declined during the
period."
[END CALLOUT]
1
<PAGE>
MARKET OVERVIEW
Performance At-A-Glance As of April 30, 1998
<TABLE>
<CAPTION>
Retail Retail B Trust
Shares Shares Shares
<S> <C> <C> <C>
Galaxy Money Market Fund
7-day average yield.. 4.92% 4.24% 5.10%
30-day average yield. 4.92% 4.19% 5.10%
Galaxy Government Fund
7-day average yield.. 4.86% N/A 5.04%
30-day average yield. 4.86% N/A 5.04%
Galaxy Tax-Exempt Fund
7-day average yield.. 3.20% N/A 3.34%
30-day average yield. 2.99% N/A 3.13%
Galaxy U.S. Treasury Fund
7-day average yield.. 4.70% N/A 4.86%
30-day average yield. 4.72% N/A 4.88%
Galaxy Connecticut Municipal
Money Market Fund
7-day average yield.. 3.36% N/A N/A
30-day average yield. 3.08% N/A N/A
GALAXY MASSACHUSETTS MUNICIPAL
MONEY MARKET FUND
7-day average yield.. 3.33% N/A N/A
30-day average yield. 3.05% N/A N/A
</TABLE>
Past performance is no guarantee of future results. Investments in
the Galaxy Money Market Fund are neither insured nor guaranteed by the U.S.
Government, and there can be no assurance that the Funds will be able to
maintain a stable net asset value of $1.00 per share. Yields are historical and
will vary with market performance.
Retail Shares are currently charged a shareholder servicing fee of
0.10% of average daily net assets. Retail B Shares are currently charged a
distribution fee of 0.65% of average daily net assets and a shareholder
servicing fee of 0.10% of average daily net assets. (See Note 3 in the Notes to
Financial Statements.)
[CALLOUT]
"Because of the uncertainty about where rates will head, we plan to stay focused
for now on shorter-term issues and floating-rate securities, which could give
the Funds upside potential if yields continue to rise."
[END CALLOUT]
The Months Ahead
We believe the problems in Asia could slow U.S. economic growth by
the end of 1998. This would help keep inflation at bay and could send money
market yields lower. In the meantime, however, short-term yields may continue to
fluctuate. Even though the market has begun to adjust for a potential rate hike,
yields could move higher if growth remains strong and inflation rises.
Because of the uncertainty about where rates will head, we plan to
stay focused for now on shorter-term issues and floating-rate securities, which
could give the Funds upside potential if yields continue to rise. If we become
convinced that yields have stabilized and could head lower, we will buy longer
fixed-rate securities.
2
<PAGE>
PORTFOLIO REVIEWS
GALAXY TAXABLE MONEY MARKET FUNDS
By Karen Arneil
Portfolio Manager
[Photo of Karen Arneil]
As changing inflation expectations caused short-term yields to
fluctuate in recent months, we used different mixes of maturities to enhance
yields of the Galaxy Taxable Money Market Funds -- which include the Galaxy
Money Market Fund, the Galaxy Government Fund and the Galaxy U.S. Treasury Fund.
By making these adjustments, and taking advantage of yield opportunities in
individual market sectors, we helped the Funds earn competitive returns for the
six months ended April 30, 1998.
During the period, Trust Shares of the Galaxy Money Market Fund
had a total return of 2.59%, and Retail A Shares of the Galaxy Money Market Fund
earned a total return of 2.50%. Retail B Shares earned a total return of 2.13%
before deducting the 5.00% contingent deferred sales charge, and a total return
of -2.87% after deducting the 5.00% contingent deferred sales charge.
Over the same time, Lipper Analytical Services ("Lipper"), a
mutual fund performance tracking service, measured average total returns of
2.65% for trust shares and 2.43% for retail shares of other taxable money market
funds that reported their results to Lipper.
For the six months ended April 30, 1998, Trust Shares of the
Galaxy Government Fund had a total return of 2.55% and Retail A Shares of the
Galaxy Government Fund had a total return of 2.44%. Trust shares of other money
market funds investing in U.S. government issues that reported their
performances to Lipper earned an average total return of 2.62% over the same
period. Retail shares of similar funds that reported their performances to
Lipper earned an average total return of 2.46% for the period.
During this time, Trust Shares of the Galaxy U.S. Treasury Fund
had a total return of 2.44%. Retail A Shares of the Galaxy U.S. Treasury Fund
earned a total return of 2.35%. These returns compared with an average total
return of 2.55% for trust shares of other money market funds investing in U.S.
Treasury issues that reported their results to Lipper. Retail Shares of similar
funds that reported their performances to Lipper earned a total return of 2.39%
for the period.
Increasing Fund Yields
In November and early December of 1997, with the yield curve for
U.S. Treasury money market instruments quite flat, we focused investments in the
Galaxy U.S. Treasury Fund on issues that matured in one month or less. When
yields improved late in December, due to heavy sales of short-term Treasuries by
foreign investors, we added longer maturities to take advantage of this
temporary increase in yields. During this time
[Pie Chart]
Galaxy Money
Market Fund
Distribution of Total Net
Assets as of April 30, 1998
Corporate Notes & Bonds 7%
Repurchase Agreement 7%
Certificates of Deposit 5%
Commercial Paper 67%
U.S. Gov't. & Agency Obligations 14%
[Line Chart]
Galaxy Money Market Fund
7-Day Average Yield
4/30/97 4.87 5.04 4.32
5/31/97 4.93 5.11 4.27
6/30/97 4.98 5.16 4.27
7/31/97 4.97 5.15 4.21
8/31/97 4.96 5.15 4.22
9/30/97 4.97 5.16 4.22
10/31/97 4.93 5.12 4.24
11/30/97 4.99 5.18 4.36
12/31/97 5 5.19 4.32
1/31/98 5.01 5.2 4.27
2/29/98 4.97 5.14 4.19
3/31/98 4.95 5.12 4.19
4/30/98 4.92 5.1 4.24
(Square Bullet) Galaxy Money Market Fund-Trust
(Square Bullet) Galaxy Money Market Fund-Retail A
(Square Bullet) Galaxy Money Market Fund-Retail B
[Pie Chart]
Galaxy Government Fund
Distribution Of Total Net Assets As Of April 30, 1998
Federal Home Loan Mortgage Corporation 30%
Student Loan Marketing Association 2%
Federal Farm Credit Bank 9%
Federal Home Loan Bank 16%
Repurchase Agreement 16%
Federal National Mortgage Association 27%
3
<PAGE>
PORTFOLIO REVIEWS
we bought investments for the Galaxy Money Market Fund and the Galaxy Government
Fund that matured in the early months of 1998. This let us make the most of a
year-end increase in supply that pushed yields higher.
As expectations for a cut in short-term rates pushed yields lower
early in 1998, we added yield in the Galaxy U.S. Treasury Fund by purchasing
slightly longer maturities and emphasizing Treasury notes and bonds that mature
in one year or less. We also added cash-management bills issued by the U.S.
Treasury to meet short-term borrowing needs. These issues matured around tax
time and were cheap compared to treasuries in other parts of the curve.
In the Galaxy Government Fund, we kept large overnight positions
early in 1998, when yields for U.S. government agency instruments were much
lower than yields for overnight securities. As agency yields improved, we added
longer maturities. Because the yield curve for commercial paper was flat during
this time, we emphasized shorter maturities in the Galaxy Money Market Fund --
enhancing yields through individual investment opportunities.
Throughout the period we staggered maturity dates of the Funds'
holdings. We concentrated on high-quality domestic names to minimize exposure to
economic woes overseas. We also added investments in floating rate securities,
whose coupons reset frequently, to give the Fund upside potential should the
Federal Reserve (the "Fed") raise interest rates. On April 30, 1998, the Galaxy
Money Market Fund had an average maturity of 36 days, the Galaxy Government Fund
had an average maturity of 34 days, and the Galaxy U.S. Treasury Fund had an
average maturity of 59 days.
A Cautious Approach
We expect to use similar strategies in the months ahead. Because
yields could move higher if economic growth remains strong and inflation rises,
we plan to stay focused on shorter-term issues. This, plus continued use of
floating-rate securities, should make it easier to restructure Fund portfolios
as yields change.
In the meantime, we plan to continue looking for high-quality
investments with good value. If we feel rates have stabilized and could move
lower, we will add longer fixed-rate securities to the investment mix.
Karen Arneil has managed the Galaxy Money Market Fund, the Galaxy Government
Fund and the Galaxy U.S. Treasury Fund since September 1996. She has managed
money investments since 1993.
[Line Chart]
Galaxy Government Fund
7-Day Average Yield
4/30/97 4.77 4.97
5/31/97 4.48 4.69
6/30/97 4.5 4.71
7/31/97 4.54 4.75
8/31/97 4.61 4.82
9/30/97 4.63 4.85
10/31/97 4.58 4.8
11/30/97 4.86 5.06
12/31/97 4.88 5.08
1/30/98 4.91 5.11
2/29/98 4.9 5.07
3/31/98 4.89 5.07
4/30/98 4.86 5.04
(Square Bullet) Galaxy Government Fund-Trust
(Square Bullet) Galaxy Government Fund-Retail A
[Pie Chart]
Galaxy U.S. Treasury Fund
Distribution of Total Net Assets as of April 30, 1998
Net Other Assets & Liabilities 1%
Student Loan Marketing Association 4%
U.S. Treasury Bills 15%
Federal Home Loan Bank 23%
Federal Farm Credit Bank 6%
U.S. Treasury Notes 51%
[Line Chart]
Galaxy U.S. Treasury Fund
7-Day Average Yield
4/30/97 4.62 4.78
5/30/97 4.61 4.78
6/30/97 4.64 4.81
7/31/97 4.68 4.85
8/31/97 4.63 4.8
9/30/97 4.65 4.84
10/31/97 4.64 4.81
11/30/97 4.67 4.84
12/31/97 4.68 4.85
1/31/98 4.7 4.87
2/29/98 4.73 4.89
3/31/98 4.75 4.91
4/30/98 4.7 4.86
(Square Bullet) Galaxy U.S. Treasury Fund-Trust
(Square Bullet) Galaxy U.S. Treasury Fund-Retail A
4
<PAGE>
PORTFOLIO REVIEWS
GALAXY TAX-EXEMPT
MONEY MARKET FUNDS
By Karen Arneil
Portfolio Manager
In the six months ended April 30, 1998, yields for tax-exempt
money market instruments were strongly affected by seasonal shifts in supply and
demand. In trying to make the most of yield fluctuations, we adjusted maturities
of the Galaxy Tax-Exempt Money Market Funds -- which include the Galaxy
Tax-Exempt Fund, the Galaxy Connecticut Municipal Money Market Fund and the
Galaxy Massachusetts Municipal Money Market Fund. By also looking for individual
instruments that offered good value, we helped the Funds earn returns that were
close to other funds with similar investment objectives.
During the period Trust and Retail A Shares of the Galaxy
Tax-Exempt Fund had total returns of 1.50% and 1.44%, respectively. Over the
same time, trust and retail shares of other tax-exempt money market funds
reporting their performances to Lipper earned average total returns of 1.63% and
1.50%.
Shares of the Galaxy Connecticut Municipal Money Market Fund had a
total return of 1.44%, versus 1.41% for the retail shares of other Connecticut
tax-exempt money market funds tracked by Lipper. Shares of the Galaxy
Massachusetts Municipal Money Market Fund had a total return of 1.42%, versus
1.46% for the retail shares of other Massachusetts tax-exempt money market funds
reporting performances to Lipper.
Adding Yield
In the last months of 1997, we took a two-pronged approach in
managing the Funds. To meet traditional year-end outflows of cash, we emphasized
investments with strong liquidity. At the same time, we purchased longer-term
investments that would
[Pie Chart]
Galaxy Tax-Exempt Fund
Distribution of Total Net Assets as of April 30, 1998
Other Territories, Cash Equivalents &
Net Other Assets & Liabilities 5%
North Central 19%
East 11%
Pacific 8%
Mountain 15%
South 42%
[Line Chart]
Galaxy Tax-Exempt Fund
7-Day Average Yield
4/30/97 3.25 3.39
5/31/97 3.18 3.33
6/30/97 3.41 3.55
7/31/97 2.99 3.13
8/31/97 2.92 3.07
9/30/97 3.11 3.26
10/31/97 2.99 3.13
11/30/97 3.08 3.23
12/31/97 3 3.15
1/30/98 2.93 3.07
2/29/98 2.83 2.96
3/31/98 2.91 3.04
4/30/98 3.2 3.34
(Square Bullet) Galaxy Tax-Exempt Fund-Trust
(Square Bullet) Galaxy Tax-Exempt Fund-Retail A
[Line Chart]
Galaxy Connecticut Municipal
Money Market Fund
7-Day Average Yield
4/30/97 3.44
5/31/97 3.14
6/30/97 3.31
7/31/97 2.95
8/31/97 2.79
9/30/97 3.18
10/31/97 3
11/30/97 3.12
12/31/97 3
1/31/98 2.87
2/29/98 2.77
3/31/98 2.97
4/30/98 3.36
(Square Bullet) Galaxy Connecticut Municipal Money Market Fund
5
<PAGE>
PORTFOLIO REVIEWS
mature after January of 1998, when we expected strong demand to put downward
pressure on the yields of short-term tax-exempt securities. Demand remained
strong after January. Because supplies of tax-exempt money market instruments
were relatively tight, this made the prices of these securities expensive and
their yields low. To add yield, while reducing daily yield fluctuations, we
increased positions in variable rate instruments, whose rates reset weekly
instead of daily. Throughout the period we maintained very liquid portfolios of
high-quality investments that would allow us to respond quickly to any changes
in yields.
As of April 30, 1998, the average maturity of the Tax-Exempt Fund
was 32 days, and the average maturities of the Connecticut and Massachusetts
Municipal Money Market Funds were 31 days and 34 days, respectively.
New Opportunities
In recent weeks the supply of tax-exempt money market securities
has increased. With the April tax season and liquidity concerns behind us, and
demand likely to strengthen, we plan to start adding longer maturities to lock
in the higher yields. The fiscal 1999 note season will start in late May and
early June when many municipalities issue debt. At that time, we expect to buy
notes to extend the Funds' average days to maturity. Because of the historical
seasonal strengthening of demand in July, we will be looking for investments
that mature after July. As a result of such technical factors, average
maturities for the Galaxy Tax-Exempt Money Market Funds may be slightly longer
than average maturities for their taxable counterparts.
Karen Arneil has managed the Galaxy Tax-Exempt Fund, the Galaxy Connecticut
Municipal Money Market Fund and the Galaxy Massachusetts Municipal Money
Market Fund since September 1996. She has managed money market investments
since 1993.
[Pie Chart]
Galaxy
Connecticut Municipal
Money Market Fund
Distribution of Total Net Assets
as of April 30, 1998
South 7%
Pacific 6%
Connecticut 62%
Other Territories, Cash Equivalents &
Net Other Assets & Liabilities 7%
Puerto Rico 15%
North Central 3%
[Pie Chart]
Galaxy Massachusetts Municipal
Money Market Fund
Distribution of Total Net Assets as of April 30, 1998
Puerto Rico 12%
Massachusetts 70%
Pacific, Other Territories,
Cash Equivalents &
Net Other Assets & Liabilities 4%
South 10%
North Central 4%
[Line Chart]
Galaxy Massachusetts Municipal
Money Market Fund
7-Day Average Yield
4/30/97 3.47
5/31/97 3.16
6/30/97 3.4
7/31/97 2.95
8/31/97 2.8
9/30/97 3.2
10/31/97 2.96
11/30/97 3.09
12/31/97 2.96
1/31/98 2.83
2/28/98 2.72
3/31/98 2.87
4/30/98 3.33
(Square Bullet) Galaxy Massachusetts Municipal Money Market Fund
- --------------------------------------------------------------------------------
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 contingent deferred sales charge
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.
6
<PAGE>
SHAREHOLDER
SERVICES
AUTOMATIC INVESTMENT PROGRAM
The Golden Rule of investing is "pay yourself first." That is easy to do with
Galaxy's Automatic Investment Program. For as little as $50 per month deducted
directly from your checking, savings, or bank money market account, you can
consistently and conveniently add to your Galaxy investment. When you establish
an Automatic Investment Program, the $2,500 initial investment requirement for
Galaxy is waived. Of course, such a program does not assure a profit and does
not protect against loss in a declining market.
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 services. 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.
[CALLOUT]
"A well-balanced asset allocation plan may help to control your risk while
pursuing your goals."
[END CALLOUT]
7
<PAGE>
TRUSTEES
AND OFFICERS
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
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
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. There is no assurance that the Funds will be
able to maintain a stable net asset value of $1.00 per share.
[Recycle Logo]
This report was printed on recycled paper.
8
<PAGE>
THE GALAXY FUND
Money Market Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
COMMERCIAL PAPER (A) - 66.69%
<S> <C> <C>
Finance - 41.52%
$ 34,000,000 ABN-AMRO North America
Finance, Inc.
5.46%, 07/02/98.............................. $ 33,680,286
25,000,000 American Express Credit Corp.
5.52%, 05/04/98.............................. 24,988,500
35,000,000 American Express Credit Corp.
5.46%, 06/02/98.............................. 34,830,133
35,000,000 American Express Credit Corp.
5.45%, 08/07/98.............................. 34,480,736
35,000,000 Associates Corp. of North America
5.50%, 05/15/98.............................. 34,925,139
40,000,000 Associates Corp. of North America
5.48%, 06/16/98.............................. 39,719,911
15,000,000 Bellsouth Capital Funding
5.49%, 05/18/98.............................. 14,961,113
25,000,000 Cargill Financial Services Corp.
5.54%, 5/01/98................................ 25,000,000
14,450,000 Caterpillar Financial Services Corp.
5.52%, 05/04/98.............................. 14,443,353
20,500,000 Caterpillar Financial Services Corp.
5.37%, 06/09/98.............................. 20,380,741
25,000,000 Caterpillar Financial Services Corp.
5.42%, 08/26/98.............................. 24,559,625
35,000,000 Diageo Capital, Plc (C)
5.48%, 05/01/98.............................. 35,000,000
35,000,000 Diageo Capital, Plc (C)
5.47%, 05/26/98.............................. 34,867,049
25,000,000 Diageo Capital, Plc (C)
5.46%, 07/06/98.............................. 24,749,750
30,000,000 Export Development Corp.
5.53%, 05/01/98.............................. 30,000,000
45,000,000 Ford Motor Credit Co.
5.45%, 05/20/98.............................. 44,870,562
45,000,000 Ford Motor Credit Co.
5.49%, 07/24/98.............................. 44,423,550
40,000,000 General Electric Capital Corp.
5.44%, 05/05/98.............................. 39,975,822
35,000,000 General Electric Capital Corp.
5.41%, 07/22/98.............................. 34,568,702
25,000,000 General Electric Capital Corp.
5.37%, 08/20/98.............................. 24,586,063
40,000,000 General Motors Acceptance Corp.
5.44%, 05/04/98.............................. 39,981,867
20,000,000 General Motors Acceptance Corp.
5.53%, 05/06/98.............................. 19,984,639
29,918,000 General Re Corp.
5.50%, 05/28/98.............................. 29,794,588
10,000,000 General Re Corp.
5.50%, 06/05/98.............................. 9,946,527
20,000,000 General Re Corp.
5.53%, 06/11/98.............................. 19,874,038
Finance (continued)
$ 15,000,000 General Re Corp.
5.47%, 06/12/98.............................. $14,904,275
5,400,000 General Re Corp.
5.47%, 06/26/98.............................. 5,354,052
40,000,000 Lloyds Bank, Plc
5.44%, 07/06/98.............................. 39,601,067
40,000,000 Morgan (J.P.) & Co., Inc.
5.50%, 05/18/98.............................. 39,896,111
25,000,000 Motorola, Inc.
5.47%, 06/22/98.............................. 24,802,472
30,000,000 Motorola, Inc.
5.45%, 06/26/98.............................. 29,745,666
13,750,000 National Rural Utilities Cooperative
Finance Corp.
18,500,000 5.43%, 05/12/98.............................. 13,727,186
National Rural Utilities Cooperative
Finance Corp.
5.50%, 06/11/98.............................. 18,384,118
15,000,000 National Rural Utilities Cooperative
Finance Corp.
5.48%, 06/19/98.............................. 14,888,117
10,000,000 National Rural Utilities Cooperative
Finance Corp.
5.47%, 06/22/98.............................. 9,920,989
15,000,000 National Rural Utilities Cooperative
Finance Corp.
5.47%, 06/25/98.............................. 14,874,646
30,000,000 National Rural Utilities Cooperative
Finance Corp.
5.47%, 07/20/98.............................. 29,635,334
40,000,000 Nestle Capital Corp.
5.47%, 06/10/98.............................. 39,756,889
10,000,000 Nestle Capital Corp.
5.47%, 06/12/98.............................. 9,936,183
25,000,000 Novartis Finance Corp.
5.49%, 05/21/98.............................. 24,923,750
30,000,000 Novartis Finance Corp.
5.49%, 05/26/98.............................. 29,885,625
21,000,000 Novartis Finance Corp.
5.48%, 06/16/98.............................. 20,852,953
25,000,000 Novartis Finance Corp.
5.49%, 06/29/98.............................. 24,775,063
23,000,000 PACCAR Financial Corp.
5.48%, 05/07/98.............................. 22,978,993
12,000,000 PACCAR Financial Corp.
5.43%, 05/08/98.............................. 11,987,330
20,000,000 PACCAR Financial Corp.
5.50%, 05/14/98.............................. 19,960,278
40,000,000 Toronto Dominion Holdings USA, Inc.
5.47%, 06/09/98.............................. 39,762,967
25,000,000 Toronto Dominion Holdings USA, Inc.
5.50%, 06/30/98.............................. 24,770,833
See Notes to Financial Statements.
9
<PAGE>
THE GALAXY FUND
Money Market Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
Value
Par Value (Note 2)
- --------- --------
Finance (continued)
$ 30,000,000 Toronto Dominion Holdings USA, Inc.
5.45%, 07/08/98.............................. $ 29,691,167
12,235,000 USAA Capital Corp.
5.48%, 06/08/98.............................. 12,164,227
15,000,000 USAA Capital Corp.
5.46%, 06/10/98.............................. 14,909,000
7,375,000 USAA Capital Corp.
5.45%, 07/24/98.............................. 7,281,215
13,000,000 USAA Capital Corp.
5.45%, 08/28/98.............................. 12,765,801
-------------
1,336,729,001
-------------
Industrial - 8.28%
42,000,000 Atlantic Richfield Co.
5.48%, 05/19/98.............................. 41,884,920
19,550,000 Atlantic Richfield Co.
5.46%, 06/19/98.............................. 19,404,711
24,875,000 Atlantic Richfield Co.
5.47%, 07/10/98.............................. 24,610,427
25,725,000 Emerson Electric Co.
5.48%, 05/11/98.............................. 25,685,841
24,500,000 Emerson Electric Co.
5.47%, 06/08/98.............................. 24,358,540
35,000,000 Minnesota Mining & Manufacturing Co.
5.48%, 05/07/98.............................. 34,968,033
26,875,000 Minnesota Mining & Manufacturing Co.
5.42%, 05/20/98.............................. 26,798,123
50,000,000 Shell Oil Co.
5.53%, 05/01/98.............................. 50,000,000
19,000,000 Shell Oil Co.
5.46%, 06/12/98.............................. 18,878,970
-----------
266,589,565
-----------
Consumer Staples - 7.99%
54,000,000 Abbott Laboratories
5.47%, 05/12/98.............................. 53,909,745
25,000,000 Anheuser Busch Co, Inc.
5.53%, 05/01/98.............................. 25,000,000
17,000,000 Campbell Soup Co.
5.33%, 06/16/98.............................. 16,884,221
20,000,000 Coca Cola Co.
5.49%, 06/24/98.............................. 19,835,300
8,300,000 Coca Cola Co.
5.46%, 07/30/98.............................. 8,186,705
22,853,000 Heinz (H.J.) Co.
5.49%, 05/05/98.............................. 22,839,060
40,000,000 Heinz (H.J.) Co.
5.49%, 05/12/98.............................. 39,932,900
14,200,000 Kellogg Co.
5.47%, 06/03/98.............................. 14,128,799
Consumer Staples (continued)
$ 7,090,000 Procter & Gamble Co.
5.38%, 06/08/98.............................. $ 7,049,737
10,000,000 Procter & Gamble Co.
5.38%, 06/23/98.............................. 9,920,794
40,000,000 Procter & Gamble Co.
5.45%, 06/29/98.............................. 39,642,722
-------------
257,329,983
-------------
Chemicals and Drugs - 2.57%
12,000,000 duPont (E.I.) deNemours & Co.
5.50%, 05/07/98.............................. 11,989,000
1,075,000 duPont (E.I.) deNemours & Co.
5.48%, 05/22/98.............................. 21,007,630
50,000,000 duPont (E.I.) deNemours & Co.
5.43%, 05/28/98.............................. 49,796,375
-------------
82,793,005
-------------
Technology - 2.48%
40,000,000 Ameritech Corp.
5.41%, 05/12/98.............................. 39,933,878
40,000,000 Ameritech Corp.
5.48%, 05/15/98.............................. 39,914,756
-------------
79,848,634
-------------
Agricultural - 2.32%
25,000,000 Cargill, Inc.
5.54%, 05/01/98.............................. 25,000,000
25,000,000 Cargill, Inc.
5.42%, 05/19/98.............................. 24,932,250
25,000,000 Cargill, Inc.
5.46%, 06/10/98.............................. 24,848,333
-------------
74,780,583
-------------
Utilities - 1.53%
25,000,000 AMOCO Co.
5.43%, 07/16/98.............................. 24,713,417
25,000,000 AMOCO Co.
5.45%, 07/21/98.............................. 24,693,438
-------------
49,406,855
-------------
Total Commercial Paper....................... 2,147,477,626
-------------
(Cost $2,147,477,626)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 14.37%
Federal Home Loan Mortgage Corporation - 7.39%
40,000,000 5.44%, 05/08/98 (A)......................... 39,957,689
40,000,000 5.42%, 05/29/98 (A)......................... 39,831,378
See Notes to Financial Statements.
10
<PAGE>
THE GALAXY FUND
Money Market Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
Value
Par Value (Note 2)
- --------- --------
Federal Home Loan
Mortgage Corporation (continued)
$ 25,000,000 5.58%, 06/05/98 (A)......................... $ 24,864,375
35,000,000 5.42%, 06/08/98 (A)......................... 34,799,761
20,000,000 5.43%, 06/22/98 (B)......................... 19,992,496
40,000,000 5.40%, 07/23/98 (A)......................... 39,502,000
40,000,000 5.32%, 10/09/98 (A)......................... 39,048,311
-------------
237,996,010
-------------
Federal Home Loan Bank - 3.57%
45,000,000 5.43%, 05/06/98 (A)......................... 44,966,063
35,000,000 5.41%, 06/12/98 (A)......................... 34,779,092
35,000,000 5.43%, 07/07/98 (B)......................... 34,993,667
-------------
114,738,822
-------------
Federal National Mortgage Association (A) - 3.41%
40,000,000 5.42%, 06/24/98............................. 39,674,800
40,000,000 5.41%, 07/10/98............................. 39,579,611
31,000,000 5.39%, 07/27/98............................. 30,596,199
-------------
109,850,610
-------------
Total U.S. Government and
Agency Obligations........................ 462,585,442
(Cost $462,285,442) -------------
CORPORATE NOTES AND BONDS - 7.38%
Banking (B) - 4.46%
25,000,000 NationsBank of Texas, Bank Note
5.78%, 12/18/98............................. 25,026,264
7,500,000 NationsBank Corp, MTN
5.72%, 08/25/98............................. 7,504,005
53,000,000 PNC Bank NA, Bank Note
5.68%, 06/05/98............................. 53,002,620
18,200,000 PNC Bank NA, Bank Note
5.68%, 09/25/98............................. 18,205,052
40,000,000 U.S. Bank National Association
of Minnesota, Bank Note
5.53%, 10/21/98............................. 39,986,994
-------------
143,724,935
-------------
Finance (B) - 2.92%
14,000,000 Caterpillar Financial Services Corp.
Series, MTN
5.89%, 10/19/98............................. 14,017,603
40,000,000 Deere (John) Capital Corp., MTN
5.49%, 02/09/99............................. 39,981,326
40,000,000 IBM Credit Corp., MTN
5.47%, 09/10/98............................. 39,990,420
-------------
93,989,349
-------------
Total Corporate Notes and Bonds 237,714,284
(Cost $237,714,284) -------------
CERTIFICATES OF DEPOSIT - 4.72%
$ 32,000,000 ABN-AMRO Bank, NV
Yankee
5.82%, 07/17/98............................. $ 31,991,967
40,000,000 Canadian Imperial Bank of Commerce
Yankee
5.55%, 06/15/98............................. 40,000,000
40,000,000 Canadian Imperial Bank of Commerce
Yankee
5.62%, 06/22/98............................. 40,000,000
40,000,000 National Westminster Bank, Plc
Yankee
5.51%, 05/27/98............................. 40,000,284
-------------
Total Certificates of Deposit .............. 151,992,251
(Cost $151,992,251) -------------
REPURCHASE AGREEMENT - 6.95%
223,788,000 Repurchase Agreement with:
State Street
5.49%, 05/01/98, dated 04/30/98
Repurchase Price $223,822,128
(Collateralized by U.S. Treasury Bonds
8.38%, Due 2008;
Total Par $201,304,000;
Market Value $228,069,225).................. 223,788,000
-------------
Total Repurchase Agreement.................. 223,788,000
-------------
(Cost $223,788,000)
Total Investments - 100.11%.................................. 3,223,557,603
(Cost $3,223,557,603)*
Net Other Assets and Liabilities - (0.11)%................... (3,562,172)
--------------
Net Assets - 100.00%......................................... $3,219,995,431
==============
</TABLE>
- -------------------------------------------------------
* Aggregate cost for federal tax purposes.
(A) Discount yield at time of purchase
(B) Interest is reset at various time intervals. The interest rate shown
reflects the rate in effect at April 30, 1998.
(C) Securities exempt from registration under section 4(2) of the Securities
Act of 1933, as amended. These securities may be resold to qualified
institutional buyers. At April 30, 1998, these securities amounted to
$94,616,799 or 2.94% of net assets.
MTN Medium Term Note
See Notes to Financial Statements.
11
<PAGE>
THE GALAXY FUND
Government Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
THE GALAXY FUND
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 84.29%
Federal Home Loan Mortgage Corporation - 30.65%
$ 25,000,000 5.43%, 05/08/98 (A)......................... $ 24,973,604
35,000,000 5.46%, 05/13/98 (A)......................... 34,936,300
25,000,000 5.43%, 05/15/98 (A)........................ 24,947,208
30,000,000 5.42%, 05/28/98 (A)......................... 29,878,050
30,000,000 5.42%, 05/29/98 (A)......................... 29,873,533
30,000,000 5.40%, 06/10/98 (A)......................... 29,820,000
35,000,000 5.39%, 06/18/98 (A)......................... 34,748,467
35,971,000 5.42%, 06/19/98 (A)......................... 35,705,417
30,000,000 5.43%, 06/22/98 (B)......................... 29,996,670
20,000,000 5.42%, 06/26/98 (A)......................... 19,831,378
30,000,000 5.40%, 07/15/98 (A)......................... 29,662,500
35,000,000 5.35%, 09/18/98 (A)......................... 34,271,804
-------------
358,644,931
-------------
Federal National Mortgage Association - 26.97%
23,515,000 5.44%, 05/07/98 (A)......................... 23,493,680
30,000,000 5.40%, 05/11/98 (A)......................... 29,955,000
40,000,000 5.36%, 05/18/98 (A)......................... 39,898,850
14,925,000 5.42%, 05/27/98 (A)......................... 14,866,631
30,000,000 5.42%, 06/05/98 (A)......................... 29,842,063
50,000,000 5.37%, 06/12/98 (A)......................... 49,686,750
25,000,000 5.27%, 06/15/98 (A)......................... 24,835,313
25,000,000 5.41%, 07/10/98 (A)......................... 24,737,257
20,000,000 5.37%, 08/12/98............................. 19,985,571
20,000,000 5.71%, 09/09/98 MTN......................... 19,991,056
38,350,000 5.57%, 11/09/98 MTN (B)..................... 38,349,737
-------------
315,641,908
-------------
Federal Home Loan Bank - 15.73%
30,000,000 5.43%, 05/01/98 (A)......................... 30,000,000
30,000,000 5.43%, 05/06/98 (A)......................... 29,977,375
12,336,000 5.42%, 05/08/98 (A)......................... 12,322,999
32,500,000 5.43%, 05/15/98 (A)......................... 32,431,371
15,000,000 5.41%, 06/12/98 (A)......................... 14,905,325
25,000,000 5.43%, 07/07/98 (B)......................... 24,995,477
20,000,000 5.47%, 10/02/98 (B)......................... 19,994,250
20,000,000 5.32%, 10/16/98 (A)......................... 19,503,465
-------------
184,130,262
-------------
Federal Farm Credit Bank - 9.23%
$ 52,574,000 5.35%, 05/01/98............................. $ 52,574,000
15,000,000 5.50%, 06/01/98............................. 15,000,000
10,000,000 5.40%, 07/01/98 (A)......................... 9,908,500
20,000,000 5.46%, 09/02/98 MTN (B)..................... 19,994,361
11,000,000 5.22%, 03/05/99 (A)......................... 10,508,740
-------------
107,985,601
-------------
Student Loan Marketing Association - 1.71%
20,000,000 5.55%, 11/25/98 MTN (B)..................... 20,000,000
-------------
Total U.S. Government
and Agency Obligations................ 986,402,702
-------------
(Cost $986,402,702)
REPURCHASE AGREEMENT - 15.85%
185,516,000 Repurchase Agreement with:
State Street
5.49%, 05/01/98, dated 04/30/98
Repurchase Price $185,544,291
(Collateralized by U.S. Treasury Bonds
10.64%, Due 2015;
Total Par $125,525,000;
Market Value $189,228,938).................. 185,516,000
-------------
Total Repurchase Agreement.................. 185,516,000
-------------
(Cost $185,516,000)
Total Investments - 100.14%.................................. 1,171,918,702
-------------
(Cost $1,171,918,702)*
Net Other Assets and Liabilities - (0.14)%................... (1,611,136)
-------------
Net Assets - 100.00%......................................... $ 1,170,307,566
===============
</TABLE>
- --------------------------------------------
* Aggregate cost for federal tax purposes
(A) Discount yield at time of purchase
(B) Interest is reset at various time intervals. The interest rate shown
reflects the rate in effect at April 30, 1998.
MTN Medium Term Note
See Notes to Financial Statements.
12
<PAGE>
THE GALAXY FUND
Tax-Exempt Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
MUNICIPAL SECURITIES - 99.13%
Alabama - 3.45%
$2,000,000 Mobile Industrial
Development Board
Exempt Facility Revenue
Kimberly-Clark Tissue Project
4.10%, 04/01/15 (A)
Guaranteed: Kimberly-Clark Corp. ......... $ 2,000,000
1,400,000 Montgomery Industrial
Development Board PCR Solid Waste
General Electric Co. Project
3.50%, 06/09/98
Guaranteed: General Electric Co. ......... 1,400,000
2,000,000 Montgomery Industrial
Development Board PCR Solid Waste
General Electric Co. Project
3.55%, 06/09/98
Guaranteed: General Electric Co. ......... 2,000,000
5,580,000 Montgomery Industrial
Development Board PCR Solid Waste
3.45%, 06/12/98
Guaranteed: General Electric Co. ......... 5,580,000
700,000 North Alabama Environmental
Improvement Authority, PCR
Reynolds Metals Co. Project
4.30%, 12/01/00 (A)
LOC: Bank of Nova Scotia ................. 700,000
1,000,000 Phoenix County Industrial
Development Board
Environmental Improvements Revenue
Georgia Kraft Project
4.20%, 12/01/15 (A)
LOC: Deutsche Bank AG .................... 1,000,000
----------
12,680,000
----------
Alaska - 3.94%
5,000,000 Valdez Marine Terminal Revenue
Exxon Pipeline Co. Project, Series A
4.20%, 12/01/33 (A)
Guaranteed: Exxon Corp. .................. 5,000,000
5,000,000 Valdez Marine Terminal Revenue
ARCO Transportation Project, Series A
3.30%, 05/13/98 .......................... 5,000,000
Guaranteed: ARCO
4,500,000 Valdez Marine Terminal Revenue
ARCO Transportation Project, Series A
3.50%, 06/10/98
Guaranteed: ARCO.......................... 4,500,000
----------
14,500,000
----------
Arizona - 0.76%
$2,800,000 Maricopa County, PCR
Arizona Public Service Co., Series F
4.25%, 05/01/29 (A)
LOC: Bank of America NT & SA ............. $ 2,800,000
----------
Arkansas - 1.80%
5,400,000 Crossett PCR
Georgia Pacific Corp. Project
4.10%, 10/01/07 (A)
LOC: Toronto Dominion Bank ............... 5,400,000
1,200,000 Pulaski County, PCR
Minnesota Mining & Manufacturing
4.10%, 08/01/22 (A)
Guaranteed: Minnesota
Mining & Manufacturing ................... 1,200,000
----------
6,600,000
----------
Colorado - 2.95%
2,835,000 Colorado HFA
Boulder Community Hospital, Series B
4.10%, 10/01/14 (A)
Insured: MBIA
SPA: Rabobank Nederland NV ............... 2,835,000
1,000,000 Colorado HFA
Boulder Community Hospital, Series C
4.10%, 10/01/14 (A)
Insured: MBIA
SPA: Rabobank Nederland NV ............... 1,000,000
7,000,000 Moffat County, PCR
UTE Electric Co.
4.10%, 07/01/10 (A)
Insured: AMBAC
SPA: Societe Generale .................... 7,000,000
----------
10,835,000
----------
Connecticut - 0.27%
1,000,000 Connecticut State Special Assessment
Unemployment Compensation
Advisory Fund, Series C
3.90%, 11/15/01 (A)
SPA: FGIC ................................ 1,000,000
----------
Delaware - 1.09%
4,000,000 Delaware State Economic Development
Authority, IDR
Gore & Associates, Barksdale
3.65%, 08/12/98
LOC: Morgan Guaranty Trust Co. ........... 4,000,000
----------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
THE GALAXY FUND
Tax-Exempt Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
Florida - 3.75%
$10,000,000 Putnam County Development Authority
PCR, Seminole Electric Cooperative
Series D
3.70%, 12/15/09 (A)
Guaranteed: National Rural
Utilities CFC ............................ $10,000,000
3,800,000 West Orange Memorial Hospital
Tax District, Revenue Updates
Series A-2
3.65%, 05/28/98
LOC: Rabobank Nederland NV ............... 3,800,000
----------
13,800,000
----------
Georgia - 6.53%
8,600,000 Burke County Development Authority
PCR, Oglethorpe Power Corp., Series A
4.00%, 01/01/16 (A)
FGIC: Canadian Imperial
Bank of Commerce
LOC: Royal Bank of Canada ................ 8,600,000
6,500,000 Burke County Development Authority
PCR, Oglethorpe Power Corp., Series B
3.80%, 05/28/98
Insured: AMBAC ........................... 6,500,000
7,000,000 Municipal Electric Authority
Project One B
4.05%, 01/01/16 (A)
LOC: ABN-AMRO Bank N.V. .................. 7,000,000
1,900,000 Municipal Electric Authority
Project One - Sub D
4.10%, 01/01/22 (A)
LOC: ABN-AMRO Bank N.V. .................. 1,900,000
----------
24,000,000
----------
Illinois - 9.29%
4,000,000 Chicago, GO
3.55%, 01/31/99
LOC: Morgan Guaranty Trust Co. ........... 4,000,000
6,500,000 Chicago O'Hare International Airport
American Airlines, Series C
4.25%, 12/01/17(A)
LOC: Royal Bank of Canada ................ 6,500,000
1,750,000 Chicago O'Hare International Airport
General Airport, Second Lien, Series A
4.10%, 01/01/15 (A)
LOC: Societe Generale .................... 1,750,000
1,700,000 Chicago O'Hare International Airport
General Airport, Second Lien, Series C
4.05%, 01/01/18 (A) ...................... 1,700,000
LOC: Societe Generale
Illinois (continued)
$ 5,000,000 Illinois Development Finance Authority
PCR, Illinois Power Co. Project, Series A
4.30%, 11/01/28 (A)
LOC: Canadian Imperial
Bank of Commerce ......................... $ 5,000,000
6,300,000 Illinois Educational Facilities Authority
3.60%, 08/26/98
LOC: Northern Trust ...................... 6,300,000
2,600,000 Illinois HFA
Rush-Presbyterian Medical Center
3.50%, 06/08/98
LOC: Northern Trust ...................... 2,600,000
3,600,000 Joliet Regional Port District Marine
Terminal Revenue, Exxon Project
4.20%, 10/01/24 (A)
Guaranteed: Exxon Corp. .................. 3,600,000
2,700,000 Northbrook IDR
Euromarket Designs, Inc.
4.15%, 07/01/02 (A)
LOC: Harris Trust & Savings Bank ......... 2,700,000
----------
34,150,000
----------
Indiana - 2.40%
3,840,000 Fort Wayne Hospital Authority
Parkview Memorial Hospital, Series C
4.10%, 01/01/16 (A)
LOC: Bank of America ..................... 3,840,000
3,000,000 Mount Vernon, PCR
3.45%, 06/15/98
Guaranteed: General Electric ............. 3,000,000
2,000,000 Sullivan, PCR
Series L-5
3.35%, 05/01/98
Guaranteed: National Rural Utilities CFC.. 2,000,000
----------
8,840,000
----------
Louisiana - 2.99%
1,800,000 Lake Charles Harbor &
Terminal District
Port Facilities Revenue
Citgo Petroleum Corp.
4.15%, 08/01/07 (A)
LOC: Westdeutsche Landesbank ............. 1,800,000
1,100,000 Lake Charles Harbor &
Terminal District
Revenue Updates
Reynolds Metals Co. Project
4.10%, 05/01/06 (A)
LOC: Canadian Imperial
Bank of Commerce ......................... 1,100,000
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
THE GALAXY FUND
Tax-Exempt Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
Louisiana (continued)
$1,000,000 Louisiana Public Facilities Authority
PCR, Ciba-Geigy Corp. Project
4.10%, 12/01/04 (A)
LOC: Swiss Bank Corp. .................... $ 1,000,000
1,085,000 Louisiana Public Facilities Authority
College & University
Equipment & Capital, Series A
4.05%, 09/01/10 (A)
Insured: FGIC
SPA: Societe Generale .................... 1,085,000
1,000,000 Louisiana State Offshore Terminal
Authority, Deepwater Port
Loop, Inc. - 1st Stage
4.15%, 09/01/06 (A)
LOC: Union Bank of Switzerland ........... 1,000,000
5,000,000 St. James Parish, PCR
Texaco Project, Series A
3.65%, 05/12/98
Guaranteed: Texaco, Inc. ................. 5,000,000
----------
10,985,000
----------
Massachusetts - 0.49%
1,800,000 Massachusetts State HEFA
Capital Asset Program, Series E
4.10%, 01/01/35 (A)
LOC: First National Bank of Chicago ...... 1,800,000
----------
Michigan - 5.43%
3,500,000 Cornell Township Economic Corp.
IDR, Mead-Escanaba Paper Co.
3.25%, 05/28/98
LOC: Credit Suisse First Boston .......... 3,500,000
4,250,000 Michigan Municipal Bond Authority
Series A
4.25%, 07/31/98 .......................... 4,258,338
8,000,000 Michigan Municipal Bond Authority
Series B
4.50%, 07/02/98 .......................... 8,008,235
4,000,000 Michigan State Building Authority
Series 1
3.80%, 05/07/98
LOC: Canadian Imperial
Bank of Commerce.......................... 4,000,000
200,000 Michigan State Strategic Fund, PCR
Consumers Power Project
4.20%, 04/15/18 (A)
LOC: Union Bank of Switzerland ........... 200,000
----------
19,966,573
----------
Missouri - 1.66%
$6,100,000 Missouri State Environmental
Improvement & Energy Resource
Authority, Union Electric Co.
Series A, PCR
3.60%, 07/13/98
LOC: Union Bank of Switzerland ........... $ 6,100,000
----------
Montana - 2.72%
10,000,000 Forsyth, PCR
Portland General Electric, Series A
4.05%, 06/01/13 (A)
LOC: Union Bank of Switzerland ........... 10,000,000
----------
Nevada - 0.57%
2,100,000 Reno Hospital
St Mary's Regional Medical Center
Series B
4.20%, 05/15/23 (A)
Insured: MBIA
SPA: Rabobank Nederland NV ............... 2,100,000
----------
New Mexico - 2.39%
900,000 Farmington PCR
Arizona Public Service Co., Series B
4.15%, 09/01/24 (A)
LOC: Barclays Bank Plc ................... 900,000
2,900,000 Farmington PCR
El Paso Electric Co., Series B
4.05%, 11/01/13 (A)
LOC: Barclays Bank Plc ................... 2,900,000
5,000,000 New Mexico State, TRAN
4.50%, 06/30/98 .......................... 5,004,983
----------
8,804,983
----------
New York - 1.07%
1,000,000 New York State Energy
Research & Development Authority
Niagra Mohawk Power Corp., Series C
4.20%, 12/01/25 (A)
LOC: Canadian Imperial
Bank of Commerce ......................... 1,000,000
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
THE GALAXY FUND
Tax-Exempt Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
New York (continued)
$2,000,000 New York State Energy
Research & Development Authority
Orange & Rockland Project, Series A
3.90%, 10/01/14 (A)
Insured: FGIC
LOC: Societe Generale .................... $ 2,000,000
960,000 New York State
Housing Finance Agency
Hospital Special Surgery Staff, Series A
4.50%, 11/01/10 (A)
LOC: Chase Manhattan Bank, N.A. .......... 960,000
----------
3,960,000
----------
North Carolina - 2.04%
2,700,000 North Carolina Eastern
Municipal Power Agency
Power System, Series B
3.50%, 06/10/98
LOC: Morgan Guaranty Trust Co. ........... 2,700,000
4,800,000 North Carolina Educational Facilities
Finance Agency
Bowman Gray School Project
4.10%, 09/01/26 (A)
LOC: Wachovia Bank
of North Carolina, N.A. .................. 4,800,000
----------
7,500,000
----------
Ohio - 2.09%
1,700,000 Evendale, IDR
SHV Real Estate, Inc.
4.00%, 09/01/15 (A)
LOC: ABN-AMRO Bank NV .................... 1,700,000
1,900,000 Ohio State
Air Quality Development Authority
Cincinnati Gas & Electric, Series A
4.10%, 09/01/30 (A)
LOC: ABN-AMRO Bank NV .................... 1,900,000
1,000,000 Ohio State
Air Quality Development Authority
Environmental, Mead Corp.
4.15%, 10/01/01 (A)
LOC: Deutsche Bank AG .................... 1,000,000
3,100,000 Toledo-Lucas County Port Authority
CSX Transportation, Inc. Project
3.50%, 05/11/98
LOC: Bank of Nova Scotia ................. 3,100,000
----------
7,700,000
----------
Oregon - 1.96%
$7,200,000 Port Portland, PCR
Reynolds Metals Co.
4.25%, 12/01/09 (A)
LOC: Bank of Nova Scotia ................. $ 7,200,000
----------
Pennsylvania - 8.46%
8,000,000 Allegheny County, HDA
Health Center Development, Inc.
Series B
3.40%, 05/29/98
LOC: PNC Bank, N.A. ...................... 8,000,000
3,100,000 Beaver County, IDA
3.40%, 05/27/98
LOC: Swiss Bank Corp. .................... 3,100,000
2,000,000 Beaver County, IDA, PCR
Duquesne-Beaver Valley, Series A
4.05%, 08/01/20 (A)
LOC: Barclays Bank Plc ................... 2,000,000
4,800,000 Beaver County, IDA, PCR
Duquesne-Mansfield, Series B
4.05%, 08/01/09 (A)
LOC: Barclays Bank PLC ................... 4,800,000
6,300,000 Delaware County, IDA, PCR
Philadelphia Electric, Series A
3.60%, 06/25/98
Insured: FGIC............................. 6,300,000
6,900,000 Delaware Valley
Regional Finance Authority
Local Government Revenue, Series C
4.00%, 12/01/20 (A)
LOC: Credit Suisse First Boston .......... 6,900,000
----------
31,100,000
----------
South Carolina - 0.50%
620,000 South Carolina Jobs
Economic Development Authority
St. Francis Hospital
4.25%, 07/01/22 (A)
LOC: Chase Manhattan Bank, N.A. .......... 620,000
1,200,000 South Carolina State
Capital Improvement, GO
5.50%, 04/01/99 .......................... 1,220,927
----------
1,840,927
----------
Tennessee - 1.99%
3,800,000 Chattanooga-Hamilton County
Hospital Authority
4.25%, 10/01/17 (A)
LOC: Morgan Guaranty Trust Co. ........... 3,800,000
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
THE GALAXY FUND
Tax-Exempt Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
Tennessee (continued)
$3,500,000 Knox County, Industrial
Development Board
Old Kingston Properties. Ltd.
3.80%, 12/01/14 (A)
Insured: FGIC
LOC: BankBoston .......................... $ 3,500,000
----------
7,300,000
----------
Texas - 17.31%
4,000,000 Brazos River Authority, PCR
Texas Utilities, Series B
4.30%, 02/01/32 (A)
Insured: MBIA
SPA: Bank of New York .................... 4,000,000
8,100,000 Guadalupe-Blanco River Authority
PCR, Central Power & Light Co. Project
4.25%, 11/01/15 (A)
LOC: ABN-AMRO Bank NV .................... 8,100,000
8,000,000 Gulf Coast Waste Disposal Authority
Amoco Oil Co. Project
4.20%, 10/01/17 (A)
Guaranteed: Amoco Oil Co. ................ 8,000,000
7,500,000 Gulf Coast Waste Disposal Authority
PCR, Exxon Project
3.45%, 07/14/98
Guaranteed: Exxon Corp. .................. 7,500,000
1,300,000 Harris County, HFDC
Texas Medical Center Project
4.30%, 02/15/22 (A)
Insured: MBIA
SPA: Texas Commerce Bank NA .............. 1,300,000
5,000,000 Hockley County, IDC, PCR
Amoco Project, Standard Oil Co.
3.78%, 03/01/14 (A)
Guaranteed: Amoco Oil Co. ................ 5,001,152
4,700,000 Lower Neches Valley Authority
Chevron USA, Inc. Project
3.45%, 02/15/17 (A)
Guaranteed: Chevron Corp. ................ 4,700,000
4,600,000 Plano HFDC, Hospital Revenue
Childrens & Presbyterian Hospital
3.60%, 07/13/98
Insured: MBIA
SPA: Texas Commerce Bank, N.A. ........... 4,600,000
Texas (continued)
$7,200,000 Sabine River Authority, PCR
Texas Utilities Project, Series A
4.25%, 03/01/26 (A)
Insured: AMBAC
SPA: Bank of New York .................... $ 7,200,000
1,200,000 Texas A&M, Series B
Permanent University Fund
3.70%, 05/05/98
LOC: Morgan Guaranty Trust Co. ........... 1,200,000
12,000,000 Texas State, TRAN, Series A
4.75%, 08/31/98........................... 12,038,185
----------
63,639,337
----------
Utah - 1.50%
1,500,000 Intermountain Power Agency
Series 1985-E
3.65%, 06/08/98
Insured: AMBAC
SPA: Union Bank of Switzerland ........... 1,500,000
4,000,000 Intermountain Power Agency
Series 1985-F
3.30%, 05/13/98
LOC: Swiss Bank Corp. .................... 4,000,000
----------
5,500,000
----------
Virgina - 0.33%
1,200,000 Peninsula Ports Authority Coal Terminal
Dominion Terminal Project, Series C
4.15%, 07/01/16 (A)
LOC: National Westminster Plc ............ 1,200,000
----------
Washington - 4.72%
6,750,000 Seattle Municipal Light &
Power Revenue
3.40%, 08/03/98
SPA: Morgan Guaranty Trust Co. ........... 6,750,000
1,000,000 Snohomish County Public Utility
District No. 1, Electric Revenue
Generation System
4.00%, 01/01/25 (A)
Insured: MBIA
SPA: Bayerische Vereinsbank .............. 1,000,000
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
THE GALAXY FUND
Tax-Exempt Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
Washington (continued)
$5,400,000 Washington State
Public Power Supply System
Nuclear Project No. 1 Revenue,
Series 1A-1
4.10%, 07/01/17 (A)
LOC: Bank of America NT & SA ............. $ 5,400,000
4,220,000 Washington State Public Power Supply
Nuclear Project No. 1 Revenue
Series 1A-3
4.10%, 07/01/17 (A)
LOC: Morgan Guaranty Trust Co. ........... 4,220,000
----------
17,370,000
----------
Wyoming - 4.68%
3,200,000 Converse County, PCR
Pacificorp Project
3.40%, 05/04/98
LOC: Deutsch Bank AG ..................... 3,200,000
3,600,000 Gillette, PCR
Pacificorp Project
3.50%, 05/05/98
LOC: Deutsche Bank AG .................... 3,600,000
2,600,000 Platte County, PCR
Tri-State G & T, Series A
4.30%, 07/01/14 (A)
LOC: Societe Generale .................... 2,600,000
7,800,000 Sweetwater County, PCR
Pacificorp Project, Series A
3.40%, 05/04/98
LOC: Union Bank of Switzerland ........... 7,800,000
----------
17,200,000
----------
Total Municipal Securities ............... 364,471,820
(Cost $364,471,820) ----------
Value
Shares (Note 2)
- --------- --------
INVESTMENT COMPANY - 0.41%
1,504,627 Federated Tax-Free Obligations Fund ...... $ 1,504,627
----------
Total Investment Company ................. 1,504,627
(Cost $1,504,627) ----------
Total Investments - 99.54% ................................ 365,976,447
(Cost $365,976,447)* ----------
Net Other Assets and Liabilities - 0.46% .................. 1,687,140
----------
Net Assets - 100.00% ...................................... $367,663,587
===========
</TABLE>
- ----------------------
* Aggregate cost for federal tax purposes
(A) Variable rate demand notes are payable upon not more than one, seven
or thirty business days notice. Put bonds and notes have demand
features which mature within one year. The interest rate shown
reflects the rate in effect at April 30, 1998.
AMBAC American Municipal Bond Assurance Corp.
ARCO Atlantic Richfield Co.
CFC Cooperative Finance Corp.
FGIC Federal Guaranty Insurance Corp.
GO General Obligation
HDA Health Development Authority
HEFA Health and Educational Facilities Authority
HFA Health Facilities Authority
HFDC Health Facilities Development Corp.
IDA Industrial Development Authority
IDC Industrial Development Corp.
IDR Industrial Development Revenue
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SPA Stand-by Purchase Agreement
TRAN Tax and Revenue Anticipation Notes
See Notes to Financial Statements.
18
<PAGE>
THE GALAXY FUND
U.S. Treasury Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 99.07%
U.S. Treasury Notes - 50.90%
$ 70,000,000 6.13%, 05/15/98 .......................... $ 70,020,589
30,000,000 9.00%, 05/15/98 .......................... 30,040,109
20,000,000 6.00%, 05/31/98 .......................... 20,006,071
65,000,000 6.25%, 06/30/98 .......................... 65,101,936
80,000,000 8.25%, 07/15/98 .......................... 80,480,312
65,000,000 6.25%, 07/31/98 .......................... 65,147,893
20,000,000 5.88%, 08/15/98 .......................... 20,024,419
75,000,000 6.13%, 08/31/98 .......................... 75,171,072
10,000,000 6.00%, 09/30/98 .......................... 10,023,817
30,000,000 5.63%, 11/30/98 .......................... 30,033,006
20,000,000 6.38%, 04/30/99 .......................... 20,169,199
----------
486,218,423
----------
Federal Home Loan Bank - 22.53%
136,981,000 5.43%, 05/01/98 (A) ...................... 136,981,000
13,295,000 5.44%, 05/06/98 (A) ...................... 13,284,955
20,000,000 5.42%, 05/08/98 (A) ...................... 19,978,922
15,000,000 5.43%, 07/07/98 (B) ...................... 14,997,286
20,000,000 5.43%, 09/17/98 (A) ...................... 19,994,638
10,000,000 5.46%, 10/02/98 (A) ...................... 9,997,125
----------
215,233,926
----------
U.S. Treasury Bills (A) - 15.17%
15,000,000 5.08%, 05/14/98 .......................... 14,972,483
31,000,000 5.11%, 05/28/98 .......................... 30,881,133
15,000,000 4.78%, 06/11/98 .......................... 14,918,342
50,000,000 4.86%, 07/09/98 .......................... 49,534,250
35,000,000 4.88%, 07/30/98 .......................... 34,573,000
----------
144,879,208
----------
Federal Farm Credit Bank - 6.28%
$ 15,000,000 5.35%, 05/01/98 .......................... $ 15,000,000
25,000,000 5.50%, 06/01/98 .......................... 25,000,000
20,000,000 5.46%, 09/02/98 MTN (B)................... 19,994,361
----------
59,994,361
----------
Student Loan
Marketing Association (B) - 4.19%
15,000,000 5.35%, 08/20/98 .......................... 14,992,035
25,000,000 5.55%, 11/25/98 MTN ...................... 25,000,000
----------
39,992,035
----------
Total Investments - 99.07%................................. 946,317,953
(Cost $946,317,953) ----------
Net Other Assets and Liabilities - .93% ................... 8,846,335
----------
Net Assets - 100.00%....................................... $955,164,288
==========
</TABLE>
- ----------------------------
* Aggregate cost for federal tax purposes
(A) Discount yield at time of purchase
(B) Interest is reset at various time intervals. The interest rate shown
reflects the rate in effect at April 30, 1998
MTN Medium Term Note
See Notes to Financial Statements.
19
<PAGE>
THE GALAXY FUND
Connecticut Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
MUNICIPAL SECURITIES - 98.55%
Alabama - 1.79%
$2,700,000 McIntosh Industrial
Development Board, PCR
Ciba-Geigy Corp. Project
4.25%, 07/01/04 (A)
LOC: Credit Suisse First Boston .......... $ 2,700,000
----------
Arizona - 1.46%
2,200,000 Farmington, NM, PCR
Arizona Public Services Co.
Series B
4.15%, 09/01/24 (A)
LOC: Barclays Bank Plc ................... 2,200,000
----------
California - 0.86%
1,300,000 Los Angeles Regional Airports
Improvement Corp.
Lease Revenue, Sublease
LA International Airport
4.25%, 12/01/24 (A)
LOC: Societe Generale .................... 1,300,000
----------
Connecticut - 62.07%
6,300,000 Connecticut State
Series B, GO
4.00%, 05/15/14 (A)
SPA: Bayerische Landesbank GZ. ........... 6,300,000
1,000,000 Conneticut State Clean Water Fund
6.30%, 07/01/98........................... 1,003,981
2,600,000 Connecticut State
Development Authority, PCR
Central Vermont Public Service
3.50%, 12/01/15 (A)
LOC: Toronto Dominion Bank ............... 2,600,000
1,300,000 Connecticut State
Development Authority
Conco Project
3.90%, 11/01/05 (A)
LOC: Bayerische Vereinsbank AG ........... 1,300,000
7,800,000 Connecticut State
Development Authority, PCR
Connecticut Light & Power Co. Project
Series A
4.05%, 09/01/28 (A)
LOC: Deutsche Bank AG ..................... 7,800,000
6,100,000 Connecticut State
Development Authority
Health Care Corp.
for Independent Living
3.85%, 07/01/15 (A)
LOC: Chase Manhattan Bank, N.A. .......... 6,100,000
Connecticut (continued)
$2,400,000 Connecticut State
Development Authority, PCR
Western Massachusetts Electric Co.
Series A
3.90%, 09/01/28 (A)
LOC: Union Bank of Switzerland ........... $ 2,400,000
4,000,000 Connecticut State HEFA
Guaranteed: Yale University
3.25%, 06/01/98........................... 4,000,000
1,500,000 Connecticut State HEFA
Guaranteed: Yale University
3.50%, 08/03/98........................... 1,500,000
1,000,000 Connecticut State HEFA
Sharon Hospital Issue, Series A
4.25%, 07/01/27 (A)
LOC: BankBoston, N.A...................... 1,000,000
1,205,000 Connecticut State HEFA
Yale-New Haven Hospital, Series E
3.90%, 06/01/12 (A)
Insured: FGIC............................. 1,205,000
1,000,000 Connecticut State HEFA
Yale University, Series T-1
3.95%, 07/01/29 (A)
Guaranteed: Yale University............... 1,000,000
8,400,000 Connecticut State
Housing Finance Authority
Housing Mortgage Finance Program
Series G
3.90%, 05/15/18 (A)
SPA: Morgan Guaranty
Insured: AMBAC............................ 8,400,000
3,500,000 Connecticut State, IDA
Allen Group, Inc.
3.60%, 02/01/13 (A)
LOC: Bayerische Vereinsbank AG ........... 3,500,000
600,000 Connecticut State, IDA
Martin-Brower Co. Project
3.85%, 05/01/05 (A)
LOC: Chase Manhattan Bank, N.A. .......... 600,000
1,000,000 Connecticut State, IDA
Trudy Corp. Project 1984
3.65%, 09/01/09 (A)
LOC: Citibank............................. 1,000,000
6,000,000 Connecticut State Special Assessment
Unemployment Compensation
Advisory Fund, Series C
3.90%, 11/15/01 (A)
SPA: FGIC................................. 6,000,000
3,500,000 Connecticut State Special Assessment
2nd Injury Fund
3.50%, 05/01/98
LOC: Credit Agricole...................... 3,500,000
2,000,000 Connecticut State Special Assessment
2nd Injury Fund
3.40%, 05/01/98
LOC: Credit Agricole...................... 2,000,000
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
THE GALAXY FUND
Connecticut Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
Connecticut (continued)
$2,500,000 Connecticut State Special Assessment
2nd Injury Fund
3.40%, 05/21/98
LOC: Credit Agricole...................... $ 2,500,000
9,700,000 Connecticut State Special Tax Obligation
Revenue, Second Lien, Transportation
Infrastructure, Series 1
4.10%, 12/01/10 (A)
LOC: Commerzbank AG....................... 9,700,000
500,000 Cromwell Fire District, BAN
3.96%, 09/09/98........................... 500,438
1,000,000 Hartford Redevelopment Agency
Multi-Family Mortgage Revenue
Underwood Tower Project
4.25%, 06/01/20 (A)
SPA:Barclays Bank Plc
Insured: FSA.............................. 1,000,000
2,090,000 Manchester, Temporary Notes, Lot B
4.00%, 07/09/98........................... 2,091,199
3,665,000 New Canaan, BAN
4.00%, 03/09/99........................... 3,681,650
5,000,000 Trumbull, BAN, GO
3.75%, 08/12/98........................... 5,004,161
2,500,000 Westport, BAN, Lot A, GO
4.00%, 06/26/98........................... 2,501,100
5,500,000 Wilton, BAN, GO
4.00%, 07/21/98........................... 5,503,751
----------
93,691,280
----------
Idaho - 0.46%
700,000 Power County, PCR
FMC Corp. Project
4.25%, 12/01/10 (A)
LOC: Wachovia Bank........................ 700,000
----------
Illinois - 0.99%
100,000 Chicago O'Hare International Airport
General Airport, Second Lien, Series A
4.10%, 01/01/15 (A)
LOC: Societe Generale..................... 100,000
1,400,000 Joliet Regional Port District
Marine Terminal Revenue
Exxon Project
4.20%, 10/01/24 (A)
Guaranteed: Exxon Corp.................... 1,400,000
----------
1,500,000
----------
Indiana - 0.73%
1,100,000 Princeton, PCR
PSI Energy, Inc. Project
4.25%, 03/01/19 (A)
LOC: Canadian Imperial
Bank of Commerce.......................... 1,100,000
----------
Nevada - 2.58%
$3,900,000 Reno Nevada Hospital
Saint Mary's Regional, Series B
4.20%, 05/15/23 (A)
Insured: MBIA
SPA:Rabobank Nederland NV................. $ 3,900,000
----------
Ohio - 0.93%
1,400,000 Ohio State
Air Quality Development Authority
Cincinnati Gas & Electric, Series A
4.10%, 09/01/30 (A)
LOC: ABN-AMRO Bank NV..................... 1,400,000
----------
Oregon - 3.71%
5,600,000 Port Portland PCR
Reynolds Metals
4.25%, 12/01/09 (A)
LOC: Bank of Nova Scotia.................. 5,600,000
----------
Pennsylvania - 0.99%
1,500,000 Delaware County, IDA, PCR
Philadelphia Electric, Series A
3.60%, 06/25/98
Insured: FGIC............................. 1,500,000
----------
Puerto Rico - 15.28%
8,500,000 Puerto Rico Commonwealth
Government Development Bank
3.90%, 12/01/15 (A)
LOC: Credit Suisse First Boston .......... 8,500,000
4,000,000 Puerto Rico Commonwealth
Highway & Transportation Authority
Series A
3.75%, 07/01/28 (A)
SPA: AMBAC, Bank of Nova Scotia .......... 4,000,000
4,543,100 Puerto Rico Commonwealth
Highway & Transportation Authority
Series X
3.90%, 07/01/99 (A)
LOC: Union Bank of Switzerland ........... 4,543,100
6,000,000 Puerto Rico Commonwealth
TRAN, Series A
4.50%, 07/30/98........................... 6,010,866
----------
23,053,966
----------
South Carolina - 3.45%
5,210,000 South Carolina Jobs Economic Development
Authority, St. Francis Hospital
4.25%, 07/01/22 (A)
LOC: Chemical Bank........................ 5,210,000
----------
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
THE GALAXY FUND
Connecticut Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
Texas - 1.86%
$2,800,000 Sabine River Authority, PCR
Texas Utilities Project, Series A
4.25%, 03/01/26 (A)
SPA: Bank of New York
Insured: AMBAC............................ $ 2,800,000
----------
Wyoming - 1.39%
2,100,000 Uinta County PCR,
Chevron, USA, Inc.
4.10%, 12/01/22 (A)
Guaranteed: Chevron Corp.................. 2,100,000
----------
Total Municipal Securities................ 148,755,246
(Cost $148,755,246) ----------
Shares
------
INVESTMENT COMPANIES - 0.87%
394,511 Dreyfus Connecticut
Municipal Money Market Fund .............. 394,511
917,598 Federated Municipal Trust
Connecticut Municipal Cash Trust ......... 917,598
----------
Total Investment Companies ............... 1,312,109
(Cost $1,312,109) ----------
Total Investments - 99.42% ................................ 150,067,355
(Cost $150,067,355)* ----------
Net Other Assets and Liabilities - 0.58% .................. 872,865
----------
Net Assets - 100.00% ...................................... $150,940,220
==========
</TABLE>
- ---------------------------------
* Aggregate cost for federal tax purposes
(A) Variable rate demand notes are payable upon not more than one, seven
or thirty business days notice. Put bonds and notes have demand
features which mature within one year. The interest rate shown
reflects the rate in effect at April 30, 1998.
AMBAC American Municipal Bond Assurance Corp.
BAN Bond Anticipation Notes
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
HEFA Health and Educational Facilities Authority
IDA Industrial Development Authority
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Polution Control Revenue
SPA Stand-by Purchase Agreement
TRAN Tax and Revenue Anticipation Notes
See Notes to Financial Statements.
22
<PAGE>
THE GALAXY FUND
Massachusetts Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
MUNICIPAL SECURITIES - 98.10%
Alaska - 1.75%
$1,600,000 Valdez Alaska Marine Terminal
Exxon Pipeline Co., Project C
4.20%, 12/01/33 (A)
Guaranteed: Exxon Corp.................... $ 1,600,000
----------
Arizona - 0.55%
500,000 Maricopa County, PCR
Arizona Public Service Co., Series A
4.30%, 05/01/29 (A)
LOC: Morgan Guaranty Trust Co. ........... 500,000
----------
Illinois - 1.96%
300,000 Chicago O'Hare International Airport
American Airlines, Series A
4.25%, 12/01/17 (A)
LOC: Credit Suisse First Boston .......... 300,000
1,500,000 Illinois Educational Facilities Authority
Revenue
3.60%, 08/26/98
LOC: Northern Trust....................... 1,500,000
----------
1,800,000
----------
Indiana - 1.64%
1,500,000 Sullivan, PCR, Series L-5
3.60%, 05/26/98
Guaranteed: National Rural
Utilities CFC............................. 1,500,000
----------
Massachusetts - 69.70%
1,245,000 Arlington, BAN, GO
4.00%, 08/19/98........................... 1,246,739
1,000,000 Boston Water & Sewer Commission
General Purpose, Senior Series A
3.90%, 11/01/24 (A)
LOC: State Street......................... 1,000,000
1,200,000 Boxford, BAN
4.00%, 08/14/98........................... 1,201,024
2,255,000 Brookline, BAN, GO
4.00%, 06/04/98........................... 2,255,523
1,410,000 Concord, BAN, GO
4.13%, 05/28/98........................... 1,410,491
2,900,000 Massachusetts Bay
Transportation Authority
General Transportation System
Series 1984-A
3.75%, 03/01/14 (A)
LOC: State Street......................... 2,900,000
Massachusetts (continued)
$2,500,000 Massachusetts Municipal
Wholesale Electric Co.
Power Supply System, Series C
3.90%, 07/01/19 (A)
Insured: MBIA
LOC: Credit Suisse First Boston .......... $ 2,500,000
3,500,000 Massachusetts State HEFA
Amherst College, Series F
3.90%, 11/01/26 (A)
Guaranted: Amherst College................ 3,500,000
1,330,000 Massachusetts State HEFA
Becker College, Series A-1
3.95%, 07/01/28 (A)
LOC: BankBoston NA........................ 1,330,000
2,000,000 Massachusetts State HEFA
Capital Asset Program, Series G-1
3.85%, 01/01/19 (A)
SPA: Credit Suisse First Boston
Insured: MBIA............................. 2,000,000
1,985,000 Massachusetts State HEFA
Community Health
Center Capital Fund
Series A
5.00%, 03/01/15 (A)
LOC: BankBoston N.A....................... 1,985,000
1,000,000 Massachusetts State HEFA
Endicott College, Series A
4.00%, 10/01/11 (A)
LOC: BankBoston, N.A...................... 1,000,000
2,500,000 Massachusetts State HEFA
Harvard University
3.90%, 08/01/17 (A)
Guaranteed: Harvard University ........... 2,500,000
1,400,000 Massachusetts State HEFA
Harvard University, Series Q
3.90%, 02/01/16 (A)
Guaranteed: Harvard University ........... 1,400,000
1,000,000 Massachusetts State HEFA
Harvard University, Series Q
3.90%, 09/01/40 (A)
Guaranteed: Harvard University ........... 1,000,000
2,000,000 Massachusetts State HEFA
Newton Wellesley Hospital, Series F
3.90%, 07/01/25 (A)
SPA: Credit Suisse First Boston
Insured: MBIA............................. 2,000,000
2,000,000 Massachusetts State HEFA
Partners Healthcare System, Series P-2
4.00%, 07/01/27 (A)
SPA: Morgan Guaranty
Bayerische Lundersbank
Insured: FSA.............................. 2,000,000
</TABLE>
See Notes to Financial Statements.
23
<PAGE>
THE GALAXY FUND
Massachusetts Municipal Money Market 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
Housing Finance Agency
Multi-Family, Series A
3.90%, 12/01/25 (A)...................... $ 1,000,000
1,800,000 Massachusetts State, IFA
Buckingham Browne Issue
4.25%, 05/01/27 (A)
LOC: State Street......................... 1,800,000
1,500,000 Massachusetts State, IFA
Gordon College
3.95%, 12/01/27 (A)
LOC: State Street......................... 1,500,000
1,000,000 Massachusetts State, IFA
Governor Dummer Academy
3.95%, 07/01/26 (A)
LOC: State Street......................... 1,000,000
3,900,000 Massachusetts State, IFA
Ogden Haverhill Project, Series A
3.90%, 12/01/06 (A)
LOC: Union Bank of Switzerland ........... 3,900,000
1,000,000 Massachusetts State, IFA
Healthcare Facility Revenue
Beverly Enterprises
4.20%, 04/01/09 (A)
LOC: PNC Bank............................. 1,000,000
1,500,000 Massachusetts State Port Authority
3.20%, 06/01/98
LOC: Canadian
Imperial Bank of Commerce................. 1,500,000
3,000,000 Massachusetts State Port Authority
3.20%, 06/01/98
LOC: Canadian
Imperial Bank of Commerce................. 3,000,000
1,000,000 Massachusetts State
Water Resource Authority
Subordinated, General Purpose, Series H
3.40%, 06/15/98
LOC:Morgan Guaranty....................... 1,000,000
3,700,000 Massachusetts State
Water Resource Authority
Subordinated, General Purpose, Series A
3.80%, 04/01/28 (A)
Insured: AMBAC............................ 3,700,000
2,450,000 Reading, BAN
3.75%, 07/10/98........................... 2,450,935
3,000,000 Southborough, BAN, GO
3.75%, 07/20/98........................... 3,000,976
2,768,000 Stow, BAN, GO
4.25%, 08/20/98........................... 2,771,621
2,500,000 Wellesley, BAN, GO
4.00%, 06/11/98........................... 2,500,754
2,500,000 Weston, BAN, GO
4.00%, 09/30/98........................... 2,502,997
----------
63,856,060
----------
Michigan - 0.44%
$ 400,000 Kent Hospital Finance Authority
Butterworth Hospital, Series A
4.00%, 01/15/20 (A)
LOC: Rabobank Nederland NV ............... $ 400,000
----------
Missouri - 0.44%
400,000 Missouri State HEFA
St. Louis University
4.35%, 12/01/05 (A)
Insured: FGIC
SPA: Morgan Guaranty Trust Co. ........... 400,000
----------
Puerto Rico - 12.04%
2,900,000 Puerto Rico Commonwealth
Government Development Bank
3.90%, 12/01/15 (A)
LOC: Credit Suisse First Boston .......... 2,900,000
3,000,000 Puerto Rico Commonwealth
Highway & Transportation Authority
Series A
3.75%, 07/01/28 (A)
Insured: AMBAC
SPA: Bank of Nova Scotia ................. 3,000,000
1,122,400 Puerto Rico Commonwealth
Highway & Transportation Authority
Series X
3.90%, 07/01/99 (A)
LOC: Union Bank of Switzerland ........... 1,122,400
4,000,000 Puerto Rico Commonwealth
TRAN, Series A
4.50%, 07/30/98........................... 4,007,245
----------
11,029,645
----------
South Carolina - 2.90%
2,660,000 South Carolina Jobs Economic Development
Authority, St. Francis Hospital
4.25%, 07/01/22 (A)
LOC: Chemical Bank........................ 2,660,000
----------
Tennessee - 2.18%
2,000,000 Hamilton County, Chatanooga
Tennessee Hospital Authority Revenue
4.25%, 10/01/17 (A)
LOC: Morgan Guaranty...................... 2,000,000
----------
Texas - 4.39%
1,200,000 Grapevine Industrial Development Corp.
American Airlines, Series A-2
4.25%, 12/01/24 (A)
LOC: Morgan Guaranty...................... 1,200,000
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
THE GALAXY FUND
Massachusetts Municipal Money Market Fund
PORTFOLIO OF INVESTMENTS (continued)
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
- --------- --------
<S> <C> <C>
Texas (continued)
$1,700,000 Guadalupe-Blanco River Authority
PCR, Central Power & Light Co. Project
4.25%, 11/01/15 (A)
LOC: ABN-AMRO Bank NV..................... $ 1,700,000
900,000 Sabine River Authority, PCR
Texas Utilities Project, Series A
4.25%, 03/01/26 (A)
SPA: Bank of New York
Insured: AMBAC............................ 900,000
230,000 Texas Higher Education Authority, Inc.
Educational Equipment & Improvement
Series B
4.05%, 12/01/25 (A)
Insured: FGIC............................. 230,000
----------
4,030,000
----------
Washington - 0.11%
100,000 Washington State Public Power
Supply System Nuclear Project
No. 1 Revenue, Series 1A-1
4.10% 07/01/17 (A)
LOC: Bank of America NT & SA.............. 100,000
----------
Total Municipal Securities................ 89,875,705
(Cost $89,875,705) ----------
Shares
------
INVESTMENT COMPANIES - 1.28%
186,313 Dreyfus Massachusetts Tax
Exempt Money Market....................... $ 186,313
984,541 Federated Municipal Trust
Massachusetts Municipal Cash Trust ....... 984,541
----------
Total Investment Companies ............... 1,170,854
(Cost $1,170,854) ----------
Total Investments - 99.38% ................................ 91,046,559
(Cost $91,046,559)* ----------
Net Other Assets and Liabilities - 0.62% .................. 570,913
----------
Net Assets - 100.00% ...................................... $ 91,617,472
==========
</TABLE>
- -------------------------------
* Aggregate cost for federal tax purposes
(A) Variable rate demand notes are payable upon not more than one, seven
or thirty business days notice. Put bonds and notes have demand
features which mature within one year. The interest rate shown
reflects the rate in effect at April 30, 1998.
AMBAC American Municipal Bond Assurance Corp.
BAN Bond Anticipation Note
CFC Cooperative Finance Corp.
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
HEFA Health and Educational Facilities Authority
IFA Industrial Finance Authority
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Polution Control Revenue
SPA Stand-by Purchase Agreement
TRAN Tax and Revenue Anticipation Notes
See Notes to Financial Statements.
25
<PAGE>
THE GALAXY FUND
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Money Market Government Tax-Exempt U.S. Treasury
Fund Fund Fund Fund
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at amortized cost............................ $2,999,769,603 $ 986,402,702 $365,976,447 $946,317,953
Repurchase agreement..................................... 223,788,000 185,516,000 -- --
-------------- -------------- ------------ ------------
Total investments at value............................. 3,223,557,603 1,171,918,702 365,976,447 946,317,953
Cash....................................................... 598 562 -- 1,342
Receivable for shares sold................................. 408,946 32,465 10,782 890
Interest and dividends receivable.......................... 4,668,932 2,359,769 2,465,177 10,992,383
Receivable from investment advisor (Note 4)................ -- -- -- --
-------------- -------------- ------------ ------------
Total Assets............................................. 3,228,636,079 1,174,311,498 368,452,406 957,312,568
-------------- -------------- ------------ ------------
LIABILITIES:
Dividends payable.......................................... 4,959,508 3,308,487 572,145 1,474,464
Payable for shares repurchased............................. 1,662,024 14,938 3,278 114,800
Investment advisory fee payable (Note 3)................... 969,132 378,743 130,085 312,556
Payable to Fleet affiliates (Note 3)....................... 172,078 37,266 13,921 49,304
Payable to Administrator (Note 3).......................... 390,326 119,318 36,383 105,920
Trustees' fees and expenses payable (Note 3)............... 54,642 22,067 7,015 18,052
Payable to custodian....................................... -- -- 2,021 --
Accrued expenses and other payables........................ 432,938 123,113 23,971 73,184
-------------- -------------- ------------ ------------
Total Liabilities........................................ 8,640,648 4,003,932 788,819 2,148,280
-------------- -------------- ------------ ------------
NET ASSETS................................................... $3,219,995,431 $1,170,307,566 $367,663,587 $955,164,288
============== ============== ============ ============
NET ASSETS consist of:
Par value (Note 5)......................................... $ 3,221,119 $ 1,171,224 $ 367,815 $ 955,599
Paid-in capital in excess of par value..................... 3,217,889,949 1,170,052,974 367,447,284 954,643,540
Undistributed (overdistributed) net investment income (loss) 233,584 (45,378) (19,941) 316,536
Accumulated net realized (loss) on investments sold........ (1,349,221) (871,254) (131,571) (751,387)
-------------- -------------- ------------ ------------
TOTAL NET ASSETS............................................. $3,219,995,431 $1,170,307,566 $367,663,587 $955,164,288
============== ============== ============ ============
Retail Shares:
Net assets................................................. $2,009,632,749 $ 372,403,664 $157,055,232 $577,030,003
Shares of beneficial interest outstanding.................. 2,010,282,884 372,601,002 157,112,754 577,233,737
NET ASSET VALUE, offering and redemption price per share... $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============ ============
Retail B Shares:
Net assets................................................. $ 377,772 N/A N/A N/A
Shares of beneficial interest outstanding.................. 377,762 N/A N/A N/A
NET ASSET VALUE and offering price per share*.............. $ 1.00 N/A N/A N/A
============== ============== ============ ============
Trust Shares:
Net assets................................................. $1,209,984,910 $ 797,903,902 $210,608,355 $378,134,285
Shares of beneficial interest outstanding.................. 1,210,458,325 798,623,196 210,702,344 378,365,399
NET ASSET VALUE, offering and redemption price per share... $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============ ============
</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.
26
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Money Market Fund Money Market Fund
------------- -------------
<S> <C>
$ 150,067,355 $ 91,046,559
-- --
------------- -------------
150,067,355 91,046,559
-- --
-- 57,382
1,186,861 648,180
9,730 10,273
------------- -------------
151,263,946 91,762,394
------------- -------------
124,285 89,752
100,300 4,640
56,351 30,606
14,057 7,651
16,319 10,298
2,711 1,400
-- --
9,703 575
------------- -------------
323,726 144,922
------------- -------------
$ 150,940,220 $ 91,617,472
============= =============
$ 150,946 $ 91,630
150,801,799 91,538,542
(5,089) (120)
(7,436) (12,580)
------------- -------------
$ 150,940,220 $ 91,617,472
============= =============
$ 150,940,220 $ 91,617,472
150,946,126 91,630,008
$ 1.00 $ 1.00
============= =============
N/A N/A
N/A N/A
N/A N/A
============= =============
N/A N/A
N/A N/A
N/A N/A
============= =============
</TABLE>
27
<PAGE>
THE GALAXY FUND
STATEMENTS OF OPERATIONS
For the six months ended April 30, 1998 (unaudited)
<TABLE>
<CAPTION>
Money Market Government Tax-Exempt U.S. Treasury
Fund Fund Fund Fund
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2)................................................. $88,000,807 $29,996,395 $6,594,083 $25,568,853
Dividends (Note 2)................................................ -- -- 67,289 --
----------- ----------- ---------- -----------
Total Investment Income ........................................ 88,000,807 29,996,395 6,661,372 25,568,853
----------- ----------- ---------- -----------
EXPENSES:
Investment advisory fee (Note 3).................................. 6,215,281 2,146,683 751,701 1,850,219
Administration fee (Note 3)....................................... 1,255,052 433,401 151,791 384,131
Custodian fee (Note 3)............................................ 38,372 13,736 11,908 14,099
Fund accounting fee (Note 3)...................................... 73,032 49,266 31,030 48,943
Legal fee (Note 3)................................................ 66,898 21,259 7,842 21,034
Audit fee......................................................... 12,806 8,603 9,347 8,603
Shareholder servicing fee (Note 3)................................ 999,443 183,712 83,343 283,343
Transfer agent fee (Note 3)....................................... 1,026,136 199,004 31,726 213,564
12b-1 fee (Note 3)................................................ 1,835 -- -- --
Trustees' fees and expenses (Note 3).............................. 33,267 10,556 3,903 10,457
Reports to shareholders (Note 3).................................. 202,115 37,449 6,292 43,595
Insurance ........................................................ 12,643 5,982 1,526 4,223
Miscellaneous..................................................... 161,880 30,690 20,844 38,423
----------- ----------- ---------- -----------
Total expenses before reimbursement/waiver (Note 4)............. 10,098,760 3,140,341 1,111,253 2,920,634
----------- ----------- ---------- -----------
Less: reimbursement/waiver (Note 4)............................. (590,962) (82,376) -- --
----------- ----------- ---------- -----------
Total expenses net of reimbursement/waiver ................... 9,507,798 3,057,965 1,111,253 2,920,634
----------- ----------- ---------- -----------
NET INVESTMENT INCOME................................................. 78,493,009 26,938,430 5,550,119 22,648,219
----------- ----------- ---------- -----------
NET REALIZED GAIN ON INVESTMENTS SOLD (Note 2)........................ 3,715 -- -- 23,989
----------- ----------- ---------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................................................. $78,496,724 $26,938,430 $5,550,119 $22,672,208
=========== =========== ========== ===========
</TABLE>
See Notes to Financial Statements.
28
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Money Market Fund Money Market Fund
----------- -----------
<S> <C>
$ 2,572,528 $ 1,542,688
35,532 19,318
----------- -----------
2,608,060 1,562,006
----------- -----------
297,247 180,297
60,017 36,415
7,193 5,381
18,025 17,977
3,227 1,828
8,158 8,158
74,312 45,074
11,526 6,782
-- --
1,604 910
2,501 1,449
612 300
523 6,846
----------- -----------
484,945 311,417
----------- -----------
(24,211) (31,957)
----------- -----------
460,734 279,460
----------- -----------
2,147,326 1,282,546
----------- -----------
-- --
----------- -----------
$ 2,147,326 $ 1,282,546
=========== ===========
</TABLE>
29
<PAGE>
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Money Market Fund Government Fund
--------------------------------- ---------------------------------
Six months ended Year ended Six months ended Year ended
April 30, 1998 October 31, April 30, 1998 October 31,
(unaudited) 1997 (unaudited) 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period.............................. $3,016,823,396 $2,083,533,947 $ 981,371,917 $1,060,170,053
-------------- -------------- -------------- --------------
Increase in Net Assets resulting from operations:
Net investment income...................................... 78,493,009 127,748,599 26,938,430 53,506,212
Net realized gain on investments sold...................... 3,715 352 -- 1,250
-------------- -------------- -------------- --------------
Net increase in net assets resulting from operations..... 78,496,724 127,748,951 26,938,430 53,507,462
-------------- -------------- -------------- --------------
Dividends to shareholders from:
Retail Shares:
Net investment income.................................... (49,816,564) (76,502,698) (8,968,303) (16,580,573)
Dividends in excess of net investment income............. -- -- -- --
-------------- -------------- -------------- --------------
Total Dividends ....................................... (49,816,564) (76,502,698) (8,968,303) (16,580,573)
-------------- -------------- -------------- --------------
Retail B Shares:
Net investment income.................................... (10,539) (12,281) N/A N/A
Dividends in excess of net investment income............. -- -- N/A N/A
-------------- -------------- -------------- --------------
Total Dividends ....................................... (10,539) (12,281) N/A N/A
-------------- -------------- -------------- --------------
Trust Shares:
Net investment income.................................... (28,658,186) (51,241,328) (17,970,127) (36,925,639)
Dividends in excess of net investment income............. -- -- -- --
-------------- -------------- -------------- --------------
Total Dividends ....................................... (28,658,186) (51,241,328) (17,970,127) (36,925,639)
-------------- -------------- -------------- --------------
Total Dividends to shareholders ....................... (78,485,289) (127,756,307) (26,938,430) (53,506,212)
-------------- -------------- -------------- --------------
Net increase (decrease) from share transactions(1) ........... 203,160,600 933,296,805 188,935,649 (78,799,386)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets...................... 203,172,035 933,289,449 188,935,649 (78,798,136)
-------------- -------------- -------------- --------------
NET ASSETS at end of period (including line A)................. $3,219,995,431 $3,016,823,396 $1,170,307,566 $ 981,371,917
============== ============== ============== ==============
(A) Undistributed (overdistributed) net investment income (loss) $ 233,584 $ 225,864 $ (45,378) $ (45,378)
============== ============== ============== ==============
</TABLE>
- --------------------------------------------------
(1) For detail on share transactions by series, see Statements of Changes in Net
Assets - Capital Stock activity on pages 32 and 33.
See Notes to Financial Statements.
30
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Tax-Exempt Fund U.S. Treasury Fund Money Market Fund Money Market Fund
- ------------------------------- ------------------------------- -------------------------------- -------------------------------
Six months ended Year ended Six months ended Year ended Six months ended Year ended Six months ended Year ended
April 30, 1998 October 31, April 30, 1998 October 31, April 30, 1998 October 31, April 30, 1998 October 31,
(unaudited) 1997 (unaudited) 1997 (unaudited) 1997 (unaudited) 1997
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$321,222,118 $301,854,872 $979,144,066 $797,561,471 $137,094,660 $110,544,441 $80,965,571 $47,066,054
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
5,550,119 9,677,246 22,648,219 41,077,546 2,147,326 3,617,480 1,282,546 1,818,846
-- -- 23,989 19,124 -- -- -- --
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
5,550,119 9,677,246 22,672,208 41,096,670 2,147,326 3,617,480 1,282,546 1,818,846
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
(2,402,020) (3,944,381) (13,311,607) (23,823,527) (2,147,326) (3,614,319) (1,282,666) (1,818,846)
-- -- -- -- -- -- -- --
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
(2,402,020) (3,944,381) (13,311,607) (23,823,527) (2,147,326) (3,614,319) (1,282,666) (1,818,846)
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
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
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
(3,148,099) (5,732,832) (9,336,606) (17,254,019) N/A N/A N/A N/A
-- -- -- -- N/A N/A N/A N/A
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
(3,148,099) (5,732,832) (9,336,606) (17,254,019) N/A N/A N/A N/A
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
(5,550,119) (9,677,213) (22,648,213) (41,077,546) (2,147,326) (3,614,319) (1,282,666) (1,818,846)
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
46,441,469 19,367,213 (24,003,773) 181,563,471 13,845,560 26,547,058 10,652,021 33,899,517
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
46,441,469 19,367,246 (23,979,778) 181,582,595 13,845,560 26,550,219 10,651,901 33,899,517
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
$367,663,587 $321,222,118 $955,164,288 $979,144,066 $150,940,220 $137,094,660 $91,617,472 $80,965,571
============ ============ ============ ============ ============ ============ =========== ===========
$ (19,941) $ (19,941) $ 316,536 $ 316,530 $ (5,089) $ (5,089) $ (120) $ --
============ ============ ============ ============ ============ ============ =========== ===========
</TABLE>
31
<PAGE>
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS -
Capital Stock Activity
<TABLE>
<CAPTION>
Money Market Fund Government Fund
--------------------------------- ---------------------------------
Six months ended Year ended Six months ended Year ended
April 30, 1998 October 31, April 30, 1998 October 31,
(unaudited) 1997 (unaudited) 1997
--------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail Shares:
Sold ................................................. $ 3,097,121,231 $ 4,623,828,689 $ 468,638,594 $ 729,544,101
Issued to shareholders in reinvestment of dividends .. 49,439,415 75,954,856 8,938,885 16,519,769
Repurchased .......................................... (3,014,824,214) (3,981,201,650) (455,671,563) (721,962,501)
--------------- --------------- ------------- ---------------
Net increase (decrease) in shares outstanding ........ $ 131,736,432 $ 718,581,895 $ 21,905,916 $ 24,101,369
=============== =============== ============= ===============
Retail B Shares:
Sold ................................................. $ 2,513,166 $ 1,047,623 N/A N/A
Issued to shareholders in reinvestment of dividends .. 8,888 12,123 N/A N/A
Repurchased .......................................... (2,893,280) (310,758) N/A N/A
--------------- --------------- ------------- ---------------
Net increase (decrease) in shares outstanding ........ $ (371,226) $ 748,988 N/A N/A
=============== =============== ============= ===============
Trust Shares:
Sold ................................................. $ 1,127,278,363 $ 2,442,712,102 $ 835,515,652 $ 1,419,192,696
Issued to shareholders in reinvestment of dividends .. 405,189 824,412 227,591 779,351
Repurchased .......................................... (1,055,888,158) (2,229,570,592) (668,713,510) (1,522,872,802)
--------------- --------------- ------------- ---------------
Net increase (decrease) in shares outstanding ........ $ 71,795,394 $ 213,965,922 $ 167,029,733 $ (102,900,755)
=============== =============== ============= ===============
SHARE ACTIVITY
Retail Shares:
Sold ................................................. 3,097,121,231 4,623,828,689 468,638,594 729,544,101
Issued to shareholders in reinvestment of dividends .. 49,439,415 75,954,856 8,938,885 16,519,769
Repurchased .......................................... (3,014,824,214) (3,981,201,650) (455,671,563) (721,962,501)
--------------- --------------- ------------- ---------------
Net increase (decrease) in shares outstanding ........ 131,736,432 718,581,895 21,905,916 24,101,369
=============== =============== ============= ===============
Retail B Shares:
Sold ................................................. 2,513,166 1,047,623 N/A N/A
Issued to shareholders in reinvestment of dividends .. 8,888 12,123 N/A N/A
Repurchased .......................................... (2,893,280) (310,758) N/A N/A
--------------- --------------- ------------- ---------------
Net increase (decrease) in shares outstanding ........ (371,226) 748,988 N/A N/A
=============== =============== ============= ===============
Trust Shares:
Sold ................................................. 1,127,278,363 2,442,712,102 835,515,652 1,419,192,696
Issued to shareholders in reinvestment of dividends .. 405,189 824,412 227,591 779,351
Repurchased .......................................... (1,055,888,158) (2,229,570,592) (668,713,510) (1,522,872,802)
--------------- --------------- ------------- ---------------
Net increase (decrease) in shares outstanding ........ 71,795,394 213,965,922 167,029,733 (102,900,755)
=============== =============== ============= ===============
</TABLE>
See Notes to Financial Statements.
32
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Tax-Exempt Fund U.S. Treasury Fund Money Market Fund Money Market Fund
- ------------------------------- ------------------------------- -------------------------------- -------------------------------
Six months ended Year ended Six months ended Year ended Six months ended Year ended Six months ended Year ended
April 30, 1998 October 31, April 30, 1998 October 31, April 30, 1998 October 31, April 30, 1998 October 31,
(unaudited) 1997 (unaudited) 1997 (unaudited) 1997 (unaudited) 1997
- ------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 262,163,082 $ 405,375,839 $ 666,957,847 $ 1,252,641,737 $ 220,989,117 $ 308,300,041 $ 123,793,617 $ 164,854,517
2,393,784 3,935,706 13,271,331 23,742,666 1,518,356 2,576,197 709,093 1,161,644
(259,407,061) (374,953,462) (689,182,082) (1,133,657,607) (208,661,913) (284,329,180) (113,850,689) (132,116,644)
- ------------- ------------- ------------- --------------- ------------- ------------- ------------- -------------
$ 5,149,805 $ 34,358,083 $ (8,952,904) $ 142,726,796 $ 13,845,560 $ 26,547,058 $ 10,652,021 $ 33,899,517
============= ============= ============= =============== ============= ============= ============= =============
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
- ------------- ------------- ------------- --------------- ------------- ------------- ------------- -------------
N/A N/A N/A N/A N/A N/A N/A N/A
============= ============= ============= =============== ============= ============= ============= =============
$ 136,400,305 $ 232,513,701 $ 412,442,800 $ 1,081,964,225 N/A N/A N/A N/A
15,515 35,548 552,389 520,650 N/A N/A N/A N/A
(95,124,156) (247,540,119) (428,046,058) (1,043,648,200) N/A N/A N/A N/A
- ------------- ------------- ------------- --------------- ------------- ------------- ------------- -------------
$ 41,291,664 $ (14,990,870) $ (15,050,869) $ 38,836,675 N/A N/A N/A N/A
============= ============= ============= =============== ============= ============= ============= =============
262,163,082 405,375,839 666,957,847 1,252,641,737 220,989,117 308,300,041 123,793,617 164,854,517
2,393,784 3,935,706 13,271,331 23,742,666 1,518,356 2,576,197 709,093 1,161,644
(259,407,061) (374,953,462) (689,182,082) (1,133,657,607) (208,661,913) (284,329,180) (113,850,689) (132,116,644)
- ------------- ------------- ------------- --------------- ------------- ------------- ------------- -------------
5,149,805 34,358,083 (8,952,904) 142,726,796 13,845,560 26,547,058 10,652,021 33,899,517
============= ============= ============= =============== ============= ============= ============= =============
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
- ------------- ------------- ------------- --------------- ------------- ------------- ------------- -------------
N/A N/A N/A N/A N/A N/A N/A N/A
============= ============= ============= =============== ============= ============= ============= =============
136,400,305 232,513,701 412,442,800 1,081,964,225 N/A N/A N/A N/A
15,515 35,548 552,389 520,650 N/A N/A N/A N/A
(95,124,156) (247,540,119) (428,046,058) (1,043,648,200) N/A N/A N/A N/A
- ------------- ------------- ------------- --------------- ------------- ------------- ------------- -------------
41,291,664 (14,990,870) (15,050,869) 38,836,675 N/A N/A N/A N/A
============= ============= ============= =============== ============= ============= ============= =============
</TABLE>
33
<PAGE>
THE GALAXY FUND
Money Market 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(1) 1993(1)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A)................ 0.02 0.05 0.05 0.05 0.03 0.03
Net realized gain (loss) on investments.. -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations: ..... 0.02 0.05 0.05 0.05 0.03 0.03
---------- ---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income..... (0.02) (0.05) (0.05) (0.05) (0.03) (0.03)
Dividends from net realized capital gains -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Dividends: (0.02) (0.05) (0.05) (0.05) (0.03) (0.03)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value....... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
Total Return (B)................................. 2.50%** 4.93% 4.78% 5.23% 3.35% 2.78%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................ $2,009,633 $1,877,889 $1,159,312 $ 580,762 $ 797,399 $ 577,558
Ratios to average net assets:
Net investment income including
reimbursement/waiver .................. 4.98%* 4.85% 4.67% 5.12% 3.38% 2.74%
Operating expenses including
reimbursement/waiver ................. 0.68%* 0.69% 0.77% 0.74% 0.64% 0.63%
Operating expenses excluding
reimbursement/waiver .................. 0.72%* 0.73% 0.80% 0.76% 0.64% 0.63%
</TABLE>
- ----------------------------------------------
* Annualized.
** Not Annualized.
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As of
such date, the existing series of shares was designated as Retail A Shares
and the Fund began issuing a second series of shares designated as Trust
Shares.
(2) The Fund began offering Retail B Shares on March 6, 1997.
(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 (unaudited) and the years ended October 31,
1997, 1996, 1995, 1994 and 1993 were $0.02, $0.05, $0.05, $0.05, $0.03 and
$0.03, 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 (unaudited) and the
years ended October 31, 1997, 1996 and 1995 were $0.03, $0.05, $0.05 and
$0.05, respectively. Net investment income per share before
reimbursement/waiver of fees by Investment Advisor and/or Administrator for
Retail B Shares for the six months ended April 30, 1998 (unaudited) and the
period ended October 31, 1997 were $0.02 and $0.03, respectively.
(B) Calculation does not include the effect of any sales charge for Retail B
Shares. Total return for the year ended October 31, 1994 includes the effect
of the voluntary capital contribution of $1.6 million from Fleet in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.35%.
See Notes to Financial Statements.
34
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended
Six months ended October 31, Six months ended Year ended
April 30, 1998 -------------------------------------------- April 30, 1998 October 31,
(unaudited) 1997 1996 1995 (unaudited) 1997(2)
- ---------------- -------- -------- -------- ---------------- -----------
<S> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 $1.00
---------- ---------- -------- -------- ----- -----
0.03 0.05 0.05 0.05 0.02 0.03
-- -- -- -- -- --
---------- ---------- -------- -------- ----- -----
0.03 0.05 0.05 0.05 0.02 0.03
---------- ---------- -------- -------- ----- -----
(0.03) (0.05) (0.05) (0.05) (0.02) (0.03)
-- -- -- -- -- --
---------- ---------- -------- -------- ----- -----
(0.03) (0.05) (0.05) (0.05) (0.02) (0.03)
---------- ---------- -------- -------- ----- -----
-- -- -- -- -- --
---------- ---------- -------- -------- ----- -----
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $1.00 $1.00
========== ========== ======== ======== ===== =====
2.59%** 5.13% 5.00% 5.43% 2.13%** 2.66%**
$1,209,985 $1,138,185 $924,222 $334,054 $ 378 $ 749
5.17%* 5.04% 4.89% 5.30% 4.32%* 4.27%*
0.49%* 0.50% 0.55% 0.55% 1.38%* 1.38%*
0.53%* 0.54% 0.58% 0.56% 1.42%* 1.42%*
</TABLE>
35
<PAGE>
THE GALAXY FUND
Government 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(1) 1993(1)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A)................ 0.02 0.05 0.05 0.05 0.03 0.03
Net realized gain (loss) on investments.. -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations: ..... 0.02 0.05 0.05 0.05 0.03 0.03
---------- ---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income..... (0.02) (0.05) (0.05) (0.05) (0.03) (0.03)
Dividends from net realized capital gains -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Dividends: (0.02) (0.05) (0.05) (0.05) (0.03) (0.03)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value....... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
Total Return (B)................................. 2.44%** 4.85% 4.72% 5.20% 3.49% 2.83%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................ $ 372,404 $ 350,513 $ 326,411 $ 320,795 $ 759,106 $ 685,304
Ratios to average net assets:
Net investment income including
reimbursement/waiver .................. 4.88%* 4.74% 4.62% 5.11% 3.36% 2.79%
Operating expenses including
reimbursement/waiver ................. 0.70%* 0.71% 0.75% 0.73% 0.54% 0.55%
Operating expenses excluding
reimbursement/waiver .................. 0.72%* 0.72% 0.76% 0.74% 0.54% 0.55%
</TABLE>
- --------------------------------------------
* Annualized.
** Not Annualized.
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As of
such date, the existing series of shares was designated as Retail A Shares
and the Fund began issuing a second series of shares designated as Trust
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the six
months ended April 30, 1998 (unaudited) and the years ended October 31,
1997, 1996, 1995, 1994 and 1993 were $0.02, $0.05, $0.05, $0.05, $0.03, and
$0.03, 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 (unaudited) and the
years ended October 31, 1997, 1996 and 1995 were $0.03, $0.05, $0.05 and
$0.05, respectively.
(B) Total return for the year ended October 31, 1994 includes the effect of the
voluntary capital contribution of $2.3 million from Fleet in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.49%.
See Notes to Financial Statements.
36
<PAGE>
<TABLE>
<CAPTION>
Trust Shares
Years ended
Six months ended October 31,
April 30, 1998 --------------------------------------------
(unaudited) 1997 1996 1995
- ---------------- -------- -------- --------
<S> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- -------- --------
0.03 0.05 0.05 0.05
-- -- -- --
---------- ---------- -------- --------
0.03 0.05 0.05 0.05
---------- ---------- -------- --------
(0.03) (0.05) (0.05) (0.05)
-- -- -- --
---------- ---------- -------- --------
(0.03) (0.05) (0.05) (0.05)
---------- ---------- -------- --------
-- -- -- --
---------- ---------- -------- --------
$ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ======== ========
2.55%** 5.06% 4.95% 5.39%
$ 797,904 $ 630,859 $733,759 $678,679
5.08%* 4.94% 4.85% 5.27%
0.50%* 0.51% 0.52% 0.53%
0.52%* 0.52% 0.53% 0.54%
</TABLE>
37
<PAGE>
THE GALAXY FUND
Tax-Exempt 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(1) 1993(1)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A)................ 0.01 0.03 0.03 0.03 0.02 0.02
Net realized gain (loss) on investments.. -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations: ..... 0.01 0.03 0.03 0.03 0.02 0.02
---------- ---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income..... (0.01) (0.03) (0.03) (0.03) (0.02) (0.02)
Dividends from net realized capital gains -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Dividends: ...................... (0.01) (0.03) (0.03) (0.03) (0.02) (0.02)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value....... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
Total Return .................................... 1.44%** 2.95% 2.82% 3.16% 2.24% 1.93%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................ $ 157,055 $ 151,907 $ 117,548 $ 127,056 $ 271,050 $ 301,399
Ratios to average net assets:
Net investment income including
reimbursement/waiver .................. 2.88%* 2.92% 2.78% 3.12% 2.12% 1.92%
Operating expenses including
reimbursement/waiver ................. 0.67%* 0.68% 0.68% 0.68% 0.58% 0.59%
Operating expenses excluding
reimbursement/waiver .................. 0.67%* 0.69% 0.69% 0.71% 0.58% 0.59%
</TABLE>
- --------------------------------------------
* Annualized.
** Not Annualized.
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As of
such date, the existing series of shares was designated as Retail A Shares
and the Fund began issuing a second series of shares designated as Trust
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the six
months ended April 30, 1998 (unaudited) and the years ended October 31,
1997, 1996, 1995, 1994 and 1993 were $0.01, $0.03, $0.03, $0.03, $0.02, and
$0.02, 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 (unaudited) and the
years ended October 31, 1997, 1996 and 1995 were $0.01, $0.03, $0.03 and
$0.03, respectively.
See Notes to Financial Statements.
38
<PAGE>
<TABLE>
<CAPTION>
Trust Shares
Years ended
Six months ended October 31,
April 30, 1998 --------------------------------------------
(unaudited) 1997 1996 1995
- ---------------- -------- -------- --------
<S> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- -------- --------
0.01 0.03 0.03 0.03
-- -- -- --
---------- ---------- -------- --------
0.01 0.03 0.03 0.03
---------- ---------- -------- --------
(0.01) (0.03) (0.03) (0.03)
-- -- -- --
---------- ---------- -------- --------
(0.01) (0.03) (0.03) (0.03)
---------- ---------- -------- --------
-- -- -- --
---------- ---------- -------- --------
$ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ======== ========
1.50%** 3.10% 2.97% 3.29%
$ 210,608 $ 169,316 $184,307 $180,706
3.02%* 3.05% 2.92% 3.24%
0.53%* 0.53% 0.54% 0.55%
0.53%* 0.53% 0.54% 0.56%
</TABLE>
39
<PAGE>
THE GALAXY FUND
U.S. Treasury 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(1) 1993(1)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A)................ 0.02 0.05 0.05 0.05 0.03 0.03
Net realized gain (loss) on investments.. -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations: ..... 0.02 0.05 0.05 0.05 0.03 0.03
---------- ---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income..... (0.02) (0.05) (0.05) (0.05) (0.03) (0.03)
Dividends from net realized capital gains -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Dividends: ...................... (0.02) (0.05) (0.05) (0.05) (0.03) (0.03)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value....... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
Total Return (B)................................. 2.35%** 4.67% 4.63% 4.99% 3.30% 2.75%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................ $ 577,030 $ 585,969 $ 443,230 $ 318,621 $ 466,993 $ 447,960
Ratios to average net assets:
Net investment income including
reimbursement/waiver .................. 4.70%* 4.58% 4.53% 4.90% 3.24% 2.71%
Operating expenses including
reimbursement/waiver ................. 0.68%* 0.69% 0.69% 0.73% 0.56% 0.55%
Operating expenses excluding
reimbursement/waiver .................. 0.68%* 0.70% 0.69% 0.73% 0.56% 0.55%
</TABLE>
- --------------------------------------------
* Annualized.
** Not Annualized.
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As of
such date, the existing series of shares was designated as Retail A Shares
and the Fund began issuing a second series of shares designated as Trust
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the six
months ended April 30, 1998 (unaudited) and the years ended October 31,
1997, 1996, 1995, 1994 and 1993 were $0.02, $0.05, $0.05, $0.05, $0.03, and
$0.03, 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 (unaudited) and the
years ended October 31, 1997, 1996 and 1995 were $0.02, $0.05, $0.05 and
$0.05, respectively.
(B) Total return for the year ended October 31, 1994 includes the effect of the
voluntary capital contribution of $1 million from Fleet in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.30%.
See Notes to Financial Statements.
40
<PAGE>
<TABLE>
<CAPTION>
Trust Shares
Years ended
Six months ended October 31,
April 30, 1998 --------------------------------------------
(unaudited) 1997 1996 1995
- ---------------- -------- -------- --------
<S> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- -------- --------
0.02 0.05 0.05 0.05
-- -- -- --
---------- ---------- -------- --------
0.02 0.05 0.05 0.05
---------- ---------- -------- --------
(0.02) (0.05) (0.05) (0.05)
-- -- -- --
---------- ---------- -------- --------
(0.02) (0.05) (0.05) (0.05)
---------- ---------- -------- --------
-- -- -- --
---------- ---------- -------- --------
$ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ======== ========
2.44%** 4.85% 4.80% 5.18%
$ 378,134 $ 393,175 $354,331 $271,036
4.86%* 4.75% 4.69% 5.06%
0.51%* 0.52% 0.53% 0.55%
0.51%* 0.53% 0.53% 0.55%
</TABLE>
41
<PAGE>
THE GALAXY FUND
Connecticut Municipal Money Market Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------
Six months ended 1997 1996 1995
April 30, 1998 ---------- ---------- ------------------------
(unaudited) Investment Trust
Shares Shares Shares(3) Shares Shares
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A)(C)............. 0.01 0.03 0.03 0.03 0.03
Net realized gain (loss) on investments.. -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from Investment Operations: (A).. 0.01 0.03 0.03 0.03 0.03
---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income(A).. (0.01) (0.03) (0.03) (0.03) (0.03)
Dividends from net realized capital gains -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total Dividends:(A) ................... (0.01) (0.03) (0.03) (0.03) (0.03)
---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value....... -- -- -- --
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return (B)................................. 1.44%** 2.94% 2.83% 2.94% 3.19%
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................ $ 150,940 $ 137,095 $ 110,544 $ 71,472 $ 31,164
Ratios to average net assets:
Net investment income including
reimbursement/waiver .................. 2.89%* 2.91% 2.79% 2.88% 3.14%
Operating expenses including
reimbursement/waiver ................. 0.62%* 0.60% 0.64% 0.82% 0.57%
Operating expenses excluding
reimbursement/waiver .................. 0.65%* 0.65% 0.73% 1.29% 0.79%
</TABLE>
- ----------------------------------------------
* Annualized.
** Not Annualized.
(1) The Fund commenced operations on October 4, 1993 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds.
(2) The Predecessor Fund began offering Trust Shares on December 16, 1993.
(3) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio
of the Trust with a single series of shares. Prior to the reorganization,
the Predecessor Fund offered two series of shares, Investment Shares and
Trust Shares. In connection with the reorganization, the shareholders of the
Predecessor Fund exchanged shares of each of the two series for a single
series of shares in the Galaxy Connecticut Municipal Money Market Fund.
(A) Represents less than $0.01 per share for year 1993.
(B) Calculation does not include the effect of any sales charge for Investment
Shares of the Predecessor Fund.
(C) 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 (unaudited) and the years ended October 31, 1997 and 1996 were $0.01,
$0.03 and $0.03, respectively. Net investment income per share before
reimbursement/waiver of fees by the Investment Advisor and/or other parties
for Investment Shares for the years ended October 31, 1995 (unaudited), 1994
(unaudited) and the period ended October 31, 1993 (unaudited) were $0.03,
$0.01 and $0.00, respectively. Net investment income per share before
reimbursement/waiver of fees by the Investment Advisor and/or other parties
for Trust Shares for the year ended October 31, 1995 (unaudited) and the
period ended October 31, 1994 (unaudited) were $0.02 and $0.01,
respectively.
See Notes to Financial Statements.
42
<PAGE>
<TABLE>
<CAPTION>
Years ended October 31,
- ----------------------------------------------
1994 1993
- ---------------------------- --------
Investment Trust Investment
Shares Shares(2) Shares(1)
- ---------- -------- --------
<S> <C> <C>
$ 1.00 $ 1.00 $ 1.00
- ---------- -------- --------
0.02 0.02 --
-- -- --
- ---------- -------- --------
0.02 0.02 --
- ---------- -------- --------
(0.02) (0.02) --
-- -- --
- ---------- -------- --------
(0.02) (0.02) --
- ---------- -------- --------
-- -- --
- ---------- -------- --------
$ 1.00 $ 1.00 $ 1.00
========== ======== ========
1.83% 2.08%** 0.14%**
$ 80,663 $ 34,354 $ 6,582
1.99% 2.24%* 2.12%*
0.78% 0.53%* 0.36%*
1.50% 1.00%* 5.82%*
</TABLE>
43
<PAGE>
THE GALAXY FUND
Massachusetts Municipal Money Market Fund
FINANCIAL HIGHLIGHTS
For a Share outstanding throughout each period.
<TABLE>
<CAPTION>
Six months ended Years ended October 31,
April 30, 1998 ----------------------------------------------------------
(unaudited) 1997 1996(a) 1995 1994 1993(1)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A)(B)............. 0.01 0.03 0.03 0.03 0.02 --
Net realized gain (loss) on investments.. -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total from Investment Operations:(A)... 0.01 0.03 0.03 0.03 0.02 --
---------- ---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income(A).. (0.01) (0.03) (0.03) (0.03) (0.02) --
Dividends from net realized capital gains -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Dividends:(A) ................... (0.01) (0.03) (0.03) (0.03) (0.02) --
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net asset value....... -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ========== ==========
Total Return .................................... 1.42%** 2.92% 2.83% 3.21% 1.99% 0.12%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's)................ $ 91,617 $ 80,966 $ 47,066 $ 40,326 $ 31,516 $ 1,237
Ratios to average net assets:
Net investment income including
reimbursement/waiver .................. 2.85%* 2.90% 2.78% 3.16% 2.00% 2.75%*
Operating expenses including
reimbursement/waiver ................. 0.62%* 0.61% 0.62% 0.57% 0.53% 0.11%*
Operating expenses excluding
reimbursement/waiver .................. 0.69%* 0.69% 0.83% 1.06% 1.21% 35.42%*
</TABLE>
- --------------------------------------------
* Annualized.
** Not Annualized.
(1) The Fund commenced operations on October 5, 1993 as a separate investment
portfolio (the "Predecessor Fund") of the Shawmut Funds.
(2) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio
of the Trust.
(A) Represents less than $0.01 per share for year 1993.
(B) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or other parties for the six months ended April 30,
1998 (unaudited) and the years ended October 31, 1997, 1996, 1995
(unaudited), 1994 (unaudited) and the period ended October 31, 1993
(unaudited) were $0.01, $0.03, $0.03, $0.03, $0.01 and $(0.01),
respectively.
See Notes to Financial Statements.
44
<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 (the "1940 Act"), 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 Money Market, Government,
Tax-Exempt, U.S. Treasury, Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds (individually, a "Fund," collectively, the "Funds")
only.
The Money Market Fund is authorized to issue three series of shares (Trust
Shares, Retail A Shares and Retail B Shares). The Government, Tax-Exempt and
U.S. Treasury Funds are authorized to issue two series of Shares (Trust Shares
and Retail A Shares). Trust Shares, Retail A Shares and Retail B Shares are
substantially the same, except (i) Retail B Shares are subject to a maximum
5.00% contingent deferred sales charge and (ii) each series of shares bears the
following series specific expenses: distribution fees and/or shareholder
servicing fees and transfer agent charges. Six years after the date of purchase,
Retail B Shares of the Money Market Fund will automatically convert to Retail A
Shares of such Fund.
The Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds are authorized to issue one series of shares. Shares of the Connecticut
Municipal Money Market and Massachusetts Municipal Money Market Funds, together
with Retail A Shares of the Money Market, Government, Tax-Exempt and U.S.
Treasury Funds, are hereinafter referred to as "Retail Shares".
2. Significant Accounting Policies
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of their
financial statements.
Portfolio Valuation: Securities in the Funds are valued utilizing the amortized
cost valuation method permitted in accordance with Rule 2a-7 under the 1940 Act.
This method involves valuing a portfolio security initially at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Net realized gains or losses on sales of
securities are determined by the identified cost method. Interest income is
recorded on the accrual basis. Investment income and realized and unrealized
gains and losses are allocated to the separate series of a Fund based upon the
outstanding shares of each series.
Dividends to Shareholders: Dividends from net investment income are determined
separately for each series of a Fund and are declared daily and paid monthly.
Net realized capital gains, if any, are distributed at least annually.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
Federal Income Taxes: The Trust treats each Fund as a separate entity for
Federal income tax purposes. Each Fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. By so qualifying, each Fund will not be subject to Federal
income taxes to the extent that it distributes substantially all of its taxable
or tax-exempt income, if any, for its tax year ending October 31. In addition,
by distributing in each calendar year substantially all of its net investment
income, capital gains, and certain other amounts, if any, each Fund will not be
subject to a Federal excise tax. Therefore, no Federal income or excise tax
provision is recorded.
Repurchase Agreements: Each Fund, except the U.S. Treasury Fund, may engage in
repurchase agreement transactions with institutions that the Trust's investment
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. Each Fund requires that the securities
collateralizing a repurchase agreement transaction be transferred to the Trust's
custodian in a manner that is intended to enable the Fund to obtain those
securities in the event of a counterparty default. The value of the collateral
securities 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
45
<PAGE>
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (continued) (unaudited)
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 outstanding shares of each series. Operating expenses directly
attributable to a series of shares of a Fund are charged to the operations of
that series.
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
following annual rates: with respect to the Money Market, Government and
Tax-Exempt Funds, 0.40% of the average daily net assets of each Fund, and with
respect to the U.S. Treasury, Connecticut Municipal Money Market and
Massachusetts Municipal Money Market Funds, 0.40% of the first $750,000,000 of
net assets of each Fund plus 0.35% of net assets of each Fund in excess of
$750,000,000. The Trust has been advised by the Investment Advisor that, with
respect to the Money Market, Government and Tax-Exempt Funds, the Investment
Advisor intends to waive advisory fees payable to it by each Fund by 0.05% to
the extent that a Fund's net assets exceed $750,000,000.
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 Trust's custodian bank, The Chase Manhattan 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 distributor of the Trust's shares.
The Trust has adopted a shareholder services plan (the "Services Plan") with
respect to Retail 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 Shares, at an
aggregate annual rate not to exceed 0.25% of the average daily net asset value
of the outstanding Retail Shares of each Fund beneficially owned by such
customers. The Trust, under the direction of the Board of the Trustees, is
currently limiting fees payable under the Services Plan with respect to each
Fund to an aggregate annual rate not to exceed 0.10% of the average daily net
asset value of the outstanding Retail Shares beneficially owned by such
customers.
The Trust has adopted a distribution and services plan (the "12b-1 Plan") with
respect to Retail B Shares of the Money Market 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 liason and administrative support
services are being made solely to Fleet Bank and its affiliates. Payments for
distribution expenses may not exceed an annual rate of 0.65% of the average
daily net assets attributable to the Money Market Fund's outstanding Retail B
Shares. The fees paid for shareholder liaison and administrative support
services may not exceed the annual rates of 0.25% and 0.25%, respectively, of
the average daily net assets attributable to the Money Market Fund's outstanding
Retail B Shares owned of record or beneficially by customers of institutions.
The Trust is currently limiting the Money Market Fund's payments for shareholder
liaison and administrative support services under the 12b-1 Plan to an aggregate
fee of not more than 0.10% of the average daily net asset value of Retail B
Shares owned of record or beneficially by customers of institutions. For the six
months
46
<PAGE>
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (continued) (unaudited)
ended April 30, 1998, the Funds paid fees under the Services Plan and 12b-1 Plan
as follows:
<TABLE>
<CAPTION>
Services 12b-1 Plan
----------
Fund Plan Services Distribution
---- ---- -------- ------------
<S> <C> <C> <C>
Money Market Fund......... $999,443 $ 245 $ 1,590
Government Fund........... 183,712 N/A N/A
Tax-Exempt Fund........... 83,343 N/A N/A
U.S. Treasury Fund........ 283,343 N/A N/A
Connecticut Municipal
Money Market Fund......... 74,312 N/A N/A
Massachusetts Municipal
Money Market Fund......... 45,074 N/A N/A
</TABLE>
The Retail Shares, Retail B Shares and Trust Shares of a Fund bear series
specific transfer agent charges based upon the number of shareholder accounts
for each series. Trust Shares of the Funds (except the Tax-Exempt Fund) also
bear additional transfer agency fees in order to compensate Investor Services
Group for payments made to Fleet Bank, an affiliate of the Investment Advisor,
for performing certain sub-account and administrative functions on a per account
basis with respect to Trust Shares held by defined contribution plans. These
additional fees are based on the number of shareholder accounts. For the six
months ended April 30, 1998, transfer agent charges for each series were as
follows:
<TABLE>
<CAPTION>
Fund Retail Retail B Trust
---- ------ -------- -----
<S> <C> <C> <C>
Money Market Fund......... $959,837 $ 65,931 $ 368
Government Fund........... 179,346 N/A 19,658
Tax-Exempt Fund........... 31,688 N/A 38
U.S. Treasury Fund........ 205,378 N/A 8,186
Connecticut Municipal
Money Market Fund......... 11,526 N/A N/A
Massachusetts Municipal
Money Market Fund......... 6,782 N/A 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 month period ended April 30, 1998 include legal fees paid
to Drinker Biddle & Reath LLP. A partner of that firm is Secretary of 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 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 six
months ended April 30, 1998, the waived fees and/or reimbursed expenses with
respect to the Funds are as follows:
<TABLE>
<CAPTION>
Fund Fees waived
- ---- -----------
<S> <C>
Money Market Fund........... $ 590,951
Government Fund............. 82,376
</TABLE>
<TABLE>
<CAPTION>
Fund Expenses Reimbursed
---- -------------------
<S> <C>
Money Market Fund......... $ 11
Connecticut Municipal
Money Market Fund......... 24,211
Massachusetts Municipal
Money Market Fund......... 31,957
</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 in the Funds, each with a par value of
$0.001. The Trust's shares are classified into twenty-seven classes of shares,
each consisting of one or more series including: Class A Shares (Retail A
Shares), Class A - Special Series 1 Shares (Trust Shares) and Class A - Special
Series 2 Shares (Retail B Shares) - Money Market Fund; Class B Shares (Retail A
Shares) and Class B - Special Series 1 Shares (Trust Shares) - Government Fund;
Class E Shares (Retail A Shares) and Class E Special Series 1 Shares (Trust
Shares) - Tax-Exempt Fund; Class F Shares (Retail A
47
<PAGE>
THE GALAXY FUND
NOTES TO FINANCIAL STATEMENTS (continued) (unaudited)
Shares) and Class F - Special Series 1 Shares (Trust Shares) - U.S. Treasury
Fund; Class V Shares - Connecticut Municipal Money Market Fund; and Class W
Shares - Massachusetts Municipal Money Market Fund.
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 Retail A Shares, Retail B Shares and Trust
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. Concentration of Credit
The Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds invest primarily in debt obligations issued by the State of Connecticut
and the Commonwealth of Massachusetts, respectively, and their respective
political subdivisions, agencies and public authorities to obtain funds for
various public purposes. Such Funds are more susceptible to economic and
political factors adversely affecting issuers of each respective state's
specific municipal securities than are municipal funds that are not concentrated
in these issuers to the same extent.
7. Federal Tax Information
At October 31, 1997, the following Funds had capital loss carryforwards:
<TABLE>
<CAPTION>
Fund Amount Expiration
- ---- ---------- ----------
<S> <C> <C>
Money Market Fund ........ $ 1,304,701 2002
5,000 2003
43,235 2004
Government Fund .......... 871,254 2002
Tax-Exempt Fund .......... 120,301 2002
3,772 2003
7,498 2004
U.S. Treasury Fund ....... 775,376 2002
Connecticut Municipal
Money Market Fund ....... 6,619 2003
817 2004
Massachusetts Municipal
Money Market Fund ....... 133 2002
31 2003
12,416 2004
</TABLE>
8. Results of Special Meeting of Shareholders of the Money Market Fund,
Government Fund, U.S. Treasury Fund and Tax-Exempt Fund
At a special meeting of shareholders of the Galaxy Money Market, Government,
U.S. Treasury and Tax-Exempt Funds held on February 26, 1998 and reconvened on
March 12, 1998, shareholders of the Funds approved the elimination of the
fundamental investment limitation prohibiting the Funds from investing in
obligations with maturities exceeding one year in order to permit the Funds to
invest in obligations with maturities permitted by Rule 2a-7 under the 1940 Act.
The results of the shareholder vote were as follows:
<TABLE>
<CAPTION>
Fund For Against Abstain
- ---- --- ------- -------
<S> <C> <C> <C>
Money Market 1,335,206,856 shares 114,361,113 shares 42,333,893 shares
Government 498,129,430 shares 9,117,832 shares 8,863,274 shares
U.S. Treasury 383,784,571 shares 32,604,721 shares 96,451,717 shares
Tax-Exempt 207,548,897 shares 2,458,866 shares 2,216,700 shares
</TABLE>
At the special meeting, shareholders of the Funds also approved a change in the
Funds' fundamental investment limitation with respect to issuer diversification
to allow the Funds to operate in accordance with a diversification policy as may
be permitted from time to time in accordance with Rule 2a-7 under the 1940 Act.
The results of the shareholder vote were as follows:
<TABLE>
<CAPTION>
Fund For Against Abstain
- ---- --- ------- -------
<S> <C> <C> <C>
Money Market 1,367,332,906 shares 76,204,019 shares 48,354,937 shares
Government 496,171,306 shares 10,413,723 shares 9,525,508 shares
U.S. Treasury 377,261,369 shares 35,682,912 shares 99,896,728 shares
Tax-Exempt 207,477,886 shares 2,411,514 shares 2,335,063 shares
</TABLE>
48
<PAGE>
[logo GALAXY FUNDS]
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