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Galaxy
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Funds
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[GRAPHIC OMITTED]
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MONEY MARKET FUNDS REPORT
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MONEY MARKET FUND o GOVERNMENT FUND o TAX-EXEMPT FUND o U.S. TREASURY FUND
CONNECTICUT MUNICIPAL MONEY MARKET FUND o MASSACHUSETTS MUNICIPAL MONEY MARKET
FUND
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ANNUAL
REPORT
For the Year Ended
October 31, 1997
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<PAGE>
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CHAIRMAN'S
MESSAGE
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Dear Shareholder:
Enclosed is your performance report for the Galaxy Money Market Funds for
the fiscal year ended October 31, 1997. As in the past, investors benefited from
combining money market investments with investments in stocks and bonds. While
uncertainty about the economy, inflation, and interest rates increased
volatility in the financial markets, the steady income and short maturities of
money market issues provided investors important stability. Investors were also
rewarded for holding stocks and bonds. Because the economy continued to grow
without higher inflation, stocks and bonds enjoyed solid returns.
These returns became more attractive with passage of the Taxpayer Relief
Act of 1997 (the "Act"), which reduced tax rates for long-term capital gains.
Under the Act, the top tax rate fell from 28% to 20% for investments sold from
May 7, 1997, through July 28, 1997, that were held longer than 12 months. For
sales after July 28, 1997, the lower capital gains rate applies for investments
held more than 18 months. The rate for investors in the 15% income tax bracket
has fallen from 15% to 10%.
The new law also makes individual retirement accounts more attractive in
some circumstances. Starting in 1998, the law raises the income limits for
deductible contributions when you have a company retirement plan and allows,
when a couple's joint income is less than $150,000, one spouse to make
deductible contributions even if the other spouse has a company plan. If you
want to use money in a deductible IRA to pay college expenses or buy a first
home, you may do so without penalty before age 59 1/2.
Two new IRAs may help you build savings from nondeductible contributions.
The Roth IRA allows up to $2,000 in after-tax contributions each year and
eliminates taxes on all distributions after age 59 1/2. You may remove up to
$10,000 before 59 1/2 to buy a first home. However, no tax-free distributions
may be made until at last five years after you establish a Roth IRA. The
education IRA allows up to $500 in after-tax contributions per year for each
child under age 18. You can remove earnings at any time, without tax or
penalties, to pay the child's college expenses. Both the Roth IRA and the
education IRA are subject to certain income limits.
To help you make the most of these changes, we have prepared a guide to
the new legislation and added a Roth IRA and an education IRA to our other
retirement products. If you would like information on using IRAs with the Galaxy
Funds, or you have questions about this report, please call the Galaxy
Information Center at 1-800-628-0414.
Sincerely,
/s/ Dwight E. Vicks, Jr.
Dwight E. Vicks, Jr.
Chairman of the Board of Trustees
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MUTUAL FUNDS:
O ARE NOT BANK DEPOSITS
O ARE NOT FDIC INSURED
O ARE NOT OBLIGATIONS OF
FLEET BANK
O ARE NOT GUARANTEED BY
FLEET BANK
O ARE SUBJECT TO INVESTMENT
RISK INCLUDING POSSIBLE LOSS
OF PRINCIPAL AMOUNT INVESTED
- -----------------------------
<PAGE>
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MARKET OVERVIEW
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MONEY MARKET OVERVIEW
By Fleet Investment Advisors Inc.
Money market yields were volatile at times during the past year, but ended
the year at just about the same level at which they had begun the year. Most of
the volatility occurred as investors tried to gauge whether the economy's growth
rate would induce the Federal Reserve (the "Fed") to boost interest rates.
However, because growth and inflation remained moderate, the Fed raised interest
rates only once -- a modest increase of 25 basis points in March of 1997.
"WHEN WE EXPECTED YIELDS TO BE STABLE OR FALLING, WE EMPHASIZED ISSUES WITH
LONGER MATURITIES TO EARN HIGHER YIELDS."
We changed the maturity structure of the Galaxy Money Market Funds to make
the most of fluctuating yields, and adjusted the mix of investments to optimize
changing yield spreads. These strategies helped the funds earn solid returns for
the 12 months ended October 31, 1997.
MODERATING GROWTH
In the fall of 1996, three-month Treasury Bills were yielding about 5.1%,
the annual rate of inflation was about 3%, and economic growth seemed to be
slowing. The Commerce Department reported that the gross domestic product
("GDP"), which measures U.S. goods and services, had grown at an annual rate of
2.1% in the third quarter of 1996 -- down from 4.7% in the second quarter. With
slower growth, moderate inflation, and new hope for balancing the federal
budget, the Fed left short-term interest rates unchanged. This kept money market
yields relatively stable.
The Commerce Department reported that economic growth had accelerated in
the fourth quarter of 1997, causing money market yields to rise in the first
months of 1997. Although inflation was falling, strong consumer demand and tight
labor markets suggested higher inflation in the future. At the same time, the
Fed was concerned about an "irrational exuberance" in stock prices. These
factors caused the Fed to raise its Fed Funds rate to 5.5%.
After growing at an annual rate of 4.9% in the first quarter of 1997, the
economy's annual growth rate slowed to 3.6% in the second quarter. This, plus
improved productivity, pushed inflation down to 2.2%. Having reached a high of
5.3% in April, money market yields edged lower. A continued slowdown in growth,
plus currency problems in Asia, further reduced the chance of another hike in
interest rates. By the end of October the yield for three-month Treasuries
returned to 5.2%.
INVESTMENT STRATEGY
We purchased securities with longer maturities to earn higher yields, if
we anticipated interest rates to be stable and/or to fall. In a rising interest
rate environment, we bought shorter-term issues. This allowed us to take
advantage of higher interest rates as issues matured.
As usual, we monitored the yield spreads between different money market
instruments to find the best value, which helped to enhance fund returns.
<PAGE>
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MARKET OVERVIEW
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PERFORMANCE AT-A-GLANCE As of October 31, 1997
RETAIL RETAIL B TRUST
SHARES SHARES SHARES
------ -------- ------
GALAXY MONEY MARKET FUND
7-day average yield .......... 4.93% 4.24% 5.12%
30-day average yield ......... 4.93% 4.21% 5.12%
GALAXY GOVERNMENT FUND
7-day average yield .......... 4.84% N/A 5.04%
30-day average yield ......... 4.82% N/A 5.02%
GALAXY TAX-EXEMPT FUND
7-day average yield .......... 2.99% N/A 3.13%
30-day average yield ......... 2.96% N/A 3.10%
GALAXY U.S. TREASURY FUND
7-day average yield .......... 4.64% N/A 4.81%
30-day average yield ......... 4.62% N/A 4.80%
GALAXY CONNECTICUT MUNICIPAL
MONEY MARKET FUND
7-day average yield .......... 3.00% N/A N/A
30-day average yield ......... 2.96% N/A N/A
GALAXY MASSACHUSETTS MUNICIPAL
MONEY MARKET FUND
7-day average yield .......... 2.96% N/A N/A
30-day average yield ......... 2.92% N/A N/A
Investments in the Galaxy Money Market Funds are neither insured nor
guaranteed by the U.S. Government, and there can be no assurance that the
Funds will be able to maintain a stable net asset value of $1.00 per share.
Yields are historical and will vary with market performance. Past performance
is no guarantee of future results.
Retail B Shares were first issued on March 6, 1997.
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).
"U.S. ECONOMIC GROWTH SHOULD CONTINUE TO SLOW IN COMING MONTHS AS DEFLATIONARY
INTERNATIONAL FORCES CONTINUE AND DEBT-LADEN CONSUMER SPENDING WEAKENS."
LOOKING AHEAD
U.S. economic growth should continue to slow in coming months as
deflationary international forces continue and debt-laden consumer spending
weakens. As long as inflation is moderate, the Fed will probably leave interest
rates unchanged. If strong employment puts upward pressure on wages, however,
inflation could rise and put pressure on in terest rates. With economic growth
slowing, we believe any rate hike would probably be modest.
Given the uncertainty about inflation and interest rates, and the flatness
of the yield curve, we expect to keep sizable investments in shorter-term money
market issues. In managing the mix of fund portfolios, we will continue to
invest in high quality investments with attractive yields and strong liquidity.
As always, we will endeavor to make sure each portfolio is well diversified.
<PAGE>
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PORTFOLIO REVIEWS
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GALAXY TAXABLE MONEY MARKET FUNDS
By Karen Arneil and
Thomas DeMarco
Portfolio Managers
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[Photo Of}
Karen Arneil and
Thomas DeMarco
- -------------------------------
As interest rates fluctuated in the past year, we found many opportunities
to enhance the 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. As a result of these strategies, the Funds earned competitive
returns for the 12 months ended October 31, 1997.
GALAXY MONEY MARKET FUND
Distribution of Total Net Assets as of October 31, 1997
Repurchase Agreement & Net Other Assets & Liabilities ........ 4%
Certificates of Deposit ...................................... 6%
Corporate Notes & Bonds ...................................... 8%
Commercial Paper ............................................. 65%
U.S. Gov't. & Agency Obligations ............................. 17%
During the period, Trust Shares of the Galaxy Money Market Fund had a
total return of 5.13% and Retail A Shares of the Galaxy Money Market Fund earned
a total return of 4.93%. Retail B Shares earned a total return of 2.66% from the
date of their initial public offering on March 6, 1997 through October 31, 1997,
before deducting the 5.00% contingent deferred sales charge, and -2.34% after
deducting the 5.00% contingent deferred sales charge.
By comparison, Lipper Analytical Services ("Lipper"), a mutual fund
performance tracking service, measured average total returns for the same time
period of 5.25% for trust shares and 4.86% for retail shares of other taxable
money market funds that reported their results to Lipper.
GALAXY MONEY MARKET FUND
7-Day Average Yield
Galaxy Money Market Fund
------------------------------------------------
Trust Retail A Retail B
------- -------- --------
10/31/96 4.84 4.62
11/30/96 4.87 4.66
12/31/96 4.93 4.73
1/31/97 4.93 4.71
2/28/97 4.92 4.71
3/31/97 4.96 4.78 4.23
4/30/97 5.04 4.87 4.32
5/31/97 5.11 4.93 4.27
6/30/97 5.16 4.98 4.27
7/31/97 5.15 4.97 4.21
8/31/97 5.15 4.96 4.22
9/30/97 5.16 4.97 4.22
10/31/97 5.12 4.93 4.24
For the 12 months ended October 31, 1997, Trust Shares of the Galaxy
Government Fund had a total return of 5.06% and Retail A Shares of the Galaxy
Government Fund had a total return of 4.85%. Trust shares of other money market
funds investing in U.S. government issues that reported their performance to
Lipper earned an average total return of 5.21% over the same period. Retail
shares of similar funds that reported their performance to Lipper earned an
average total return of 4.84% for the period.
During the 12 months ended October 31, 1997, Trust Shares of the Galaxy
U.S. Treasury Fund had a total return of 4.85%. Retail A Shares of the Galaxy
U.S. Treasury Fund earned a total return of 4.67%. These returns compared with
an average total return of 5.07% 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 4.77% for the period.
GALAXY GOVERNMENT FUND
Distribution of Total Net Assets as of October 31, 1997
Federal Home Loan Mortgage Corporation ....................... 25%
Federal National Mortgage Association ........................ 27%
Student Loan Marketing Association ........................... 3%
Federal Farm Credit Bank ..................................... 11%
U.S. Treasury Notes .......................................... 4%
Federal Home Loan Bank ....................................... 21%
Repurchase Agreement & Net Other Assets & Liabilities ........ 9%
<PAGE>
GALAXY GOVERNMENT FUND
7-Day Average Yield
Galaxy Government Fund
-----------------------------
Trust Retail A
------- --------
10/31/96 4.8 4.58
11/30/96 4.84 4.62
12/31/96 4.9 4.68
1/31/97 4.89 4.7
2/28/97 4.85 4.67
3/31/97 4.92 4.72
4/30/97 4.97 4.77
5/31/97 4.69 4.48
6/30/97 4.71 4.5
7/31/97 4.75 4.54
8/31/97 4.82 4.61
9/30/97 4.85 4.63
10/31/97 4.8 4.58
ADDRESSING MARKET CHANGES
As interest rates stabilized at the end of 1996, we selectively added
longer-term investments for higher yields.
As interest rates rose early in 1997, we placed emphasis on short-term
issues. This allowed us to take advantage of higher rates that resulted from the
Federal Reserve's hike in rates in March. In addition, we incorporated
floating-rate notes of U.S. government agencies, corporations and banks whose
coupons reset frequently into our investment strategy. Investors continued to
wait for rates to rise further, weakening demand for longer-term instruments and
making their yields more attractive. We added some investments in longer
maturities, therefore, at this time.
Toward the end of the year, with the yield curve again flat, we renewed
our emphasis on shorter maturities. Throughout the period, we monitored changes
in the spreads between yields of different types of money market instruments to
find the most attractive investments.
GALAXY U.S. TREASURY FUND
Distribution of Total Net Assets as of October 31, 1997
U.S. Treasury Bills .......................................... 46%
Student Loan Marketing Association ........................... 4%
U.S. Treasury Notes .......................................... 19%
Federal Home Loan Bank ....................................... 28%
Federal Farm Credit Bank & Net Other Assets & Liabilities .... 3%
On October 31, 1997, the Galaxy Money Market Fund had an average maturity
of 36 days, the Galaxy Government Fund had an average maturity of 43 days, and
the Galaxy U.S. Treasury Fund had an average maturity of 55 days.
STAYING FLEXIBLE
With the yield curve flat and the direction of interest rates unclear, we
expect to keep fund maturities relatively short for now. If rates rise, this
will allow us to invest in securities with higher yields. If we expect rates
will fall, we plan to add longer-term issues as we find attractive investments.
As before, we will watch for attractive opportunities resulting from
changing yield spreads while maintaining a well-diversified mix of assets,
issues, and maturity dates.
Karen Arneil and Tom DeMarco have managed the Galaxy Money Market Fund, the
Galaxy Government Fund and the Galaxy U.S. Treasury Fund since September 1996.
They have managed money market investments since 1993.
GALAXY U.S. TREASURY FUND
7-Day Average Yield
Galaxy U.S. Treasury Fund
-----------------------------
Trust Retail A
------- --------
10/31/96 4.66 4.49
11/30/96 4.69 4.53
12/31/96 4.65 4.49
1/31/97 4.64 4.47
2/28/97 4.67 4.49
3/31/97 4.76 4.59
4/30/97 4.78 4.62
5/31/97 4.78 4.61
6/30/97 4.81 4.64
7/31/97 4.85 4.68
8/31/97 4.8 4.63
9/30/97 4.84 4.65
10/31/97 4.81 4.64
<PAGE>
GALAXY TAX-EXEMPT MONEY MARKET FUNDS
By Karen Arneil and
Thomas DeMarco
Portfolio Managers
As with taxable money market instruments, the yields for tax-exempt
instruments fluctuated in the 12 months ended October 31, 1997. These
fluctuations, along with changing balances of supply and demand, gave us many
opportunities to enhance the yields 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 taking
advantage of these opportunities, we helped the funds earn returns that were
competitive with other funds that have similar investment objectives.
GALAXY TAX-EXEMPT FUND
Distribution of Total Net Assets as of October 31, 1997
Other Territories, Cash Equivalents & Net Other
Assets & Liabilities ....................................... 6%
North Central ................................................ 17%
Mountain ..................................................... 11%
East ......................................................... 20%
Pacific ...................................................... 8%
South ........................................................ 38%
During the period, Trust and Retail A Shares of the Galaxy Tax-Exempt Fund
had total returns of 3.10% and 2.95%, respectively. For the same period, Lipper
measured average total returns of 3.30% for trust shares and 3.02% for retail
shares of other tax-exempt money market funds reporting their performance to the
service.
GALAXY TAX-EXEMPT FUND
7-Day Average Yield
Galaxy Tax-Exempt Fund
Trust Retail A
------- --------
10/31/96 2.95 2.81
11/30/96 3.02 2.89
12/31/96 3.1 2.96
1/31/97 2.98 2.82
2/28/97 2.94 2.77
3/31/97 2.98 2.83
4/30/97 3.39 3.25
5/31/97 3.33 3.18
6/30/97 3.55 3.41
7/31/97 3.13 2.99
8/31/97 3.07 2.92
9/30/97 3.26 3.11
10/31/97 3.13 2.99
Shares of the Galaxy Connecticut Municipal Money Market Fund had a total
return of 2.94% versus a total return of 2.89% 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 2.92%
versus a total return of 3.01% for the retail shares of other Massachusetts
tax-exempt money market funds that reported their performance to Lipper.
SHIFTING MATURITIES
At the end of 1996, with stable yields and little expectation for higher
interest rates, we added investments with longer maturities. Because of year-end
liquidity concerns, we kept a portion of the funds' investments in liquid,
floating-rate products.
GALAXY CONNECTICUT MUNICIPAL MONEY MARKET FUND
7-Day Average Yield
Retail
--------
10/31/96 2.84
11/30/96 2.84
12/31/96 3.17
1/31/97 2.85
2/28/97 2.8
3/31/97 2.85
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 3.00
<PAGE>
In the first few months of 1997, with yields on the rise, we increased the
Funds' weightings in floating-rate issues. This shift was especially helpful in
April -- when large outflows for tax payments dampened the demand for
floating-rate securities, pushing their yields sharply higher -- and in May,
when seasonal market changes put upward pressure on yields.
GALAXY CONNECTICUT MUNICIPAL MONEY MARKET FUND
Distribution of Total Net Assets as of October 31, 1997
South ........................................................ 9%
Pacific ...................................................... 6%
North Central ................................................ 4%
Puerto Rico .................................................. 7%
Other Territories, Cash Equivalents & Net Other
Assets & Liabilities ....................................... 7%
Connecticut .................................................. 67%
Last summer, the start of new fiscal years for many issuers increased the
supply of tax-exempt issues and yields again rose. Believing yields had peaked,
we again added issues with somewhat longer maturities. This helped enhance the
funds' returns when yields fell in September and October. As of October 31,
1997, the Tax-Exempt Fund had an average maturity of 47 days, and the
Connecticut and Massachusetts Municipal Money Market Funds had average
maturities of 43 days and 41 days, respectively.
GALAXY MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
Distribution of Total Net Assets as of October 31, 1997
North Central ................................................ 3%
South ........................................................ 12%
East ......................................................... 3%
Cash Equivalents & Net Other Assets & Liabilities ............ 1%
Pacific ...................................................... 3%
Puerto Rico .................................................. 4%
Massachusetts ................................................ 74%
WEATHERING VOLATILITY
Because the yield curve has been flat, and the financial markets have been
volatile, we have not increased the Funds' longer-term investments. We need to
have enough liquidity to allow us to respond rapidly to changes in interest
rates, supply, or demand. If it looks like yields will continue to fall, we will
probably look for opportunities to add longer-term issues.
As always, we will watch for changes in the spreads between yields of
different instruments to improve fund returns -- while maintaining a
well-diversified mix of high-quality investments.
Karen Arneil and Tom DeMarco have managed the Galaxy Tax-Exempt Fund, the Galaxy
Connecticut Municipal Money Market Fund and the Galaxy Massachusetts Municipal
Money Market Fund since September 1996. They have managed money market
investments since 1993.
GALAXY MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
7-Day Average Yield
Retail
--------
10/31/96 2.83
11/30/96 2.9
12/31/96 3.15
1/31/97 2.84
2/28/97 2.74
3/31/97 2.83
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
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Investment returns and principal values will vary with market conditions so that
an investor's shares, when redeemed, may be worth more or less than their
original cost. The Investment Adviser is presently waiving fees and/or
reimbursing expenses and may revise or discontinue such practice at any time.
Without such waivers and/or reimbursements, performance would be lower. Past
performance is no guarantee of future results. 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.
- ---------------------
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.
"A WELL-BALANCED ASSET ALLOCATION PLAN MAY HELP TO CONTROL YOUR RISK WHILE
PURSUING YOUR GOALS."
EXCHANGE PRIVILEGES
As your investment needs change, you can conveniently exchange your shares in
one fund for shares in another fund.
QUARTERLY MAGAZINE
Service also means giving you the practical information you need in language you
can understand to make smart investment decisions. The quarterly magazine,
Galaxy Observer, brings news, strategies and simple, straight-forward
explanations of investment basics and terminology.
CONSOLIDATED STATEMENTS
Timely, comprehensive mutual fund account statements offer detailed information
on your individual account. If you have a Fleet One or a Fleet Private Banking
Account, your Galaxy Fund information can be added to these statements.
INVESTMENT SPECIALISTS
In many Fleet branch offices or in the convenience of your home or office, you
can visit one-on-one with an Investment Specialist* who can help you select the
investments that match your individual needs. This service is at no cost to you.
24-HOUR ACCESS TO REGISTERED REPRESENTATIVES
24 hours a day, seven days a week, 365 days a year, we are ready and available
to help. Our toll-free telephone lines offer round-the-clock access to Fund
information and 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-FOR-GLXY (367-4599).
- -------------------------------------------------------------------------------
Certain shareholder services may not be available for Trust Share investors.
Please consult your Fund Prospectus.
* Shares of the Funds are distributed through First Data Distributors, Inc.,
member NASD and SIPC. Investment Specialists are registered representatives of
FIS Securities, Inc., member NASD, or Fleet Enterprises Inc., member NASD and
SIPC.
<PAGE>
TRUSTEES
AND OFFICERS
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
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 deposits or obligations of, or guaranteed or
endorsed by Fleet Financial Group, Inc. or any of its affiliates, Fleet
Investment Advisors Inc., or any Fleet bank. Shares of the funds are not
federally insured by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other 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.
[RECYCLE LOGO]
This report was printed on recycled paper.
<PAGE>
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MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
THE GALAXY FUND OCTOBER 31, 1997
- --------------------
VALUE
PAR VALUE (NOTE 2)
- --------- --------
COMMERCIAL PAPER (A) - 64.61%
FINANCE - 43.30%
$ 25,000,000 ABN-AMRO North America
Finance, Inc.
5.50%, 12/16/97 ..................... $ 24,828,125
35,000,000 American Express Credit Corp.
5.52%, 11/21/97 ..................... 34,892,667
30,000,000 American Express Credit Corp.
5.50%, 11/28/97 ..................... 29,876,250
25,000,000 American General Finance Corp.
5.51%, 11/25/97 ..................... 24,908,167
25,000,000 Associates Corp. of North America
5.48%, 12/11/97 ..................... 24,847,778
50,000,000 Banc One Corp.
5.70% 11/03/97 ...................... 49,984,167
30,000,000 Banc One Corp.
5.50%, 11/13/97 ..................... 29,945,000
8,500,000 Banco De Credito Nacional S.A.
Series A
5.56%, 02/03/98
LOC: Barclays Bank, Plc ............. 8,376,599
52,500,000 Banco Nacional De Comercio
Exterior, S.A., Series A
5.54%, 11/24/97
LOC: Societe Generale ............... 52,314,179
25,000,000 Banco Rio De La Plata S.A.,
Series A 5.62%, 01/20/98
LOC: Bayerische Verinsbank AG ....... 24,687,778
40,000,000 Bank of Nova Scotia
5.50%, 11/06/97 ..................... 39,969,444
38,500,000 Bank of Nova Scotia
5.51%, 12/09/97 ..................... 38,276,080
40,000,000 Bank of Nova Scotia
5.70%, 12/15/97 ..................... 39,730,133
28,700,000 Caterpillar Financial Services Corp.
5.50%, 11/04/97 ..................... 28,686,846
10,700,000 Caterpillar Financial Services Corp.
5.53%, 01/12/98 ..................... 10,581,658
16,570,000 Caterpillar Financial Services Corp.
5.52%, 02/10/98 ..................... 16,313,386
50,000,000 Deutsche Bank Financial, Inc.
5.50%, 11/17/97 ..................... 49,877,778
10,000,000 Export Development Corp.
5.50%, 12/17/97 ..................... 9,929,722
25,000,000 Ford Motor Credit Co.
5.50%, 12/01/97 ..................... 24,885,417
40,000,000 Ford Motor Credit Co.
5.49%, 02/13/98 ..................... 39,365,600
40,000,000 General Electric Capital Corp.
5.50%, 11/18/97 ..................... 39,896,111
30,000,000 General Electric Capital Corp.
5.50%, 02/04/98 ..................... 29,564,583
49,637,000 General Re Corp.
5.51%, 11/14/97 ..................... 49,538,236
20,000,000 General Re Corp.
5.48%, 12/12/97 ..................... 19,875,178
25,000,000 General Re Corp.
5.50%, 01/07/98 ..................... 24,744,097
40,000,000 Lloyds Bank, Plc
5.50%, 12/22/97 ..................... 39,688,333
27,221,000 Morgan (J.P.) & Co., Inc.
5.48%, 11/07/97 ..................... 27,196,047
35,000,000 Morgan (J.P.) & Co., Inc.
5.50%, 11/18/97 ..................... 34,909,097
35,000,000 Morgan (J.P.) & Co., Inc.
5.50%, 12/08/97 ..................... 34,802,153
47,000,000 National Rural Utilities Cooperative
Finance Corp.
5.50%, 11/21/97 ..................... 46,856,389
30,000,000 National Rural Utilities Cooperative
Finance Corp.
5.57%, 01/15/98 ..................... 29,651,875
15,800,000 Novartis Finance Corp.
5.50%, 11/03/97 ..................... 15,795,172
17,500,000 Novartis Finance Corp.
5.52%, 11/10/97 ..................... 17,475,850
20,395,000 PACCAR Financial Corp.
5.52%, 11/20/97 ..................... 20,335,583
30,000,000 Pemex Capital, Inc.
5.50%, 11/13/97
LOC: Credit Suisse First Boston ..... 29,945,000
20,000,000 Pemex Capital, Inc.
5.51%, 11/17/97
LOC: Credit Suisse First Boston ..... 19,951,022
10,000,000 Pitney Bowes Credit Corp.
5.61%, 11/06/97 ..................... 9,992,208
29,500,000 Pitney Bowes Credit Corp.
5.50%, 01/14/98 ..................... 29,166,486
35,000,000 Republic New York Corp.
5.62%, 11/14/97 ..................... 34,928,969
35,000,000 Toronto Dominion Holdings USA,
Inc. 5.52%, 11/07/97 ................ 34,967,800
35,000,000 Toronto Dominion Holdings USA,
Inc. 5.53%, 01/02/98 ................ 34,666,664
14,000,000 USAA Capital Corp.
5.49%, 11/03/97 ..................... 13,995,730
24,000,000 USAA Capital Corp.
5.50%, 11/10/97 ..................... 23,967,000
19,350,000 USAA Capital Corp.
5.49%, 12/04/97 ..................... 19,252,621
15,000,000 USAA Capital Corp.
5.49%, 12/08/97 ..................... 14,915,363
8,065,000 USAA Capital Corp.
5.49%, 01/06/98 ..................... 7,983,826
--------------
1,306,338,167
--------------
CONSUMER STAPLES - 11.14%
30,000,000 Abbott Laboratories
5.46%, 11/13/97 ..................... 29,945,400
35,000,000 Abbott Laboratories
5.49%, 01/08/98 ..................... 34,637,050
10,365,000 Abbott Laboratories
5.48%, 01/16/98 ..................... 10,245,088
23,000,000 Campbell Soup Co.
5.48%, 11/17/97 ..................... 22,943,982
50,000,000 Gillette Co.
5.67%, 11/03/97 ..................... 49,984,250
14,400,000 Kellogg Co.
5.52%, 11/06/97 ..................... 14,388,960
40,000,000 Motorola, Inc.
5.47%, 12/05/97 ..................... 39,793,355
25,000,000 Procter & Gamble Co.
5.52%, 11/05/97 ..................... 24,984,667
50,000,000 Procter & Gamble Co.
5.50%, 01/28/98 ..................... 49,327,778
35,000,000 Sara Lee Corp.
5.50%, 11/05/97 ..................... 34,978,611
25,000,000 Sara Lee Corp.
5.52%, 11/07/97 ..................... 24,977,000
--------------
336,206,141
--------------
TECHNOLOGY - 6.46%
31,000,000 Ameritech Corp.
5.50%, 11/24/97 ..................... 30,891,069
15,000,000 Ameritech Corp.
5.48%, 12/04/97 ..................... 14,924,650
20,000,000 Ameritech Corp.
5.55%, 12/08/97 ..................... 19,885,917
34,000,000 Lucent Technologies, Inc.
5.60%, 11/24/97 ..................... 33,878,356
33,470,000 Lucent Technologies, Inc.
5.51%, 12/19/97 ..................... 33,224,107
30,000,000 Xerox Credit Corp.
5.48%, 11/19/97 ..................... 29,917,800
32,500,000 Xerox Credit Corp.
5.50%, 12/02/97 ..................... 32,346,076
--------------
195,067,975
--------------
CHEMICALS AND DRUGS - 1.67%
15,110,000 duPont (E.I.) deNemours & Co.
5.56%, 11/04/97 ..................... 15,102,999
35,243,000 Merck & Co., Inc.
5.47%, 12/01/97 ..................... 35,082,351
--------------
50,185,350
--------------
FOREST PRODUCTS - 1.24%
37,500,000 Fletcher Challenge USA, Inc.
5.52%, 11/19/97 LOC: National
Westminister Bank, Plc ............... 37,396,500
--------------
CONSUMER CYCLICAL - 0.80%
24,000,000 Wal-Mart Stores, Inc.
5.48%, 11/04/97 ..................... 23,989,040
--------------
TOTAL COMMERCIAL PAPER .............. 1,949,183,173
(Cost $1,949,183,173) --------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 16.73%
FEDERAL HOME LOAN MORTGAGE CORPORATION - 6.82%
25,000,000 5.65%, 11/03/97 (A) ................. 24,992,153
30,000,000 5.38%, 11/12/97 (A) ................. 29,949,858
75,000,000 5.47%, 12/17/97 (A) ................. 74,475,856
35,000,000 5.42%, 12/29/97 (A) ................. 34,694,372
21,891,000 5.43%, 01/30/98 (A) ................. 21,593,830
20,000,000 5.41%, 06/22/98 (B) ................. 19,990,054
--------------
205,696,123
--------------
FEDERAL HOME LOAN BANK - 4.96%
20,000,000 5.63%, 11/03/97 (A) ................. 19,993,744
40,000,000 5.58%, 11/20/97 (A) ................. 39,882,200
30,000,000 5.38%, 01/16/98 (A) ................. 29,659,267
25,000,000 6.06%, 04/17/98 ................. 25,046,952
35,000,000 5.42%, 07/07/98 (B) ................. 34,976,559
--------------
149,558,722
--------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 4.95%
40,000,000 9.55%, 11/10/97 ................ 40,035,366
40,000,000 5.38%, 12/03/97 (A) ................ 39,808,533
70,000,000 5.40%, 12/16/97 (A) ................ 69,527,500
--------------
149,371,399
--------------
TOTAL U. S. GOVERNMENT AND
AGENCY OBLIGATIONS ................. 504,626,244
(Cost $504,626,244) --------------
CORPORATE NOTES AND BONDS - 8.07%
BANKING - 6.48%
40,000,000 BankBoston, N.A.
5.64% 01/13/98 ...................... 40,000,000
20,000,000 Bank of America
5.66%, 12/19/97 ..................... 19,995,491
50,000,000 FCC National Bank
5.83%, 12/09/97 ..................... 50,001,025
7,500,000 NationsBank Corp., Series D
Senior MTN
5.81%, 08/25/98 (B) ................. 7,510,254
10,000,000 PNC Bank NA
5.65%, 06/05/98 (B) ................. 10,003,703
18,200,000 PNC Bank NA
5.68%, 09/25/98 (B) ................. 18,211,272
10,000,000 PNC Bank NA
5.54%, 01/09/98 (B) ................. 9,999,248
40,000,000 U.S. Bank National Association
of Minnesota
5.50%, 10/21/98 (B) ................. 39,973,386
--------------
195,694,379
--------------
FINANCE (B) - 1.39%
2,000,000 Caterpillar Financial Services Corp.
Series F, MTN
5.70%, 04/13/98 ..................... 2,000,078
40,000,000 IBM Credit Corp., Senior MTN
5.59%, 09/10/98 ..................... 39,977,283
--------------
41,977,361
--------------
AUTOMOBILE FINANCE - 0.20%
5,944,000 Ford Motor Credit Co., Debenture
9.38%, 12/15/97 ..................... 5,966,691
--------------
TOTAL CORPORATE NOTES AND BONDS ..... 243,638,431
(Cost $243,638,431) --------------
CERTIFICATES OF DEPOSIT - 6.20%
32,000,000 ABN-AMRO Bank NV, Yankee
5.82%, 07/17/98 ..................... 31,973,084
30,000,000 Bayerische Landesbank, Yankee
5.50%, 04/15/98 (B) ................. 29,993,125
25,000,000 Bayerische Vereinsbank AG, Yankee
5.64%, 02/02/98 ..................... 24,997,489
40,000,000 Canadian Imperial Bank of Commerce
Yankee
5.57%, 11/03/97 ..................... 39,999,992
30,000,000 Deutsche Bank AG, Yankee
5.57%, 12/22/97 ..................... 29,999,158
30,000,000 Harris Trust
5.53%, 11/12/97 ..................... 30,000,000
--------------
TOTAL CERTIFICATES OF DEPOSIT ....... 186,962,848
(Cost $186,962,848) --------------
REPURCHASE AGREEMENT - 5.05%
152,401,963 Repurchase Agreement with:
HSBC Securities, Inc.
5.65%, 11/03/97, dated 10/31/97
Repurchase Price $152,473,719
Collateralized by U.S.Treasury
Bonds 6.00% to 10.63%, Due 2009
to 2026 Total Par $128,409,000;
Market Value $155,451,704 ........... $ 152,401,963
--------------
TOTAL REPURCHASE AGREEMENT .......... 152,401,963
(Cost $152,401,963) --------------
TOTAL INVESTMENTS - 100.66% ........................ 3,036,812,659
(Cost $3,036,812,659)* --------------
NET OTHER ASSETS AND LIABILITIES - (0.66%) ......... (19,989,263)
--------------
NET ASSETS - 100.00% ............................... $3,016,823,396
==============
- --------------------------------
* 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 October 31, 1997.
MTN Medium Term Note.
See Notes to Financial Statements.
<PAGE>
- -------------------
GOVERNMENT FUND
PORTFOLIO OF INVESTMENTS
THE GALAXY FUND OCTOBER 31, 1997
- --------------------
VALUE
PAR VALUE (NOTE 2)
--------- --------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 90.53%
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 27.00%
$25,000,000 5.40%, 11/07/97 (A) ....................... $ 24,977,500
30,000,000 9.55%, 11/10/97 ........................... 30,026,524
9,320,000 5.37%, 11/10/97 (A) ....................... 9,307,488
30,000,000 5.42%, 11/17/97 (A) ....................... 29,927,800
23,755,000 5.49%, 11/18/97 (A) ....................... 23,693,415
54,112,000 5.43%, 11/24/97 (A) ....................... 53,924,276
25,000,000 5.40%, 12/16/97 (A) ....................... 24,831,250
23,750,000 5.43%, 12/22/97 (A) ....................... 23,567,303
25,000,000 5.48%, 01/29/98 (A) ....................... 24,661,306
20,000,000 5.72%, 09/09/98, MTN ...................... 19,978,699
------------
264,895,561
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION - 24.83%
25,000,000 5.50%, 11/07/97 (A) ....................... 24,977,083
25,000,000 5.41%, 11/28/97 (A) ....................... 24,898,563
24,300,000 5.40%, 12/05/97 (A) ....................... 24,176,185
35,000,000 5.46%, 12/12/97 (A) ....................... 34,782,358
25,000,000 5.39%, 12/16/97 (A) ....................... 24,831,406
35,000,000 5.46%, 12/17/97 (A) ....................... 34,755,817
33,630,000 5.48%, 12/22/97 (A) ....................... 33,368,919
12,000,000 5.47%, 12/24/97 (A) ....................... 11,903,363
30,000,000 5.41%, 06/22/98 (B) ....................... 29,985,081
------------
243,678,775
------------
FEDERAL HOME LOAN BANK - 21.63%
35,000,000 5.38%, 11/14/97 (A) ....................... 34,932,003
18,853,000 5.38%, 01/09/98 (A) ....................... 18,658,594
20,000,000 5.38%, 01/16/98 (A) ....................... 19,772,844
20,000,000 5.71%, 01/21/98 ........................... 20,001,497
35,000,000 5.40%, 01/30/98 (A) ....................... 34,527,500
30,000,000 5.39%, 03/11/98 (A) ....................... 29,416,083
10,000,000 6.06%, 04/17/98 ........................... 10,018,781
25,000,000 5.42%, 07/07/98 (B) ....................... 24,983,257
20,000,000 5.44%, 10/02/98 (B) ....................... 19,987,492
------------
212,298,051
------------
FEDERAL FARM CREDIT BANK - 10.63%
15,125,000 5.50%, 11/03/97 (A) ....................... 15,124,945
20,000,000 5.41%, 12/05/97 (A) ....................... 19,897,811
10,450,000 5.63%, 01/02/98 ........................... 10,448,511
18,485,000 5.37%, 01/07/98 (A) ....................... 18,300,258
20,590,000 5.53%, 02/02/98 ........................... 20,580,247
20,000,000 5.43%, 09/02/98 (B) ....................... 19,986,129
------------
104,337,901
------------
U.S. TREASURY NOTES - 3.77%
37,000,000 6.00%, 11/30/97 ........................... 37,014,906
------------
STUDENT LOAN MARKETING ASSOCIATION - 2.67%
26,180,000 5.45%, 11/20/97 (B) ....................... 26,182,184
------------
TOTAL U.S. GOVERNMENT
AND AGENCY OBLIGATIONS .................... 888,407,378
(Cost $888,407,378) ------------
REPURCHASE AGREEMENT - 9.38%
92,101,485 Repurchase Agreement with: HSBC
Securities, Inc. 5.65%, 11/03/97,
dated 10/31/97 Repurchase Price
$92,144,849 (Collateralized by
U.S. Treasury Bonds 7.25% to 7.50%,
Due 2016 Total Par $81,427,000;
Market Value $93,945,330) ................. 92,101,485
------------
TOTAL REPURCHASE AGREEMENT ................ 92,101,485
(Cost $92,101,485) ------------
TOTAL INVESTMENTS - 99.91% .................................. 980,508,863
(Cost $980,508,863)* ------------
NET OTHER ASSETS AND LIABILITIES - 0.09% .................... 863,054
------------
NET ASSETS - 100.00% ........................................ $981,371,917
============
- -----------------------------------
* 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 October 31, 1997.
MTN Medium Term Note
See Notes to Financial Statements.
<PAGE>
- --------------------
TAX-EXEMPT FUND
PORTFOLIO OF INVESTMENTS
THE GALAXY FUND OCTOBER 31, 1997
- --------------------
VALUE
PAR VALUE (NOTE 2)
--------- --------
MUNICIPAL SECURITIES - 98.19%
ALABAMA - 0.93%
$1,000,000 Phoenix County Industrial
Development Board
Environmental Improvements Revenue
Georgia Kraft Project
4.00%, 12/01/15 (A) ......................... $ 1,000,000
LOC: Deutsche Bank AG
2,000,000 Montgomery Industrial
Development Board, Series 1990, PCR
3.65%, 12/01/97
Guaranteed: General Electric Co. ............ 2,000,000
-----------
3,000,000
-----------
ALASKA - 4.05%
2,900,000 Valdez Marine Terminal Revenue
Exxon Pipeline Co. Project, Series A
4.15%, 12/01/33 (A) ......................... 2,900,000
5,700,000 Valdez Marine Terminal Revenue
ARCO Transportation Project, Series A
3.65%, 11/17/97
Guaranteed: ARCO ............................ 5,700,000
1,400,000 Valdez Marine Terminal Revenue
ARCO Transportation Project, Series A
3.70%, 12/18/97
Guaranteed: ARCO ............................ 1,400,000
3,000,000 Valdez Marine Terminal Revenue
ARCO Transportation Project, Series A
3.75%, 02/10/98 ............................. 3,000,000
-----------
13,000,000
-----------
ARIZONA - 3.10%
2,800,000 Maricopa County, PCR
Arizona Public Service Co., Series F
4.00%, 05/01/29 (A)
LOC: Bank of America NT & SA ................ 2,800,000
5,170,000 Mesa Municipal Development Corp.
Series 1996-A
3.70%, 11/13/97
LOC: Westdeutsche Landesbank ................ 5,170,000
2,000,000 Pima County, IDA
Tuson Electric, Series A
3.75%, 06/15/22 (A)
LOC: Societe Generale ....................... 2,000,000
-----------
9,970,000
-----------
ARKANSAS - 0.37%
1,200,000 Pulaski County, PCR
Minnesota Mining & Manufacturing
3.65%, 08/01/22 (A) ......................... 1,200,000
-----------
COLORADO - 2.18%
7,000,000 Moffat County, PCR
UTE Electric Co.
3.70%, 07/01/10 (A)
Insured: AMBAC .............................. 7,000,000
-----------
CONNECTICUT - 0.31%
1,000,000 Connecticut State Special Assessment
Unemployment Compensation
Advisory Fund, Series C
3.90%, 11/15/01 (A)
Insured: FGIC ............................... 1,000,000
-----------
DELAWARE - 1.25%
4,000,000 Delaware State Economic Development
Authority, IDR
Gore & Associates, Barksdale
3.75%, 12/04/97
LOC: Morgan Guaranty Trust Co. .............. 4,000,000
-----------
DISTRICT OF COLUMBIA - 0.31%
1,000,000 District of Columbia
Series A-3, GO
4.25%, 10/01/07 (A)
LOC: Societe Generale ....................... 1,000,000
-----------
FLORIDA - 7.00%
3,000,000 Florida Housing Finance Agency
Multifamily, Oak Mill
4.00%, 11/01/07 (A)
LOC: Chase Manhattan Bank, N.A. ............. 3,000,000
1,500,000 Orange County HFA
Pooled Hospital Loan Program, Series 1
3.65%, 11/24/97
Insured: MBIA ............................... 1,500,000
5,000,000 Pinellas County Educational
Facilities Authority
Pooled Independent Higher Education
3.65%, 11/18/97
LOC: Credit Suisse First Boston
Insured: MBIA ............................... 5,000,000
9,000,000 Putnam County Development Authority
PCR, Seminole Electric Cooperative
Series D
3.60%, 12/15/09 (A)
Guaranteed: National Rural
Utilities CFC ............................... 9,000,000
4,000,000 West Orange Memorial Hospital
Tax District, Series A-2
3.70%, 2/05/98
LOC: Rabobank Nederland ..................... 4,000,000
-----------
22,500,000
-----------
GEORGIA - 4.55%
6,500,000 Burke County Development Authority
PCR, Oglethorpe Power Corp., Series B
3.80%, 05/28/97
Insured: AMBAC .............................. 6,500,000
7,000,000 De Kalb County, TAN
4.00%, 12/31/97 ............................. 7,005,017
1,100,000 Fulco Hospital Revenue Anticipation
Certificates, St. Joseph's Hospital Project
3.70%, 11/24/97
LOC: Trust Co. Bank ......................... 1,100,000
-----------
14,605,017
-----------
ILLINOIS - 8.99%
6,500,000 Chicago O'Hare International Airport
American Airlines, Series C
4.00%, 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
3.65%, 01/01/15 (A)
LOC: Societe Generale ....................... 1,750,000
1,800,000 Chicago O'Hare International Airport
General Airport, Second Lien, Series C
3.65%, 01/01/18 (A)
LOC: Societe Generale ....................... 1,800,000
5,000,000 Illinois Development Finance Authority
PCR, Illinois Power Co. Project, Series A
3.65%, 11/01/28 (A)
LOC: Canadian Imperial
Bank of Commerce ............................ 5,000,000
5,300,000 Illinois Educational Facilities Authority
Series 1995
3.70%, 12/19/97
LOC: Northern Trust ......................... 5,300,000
2,600,000 Illinois HFA, Series 1989-A
3.70%, 11/04/97
LOC: Northern Trust ......................... 2,600,000
2,335,000 Illinois HFA, Series 1985-D
3.70%, 11/13/97
Insured: MBIA
LOC: Morgan Guaranty Trust .................. 2,335,000
3,600,000 Joliet Regional Port District Marine
Terminal Revenue, Exxon Project
4.15%, 10/01/24 (A) ......................... 3,600,000
-----------
28,885,000
-----------
INDIANA - 0.64%
2,050,000 Sullivan, PCR, Series 1985L-2
3.65%, 11/14/97
Guaranteed: National Rural
Utilities CFC ............................... 2,050,000
----------
KANSAS - 0.37%
1,200,000 Burlington, PCR, Series 1985C-1
3.85%, 12/01/97
Guaranteed: National Rural
Utilities CFC ............................... 1,200,000
----------
LOUISIANA - 2.77%
1,800,000 Lake Charles Harbor &
Terminal District
Port Facilities Revenue
Citgo Petroleum Corp.
3.65%, 08/01/07 (A)
LOC: Westdeutsche Landesbank ................ 1,800,000
1,000,000 Louisiana Public Facilities Authority
PCR, Ciba-Geigy Corp. Project
3.60%, 12/01/04 (A)
LOC: Swiss Bank Corp. ....................... 1,000,000
1,100,000 Louisiana Public Facilities Authority
College & University
Equipment & Capital , Series A
3.65%, 09/01/10 (A)
Insured: FGIC ............................... 1,100,000
5,000,000 St. James Parish, PCR
Texaco Project, Series A
3.70%, 11/06/97
Guaranteed: Texaco, Inc. .................... 5,000,000
-----------
8,900,000
-----------
MASSACHUSETTS - 5.73%
6,000,000 Massachusetts Bay
Transportation Authority, Series C
3.65%, 12/09/97
LOC: West Deutsche Landesbank ............... 6,000,000
3,600,000 Massachusetts Bay
Transportation Authority, Series C
3.75%, 01/12/98
LOC: West Deutsche Landesbank ............... 3,600,000
3,800,000 Massachusetts State HEFA
Capital Asset Program, Series E
4.15%, 01/01/35 (A)
LOC: First National Bank of Chicago 3,800,000
5,000,000 Massachusetts Water Resource Authority
3.65%, 11/07/97
LOC: Morgan Guaranty Trust Co. .............. 5,000,000
-----------
18,400,000
-----------
MICHIGAN - 4.96%
3,500,000 Cornell Township Economic Corp.
IDR, Mead-Escanaba Paper Co.
3.63%, 11/05/97
LOC: Credit Suisse First Boston ............. 3,500,000
8,000,000 Michigan Municipal Bond Authority
Series B
4.50%, 07/02/98 ............................. 8,032,276
4,200,000 Michigan State Building Authority
Series 1
3.75%, 03/02/98
LOC: Canadian Imperial
Bank of Commerce ............................ 4,200,000
200,000 Michigan State Strategic Fund, PCR
Consumers Power Project
4.20%, 04/15/18 (A)
LOC: Union Bank of Switzerland .............. 200,000
-----------
15,932,276
-----------
MISSISSIPPI - 0.92%
2,950,000 Claiborne County, PCR
Series 1985G-1
3.80%, 02/13/98
Guaranteed: National Rural
Utilities CFC ............................... 2,950,000
----------
MISSOURI - 3.33%
4,000,000 Independence Water Utility Revenue
3.80%, 11/10/97
LOC: Westdeutsche Landesbank ................ 4,000,000
1,700,000 Independence Water Utility Revenue
3.60%, 12/05/97
LOC: Westdeutsche Landesbank ................ 1,700,000
5,000,000 Missouri State Environmental
Improvement & Energy Resource
Authority, Union Electric
Series A, PCR
3.70%, 11/10/97
LOC: Union Bank of Switzerland .............. 5,000,000
-----------
10,700,000
-----------
MONTANA - 3.11%
10,000,000 Forsyth, PCR
Portland General Electric, Series A
3.55%, 06/01/13 (A)
LOC: Union Bank of Switzerland .............. 10,000,000
----------
NEW MEXICO - 1.56%
5,000,000 New Mexico State, TRAN
4.50%, 06/30/98 ............................. 5,020,015
----------
NEW YORK - 3.89%
5,500,000 New York
3.75%, 12/17/97
Insured: FSA
SPA: State Street ........................... 5,500,000
3,000,000 New York
Series J, Sub-Series J-2
3.80%, 02/26/98
LOC: Commerzbank AG ......................... 3,000,000
1,000,000 New York State Energy
Research & Development Authority
Niagara Mohawk Power Corp., Series C
4.20%, 12/01/25 (A)
LOC: Canadian Imperial
Bank of Commerce ............................ 1,000,000
2,000,000 New York State Energy
Research & Development Authority
Orange & Rockland Project, Series A
3.65%, 10/01/14 (A)
Insured: FGIC
LOC: Societe Generale ....................... 2,000,000
1,000,000 New York State
Housing Finance Agency
Hospital Special Surgery Staff, Series A
3.55%, 11/01/10 (A)
LOC: Chase Manhattan Bank, N.A. ............. 1,000,000
-----------
12,500,000
-----------
NORTH CAROLINA - 1.43%
4,600,000 North Carolina Educational Facilities
Finance Agency
Bowman Gray School Project
3.65%, 09/01/26 (A)
LOC: Wachovia Bank
of North Carolina, N.A. ..................... 4,600,000
----------
OHIO - 1.87%
1,900,000 Ohio State
Air Quality Development Authority
Cincinnati Gas & Electric, Series A
4.15%, 09/01/30 (A)
LOC: ABN-AMRO Bank NV ....................... 1,900,000
1,000,000 Ohio State
Air Quality Development Authority
Environmental, Mead Corp.
4.00%, 10/01/01 (A)
LOC: Deutsche Bank AG ....................... 1,000,000
3,100,000 Toledo-Lucas County Port Authority
CSX Transportation, Inc. Project
3.70%, 12/16/97
LOC: Bank of Nova Scotia .................... 3,100,000
-----------
6,000,000
-----------
OREGON - 0.75%
2,400,000 Umatilla County Hospital Facilities
Authority Franciscan Health System
Series B, 4.05%, 12/01/24 (A)
LOC: Toronto Dominion Bank .................. 2,400,000
----------
PENNSYLVANIA - 9.00%
2,800,000 Allegheny County, HDA
Health Center Development, Inc.
Series B
3.70%, 11/12/97
LOC: PNC Bank, N.A. ......................... 2,800,000
2,000,000 Allegheny County, HDA
Health Center Development, Inc.
Series B,
3.70%, 12/08/97
LOC: PNC Bank, N.A. ......................... 2,000,000
1,000,000 Allegheny County, HDA
Health Center Development, Inc.
Series B
3.70%, 01/26/98
LOC: PNC Bank ............................... 1,000,000
4,000,000 Beaver County, IDA
3.65%, 11/19/97
LOC: Swiss Bank Corp. ....................... 4,000,000
3,500,000 Beaver County, IDA
3.65%, 11/25/97
LOC: Swiss Bank Corp. ....................... 3,500,000
4,000,000 Delaware County, IDA
Series 1988-A
3.70%, 11/05/97
Insured: FGIC ............................... 4,000,000
2,500,000 Delaware County, IDA
Series 1988-A
3.70%, 01/05/98
Insured: FGIC ............................... 2,500,000
4,600,000 Delaware County, IDA
Series 1998-B
3.75%, 12/04/97
Insured: FGIC ............................... 4,600,000
2,300,000 Delaware Valley
Regional Finance Authority
Local Government Revenue, Series C
3.65%, 12/01/20 (A)
LOC: Credit Suisse First Boston ............. 2,300,000
2,200,000 Philadelphia Gas Works
3.70%, 12/03/97
LOC: Canadian Imperial
Bank of Commerce ............................ 2,200,000
-----------
28,900,000
-----------
TENNESSEE - 0.41%
1,300,000 Metropolitan Nashville Airport Authority
Special Facilities Revenue,
American Airlines, Series A
4.05%, 10/01/12 (A)
LOC: Credit Suisse First Boston ............. 1,300,000
----------
TEXAS - 15.92%
5,000,000 Austin Utility System, Series A
3.70%, 12/01/97
LOC: Morgan Guaranty Trust Co. .............. 5,000,000
4,000,000 Brazos River Authority, PCR
Texas Utilities, Series B
4.05%, 02/01/32 (A)
Insured: MBIA ............................... 4,000,000
2,500,000 Dallas Area Rapid Transit Sales Tax
Series A
3.80%, 11/21/97
LOC: Credit Suisse First Boston ............. 2,500,000
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
4,000,000 Gulf Coast Waste Disposal Authority
Amoco Oil Co. Project
4.15%, 10/01/17(A)
Guaranteed: Amoco Oil Co. ................... 4,000,000
2,600,000 Gulf Coast Waste Disposal Authority
PCR, Exxon Project
3.60%, 11/04/97
Guaranteed: Exxon Corp. ..................... 2,600,000
2,000,000 Gulf Coast Waste Disposal Authority
PCR, Exxon Project
3.80%, 11/17/97
Guaranteed: Exxon Corp. ..................... 2,000,000
1,400,000 Gulf Coast Waste Disposal Authority
PCR, Exxon Project
3.80%, 03/11/98
Guaranteed: Exxon Corp. ..................... 1,400,000
1,300,000 Harris County, HFDC
Texas Medical Center Project
3.95%, 02/15/22 (A)
Insured: MBIA ............................... 1,300,000
5,000,000 Hockley County, IDC, PCR
Amoco Project, Standard Oil Co.
3.78%, 03/01/14 (A) ......................... 5,001,188
4,600,000 Plano HFDC, Hospital Revenue
Series 1989
3.70%, 11/10/97
Insured: MBIA ............................... 4,600,000
1,100,000 Plano HFDC, Hospital Revenue
Series 1989
3.70%, 12/08/97
Insured: MBIA ............................... 1,100,000
1,300,000 Sabine River Authority, PCR
Texas Utilities Project, Series A
4.25%, 03/01/26 (A)
Insured: AMBAC .............................. 1,300,000
1,200,000 Texas A & M, Series B
Permanent University Fund
3.65%, 12/05/97
LOC: Morgan Guaranty Trust Co. .............. 1,200,000
7,000,000 Texas State, TRAN, Series A
4.75%, 08/31/98 ............................. 7,051,769
-----------
51,152,957
-----------
UTAH - 1.06%
3,400,000 Intermountain Power Agency
Series 1985-F
3.70%, 02/05/98
LOC: Swiss Bank Corp. ....................... 3,400,000
----------
VIRGINIA - 0.72%
2,300,000 Peninsula Ports Authority Coal Terminal
Dominion Terminal Project, Series C
4.00%, 07/01/16 (A)
LOC: National Westminster Plc ............... 2,300,000
----------
WASHINGTON - 3.78%
6,750,000 Seattle Municipal Light &
Power Revenue
3.70%, 12/03/97
LOC: Morgan Guaranty Trust Co. .............. 6,750,000
5,400,000 Washington State
Public Power Supply System
Nuclear Project No.1 Revenue,
Series 1A-1
3.65%, 07/01/17 (A)
LOC: Bank of America NT & SA ................ 5,400,000
-----------
12,150,000
-----------
WYOMING - 2.93%
3,200,000 Converse County, PCR
Pacificorp Project
3.70%, 12/15/97
LOC: Deutsche Bank AG ....................... 3,200,000
2,600,000 Gillette, PCR
Pacificorp Project
3.55%, 11/06/97
LOC: Deutsche Bank AG ....................... 2,600,000
1,000,000 Gillette, PCR
Pacificorp Project
3.60%, 11/06/97
LOC: Deutsche Bank AG ....................... 1,000,000
2,600,000 Platte County, PCR
Tri-State G & T, Series A
3.95%, 07/01/14 (A)
LOC: Societe Generale ....................... 2,600,000
-----------
9,400,000
-----------
TOTAL MUNICIPAL SECURITIES .................. 315,415,265
(Cost $315,415,265) -----------
SHARES
- -------
INVESTMENT COMPANY - 1.39%
4,453,800 Federated Tax-Free Obligations Fund .........$ 4,453,800
------------
TOTAL INVESTMENT COMPANY .................... 4,453,800
(Cost $4,453,800) ------------
TOTAL INVESTMENTS - 99.58% .................................... 319,869,065
(Cost $319,869,065)* ------------
NET OTHER ASSETS AND LIABILITIES - 0.42% ...................... 1,353,053
------------
NET ASSETS - 100.00% ......................................... $321,222,118
============
- ------------------------------
* Aggregate cost for federal tax purposes.
(A) Variable rate demand notes are payable upon not more than one, seven
or thirty business days notice. Put bonds and notes have demand
features which mature within one year. The interest rate shown
reflects the rate in effect at October 31, 1997.
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
TAN Tax Anticipation Notes
TRAN Tax and Revenue Anticipation Notes
See Notes to Financial Statements.
<PAGE>
- --------------------
U.S. TREASURY FUND
PORTFOLIO OF INVESTMENTS
THE GALAXY FUND OCTOBER 31, 1997
- --------------------
VALUE
PAR VALUE (NOTE 2)
- --------- --------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 99.92%
U.S. TREASURY BILLS (A) - 45.63%
$45,000,000 5.14%, 11/06/97 ........................... $ 44,968,903
40,000,000 5.04%, 11/13/97 ........................... 39,932,217
45,000,000 5.11%, 11/20/97 ........................... 44,880,643
20,000,000 4.91%, 11/28/97 ........................... 19,926,425
60,000,000 5.17%, 12/11/97 ........................... 59,662,667
50,000,000 4.89%, 12/26/97 ........................... 49,626,076
50,000,000 5.15%, 01/08/98 ........................... 49,520,458
60,000,000 4.90%, 01/15/98 ........................... 59,381,042
25,000,000 5.12%, 01/22/98 ........................... 24,708,160
35,000,000 5.08%, 02/05/98 ........................... 34,526,333
20,000,000 5.09%, 03/05/98 ........................... 19,649,700
------------
446,782,624
------------
FEDERAL HOME LOAN BANK - 27.71%
102,965,000 5.63%, 11/03/97 (A) ....................... 102,932,795
39,600,000 5.39%, 12/19/97 (A) ....................... 39,315,408
20,000,000 5.43%, 01/08/98 (A) ....................... 19,794,867
35,000,000 5.45%, 01/16/98 (A) ....................... 34,597,728
25,000,000 5.49%, 01/23/98 (A) ....................... 24,683,851
25,000,000 5.73%, 01/27/98 ........................... 24,999,937
15,000,000 5.42%, 07/07/98 (B) ....................... 14,989,954
10,000,000 5.44%, 10/02/98 (B) ....................... 9,993,746
------------
271,308,286
------------
U.S. TREASURY NOTES - 19.43%
20,000,000 5.38%, 11/30/97 ........................... 19,997,834
60,000,000 5.25%, 12/31/97 ........................... 59,988,130
25,000,000 5.63%, 01/31/98 ........................... 25,010,379
20,000,000 7.25%, 02/15/98 ........................... 20,096,339
15,000,000 8.13%, 02/15/98 ........................... 15,110,990
50,000,000 5.88%, 04/30/98 ........................... 50,085,000
-----------
190,288,672
-----------
STUDENT LOAN
MARKETING ASSOCIATION (B) - 4.09%
20,000,000 5.21%, 11/20/97 ........................... 20,000,000
20,000,000 5.45%, 11/20/97 ........................... 20,001,668
------------
40,001,668
------------
FEDERAL FARM CREDIT BANK - 3.06%
10,000,000 5.50%, 11/03/97 (A) ....................... 9,999,964
20,000,000 5.43%, 09/02/98 MTN (B) ................... 19,986,128
------------
29,986,092
------------
TOTAL INVESTMENTS - 99.92% ................................... 978,367,342
(Cost $978,367,342)* ------------
NET OTHER ASSETS AND LIABILITIES - 0.08% ..................... 776,724
------------
NET ASSETS - 100.00% ......................................... $979,144,066
============
- -------------------------
* 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 October 31, 1997.
MTN Medium Term Note
See Notes to Financial Statements.
<PAGE>
- --------------------
CONNECTICUT MUNICIPAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
THE GALAXY FUND OCTOBER 31, 1997
- --------------------
VALUE
PAR VALUE NOTE 2
- --------- ------
MUNICIPAL SECURITIES - 97.87%
ALABAMA - 1.97%
$ 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
------------
CALIFORNIA - 2.48%
3,400,000 Los Angeles Regional Airports
Improvement Corp.
Lease Revenue, Sublease
LA International Airport
4.05%, 12/01/25 (A)
LOC: Societe Generale ...................... 3,400,000
------------
CONNECTICUT - 66.84%
3,000,000 Avon, BAN
3.75%, 01/15/98 ............................ 3,000,904
3,000,000 Connecticut State
Series A, GO
5.25%, 03/15/98 ............................ 3,016,966
3,500,000 Connecticut State
Series B, GO
3.60%, 05/15/14 (A)
LOC: Bayerische Landesbank GZ .............. 3,500,000
500,000 Connecticut State
Series D, GO
3.75%, 12/01/97 ............................ 500,099
1,000,000 Connecticut State Clean Water Fund
6.30%, 07/01/98 ............................ 1,015,794
2,600,000 Connecticut State
Development Authority, PCR
Central Vermont Public Service
3.60%, 12/01/15 (A)
LOC: Toronto Dominion Bank .................. 2,600,000
1,300,000 Connecticut State
Development Authority
Conco Project
3.55%, 11/01/05 (A)
LOC: Bayerische Vereinsbank AG .............. 1,300,000
17,800,000 Connecticut State
Development Authority, PCR
Connecticut Light & Power Co. Project
Series A
3.60%, 09/01/28 (A)
LOC: Deutsche Bank AG ....................... 17,800,000
5,100,000 Connecticut State
Development Authority
Health Care Corp.
for Independent Living
3.50%, 07/01/15 (A)
LOC: Chase Manhattan Bank, N.A. ............. 5,100,000
2,400,000 Connecticut State
Development Authority, PCR
Western Massachusetts Electric Co.
Series A
3.35%, 09/01/28 (A)
LOC: Union Bank of Switzerland .............. 2,400,000
1,000,000 Connecticut State HEFA, Series S
3.50%, 11/06/97
Guaranteed: Yale University ................. 1,000,000
665,000 Connecticut State HEFA, Series S
3.55%, 11/17/97
Guaranteed: Yale University ................. 665,000
4,000,000 Connecticut State HEFA, Series S
3.60%, 12/08/97
Guaranteed: Yale University ................. 4,000,000
500,000 Connecticut State HEFA, Series S
3.60%, 02/13/98
Guaranteed: Yale University ................. 500,000
1,000,000 Connecticut State HEFA
Sharon Hospital Issue, Series A
3.50%, 07/01/27 (A)
LOC: BankBoston, N.A. ....................... 1,000,000
1,205,000 Connecticut State HEFA
Yale-New Haven Hospital, Series E
3.65%, 06/01/12 (A)
Insured: FGIC ............................... 1,205,000
2,100,000 Connecticut State
Housing Finance Authority
Housing Mortgage Finance Program
Series G
3.55%, 05/15/18 (A)
Insured: AMBAC .............................. 2,100,000
3,500,000 Connecticut State, IDA
Allen Group, Inc.
3.85%, 02/01/13 (A)
LOC: Bayerische Vereinsbank AG .............. 3,500,000
600,000 Connecticut State, IDA
Martin-Brower Co. Project
3.40%, 05/01/05 (A)
LOC: Chase Manhattan Bank, N.A. ............. 600,000
1,000,000 Connecticut State , IDA
Trudy Corp. Project 1984
3.70%, 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
2,500,000 Connecticut State Special Assessment,
2nd Injury Fund
3.70%, 12/03/97
LOC: Credit Agricole ........................ 2,500,000
4,900,000 Connecticut State Special Tax Obligation
Revenue, Second Lien, Transportation
Infrastructure, Series 1
3.60%, 12/01/10 (A)
LOC: Commerzbank AG ......................... 4,900,000
4,000,000 Danbury, BAN, GO
3.75%, 02/09/98 ............................. 4,001,600
780,000 East Hartford, Lot A, GO
6.13%, 01/15/98
Insured: FSA ................................ 784,097
1,000,000 Hartford Redevelopment Agency
Multi-Family Mortgage Revenue
Underwood Tower Project
3.40%, 06/01/20 (A)
Insured: FSA ................................ 1,000,000
2,090,000 Manchester, Temporary Notes, Lot B
4.00%, 07/09/98 ............................. 2,094,344
4,000,000 Orange, BAN, GO
3.50%, 03/03/98 ............................. 4,000,644
525,000 South Windsor, BAN, GO
3.79%, 03/24/98 ............................. 525,078
2,000,000 Stamford, BAN, GO
4.00%, 04/01/98 ............................. 2,003,215
2,500,000 Westport, BAN, Lot A, GO
4.00%, 06/26/98 ............................. 2,504,654
5,500,000 Wilton, BAN, GO
4.00%, 07/21/98 ............................. 5,512,133
------------
91,629,528
------------
DELAWARE - 2.33%
3,200,000 Wilmington Hospital Revenue
Franciscan Health System, Series A
4.05%, 07/01/11 (A)
LOC: Toronto Dominion Bank .................. 3,200,000
------------
FLORIDA - 1.20%
1,650,000 Florida Housing Finance Agency
Multifamily, Series NN,
South Point Project
4.00%, 11/01/07 (A)
LOC: Chase Manhattan Bank, N.A. ............. 1,650,000
------------
IDAHO - 0.51%
700,000 Power County, PCR
FMC Corp. Project
4.25%, 12/01/10 (A)
LOC: Wachovia Bank .......................... 700,000
------------
ILLINOIS - 1.10%
100,000 Chicago O'Hare International Airport
General Airport, Second Lien, Series A
3.65%, 01/01/15 (A)
LOC: Societe Generale ....................... 100,000
1,400,000 Joliet Regional Port District
Marine Terminal Revenue
Exxon Project
4.15%, 10/01/24 (A) ......................... 1,400,000
------------
1,500,000
------------
INDIANA - 0.80%
1,100,000 Princeton, PCR
PSI Energy, Inc. Project
4.25%, 03/01/19 (A)
LOC: Canadian Imperial
Bank of Commerce ............................ 1,100,000
------------
LOUISIANA - 0.66%
900,000 Louisiana State
Offshore Terminal Authority
Deepwater Port Revenue, First Stage A
Loop, Inc.
4.15%, 09/01/08 (A)
LOC: Union Bank of Switzerland .............. 900,000
------------
OHIO - 2.33%
1,400,000 Ohio State
Air Quality Development Authority
Cincinnati Gas & Electric, Series A
4.15%, 09/01/30 (A)
LOC: ABN-AMRO Bank NV ....................... 1,400,000
1,800,000 Toledo-Lucas County Port Authority
Series 1992
3.65%, 11/12/97
LOC: Bank of Nova Scotia .................... 1,800,000
------------
3,200,000
------------
OREGON - 3.65%
5,000,000 Port Portland PCR
Reynolds Metals
4.05%, 12/01/09 (A)
LOC: Bank of Nova Scotia .................... 5,000,000
------------
PENNSYLVANIA - 1.82%
1,500,000 Delaware County
Industrial Development Authority
Series 1988-A
3.70%, 11/05/97
Insured: FGIC ............................... 1,500,000
1,000,000 Philadelphia Gas Works
3.70%, 12/03/97
LOC: Canadian Imperial
Bank of Commerce ............................ 1,000,000
------------
2,500,000
------------
PUERTO RICO - 6.52%
6,100,000 Puerto Rico Commonwealth
Government Development Bank
3.35%, 12/01/15 (A)
LOC: Credit Suisse First Boston ............. 6,100,000
2,843,100 Puerto Rico Commonwealth
Highway & Transportation Authority
Series X
3.35%, 07/01/99 (A)
LOC: Union Bank of Switzerland .............. 2,843,100
------------
8,943,100
------------
TENNESSEE - 0.88%
1,200,000 Metropolitan Nashville Airport Authority
Special Facilities Revenue
American Airlines, Series B
4.05%, 10/01/12 (A)
LOC: Bayerische Landesbank GZ ............... 1,200,000
------------
TEXAS - 4.78%
3,555,000 North Central Texas
Health Facilities Development Corp.
Hospital, Presbyterian Medical Center,
4.05%, 12/01/15 (A)
Insured: MBIA ............................... 3,555,000
3,000,000 Sabine River Authority, PCR
Texas Utilities Project, Series A
4.25%, 03/01/26 (A)
Insured: AMBAC .............................. 3,000,000
------------
6,555,000
------------
TOTAL MUNICIPAL SECURITIES .................. 134,177,628
(Cost $134,177,628) ------------
Shares
- ------
INVESTMENT COMPANIES - 1.69%
173,205 Dreyfus Connecticut
Municipal Money Market Fund ................ 173,205
2,143,740 Federated Municipal Trust
Connecticut Municipal Cash Trust ........... 2,143,740
------------
TOTAL INVESTMENT COMPANIES ................. 2,316,945
(Cost $2,316,945) ------------
TOTAL INVESTMENTS - 99.56% ................................... 136,494,573
(Cost $136,494,573)* ------------
NET OTHER ASSETS AND LIABILITIES - 0.44% ..................... 600,087
------------
NET ASSETS - 100.00% ......................................... $137,094,660
============
- --------------------------------
* Aggregate cost for federal tax purposes.
(A) Variable rate demand notes are payable upon not more than one,
seven or thirty business days notice. Put bonds and notes have
demand features which mature within one year. The interest rate
shown reflects the rate in effect at October 31, 1997.
AMBAC American Municipal Bond Assurance Corp.
BAN Bond Anticipation Notes
FGIC Federal Guaranty Insurance Corp.
FSA Financial Securities Assurance Company
GO General Obligation
HEFA Health and Educational Facilities Authority
IDA Industrial Development Authority
LOC Letter of Credit
PCR Pollution Control Revenue
SPA Stand-by Purchase Agreement
See Notes to Financial Statements.
<PAGE>
- --------------------
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
THE GALAXY FUND OCTOBER 31, 1997
- --------------------
VALUE
PAR VALUE (NOTE 2)
- --------- --------
MUNICIPAL SECURITIES - 99.02%
ALABAMA - 2.96%
$ 400,000 McIntosh Industrial
Development Board, PCR
Ciba-Geigy Corp. Project
4.25%, 07/01/04 (A)
LOC: Credit Suisse First Boston ............. $ 400,000
2,000,000 Montgomery Industrial
Development Board, PCR
Series 1990
3.65%, 12/01/97
Guaranteed: General Electric Co. ............ 2,000,000
-----------
2,400,000
-----------
ARIZONA - 0.62%
500,000 Maricopa County, PCR
Arizona Public Service Co., Series A
4.15%, 05/01/29 (A)
LOC: Morgan Guaranty Trust Co. .............. 500,000
-----------
CALIFORNIA - 1.98%
1,600,000 Los Angeles Regional Airports
Improvement Corp.
Lease Revenue, Sublease,
L.A. International Airport
4.05%, 12/01/25 (A)
LOC: Societe Generale ....................... 1,600,000
-----------
DELAWARE - 1.36%
1,100,000 Wilmington Hospital Revenue
Franciscan Health System, Series B
4.05%, 07/01/11 (A)
LOC: Toronto Dominion Bank .................. 1,100,000
-----------
ILLINOIS - 0.37%
300,000 Chicago O'Hare International Airport
American Airlines, Series A
4.00%, 12/01/17 (A)
LOC: Credit Suisse First Boston ............. 300,000
-----------
MASSACHUSETTS - 73.70%
1,000,000 Boston Water & Sewer Commission
General Purpose, Senior Series A
3.40%, 11/01/24 (A)
LOC: State Street ........................... 1,000,000
2,255,000 Brookline, BAN, GO
4.00%, 06/04/98 ............................. 2,258,309
700,000 Ipswich, BAN, GO
4.00%, 02/05/98 ............................. 700,620
1,000,000 Massachusetts Bay
Transportation Authority
Series C
3.65%, 12/09/97
LOC: Westdeutsche Landesbank ................ 1,000,000
2,900,000 Massachusetts Bay
Transportation Authority
General Transportation System
Series 1984-A
3.80%, 03/01/14 (A)
LOC: State Street ........................... 2,900,000
1,500,000 Massachusetts Municipal
Wholesale Electric Co.
Power Supply System, Series C
3.50%, 07/01/19 (A)
Insured: MBIA
LOC: Credit Suisse First Boston ............. 1,500,000
4,850,000 Massachusetts State, Series B, GO
4.00%, 12/01/97 (A)
LOC: National Westminster Bank Plc .......... 4,850,000
2,500,000 Massachusetts State HEFA
Amherst College, Series F
3.55%, 11/01/26 (A) ......................... 2,500,000
2,700,000 Massachusetts State HEFA
Capital Asset Program, Series D
3.85%, 01/01/35 (A)
Insured: MBIA
SPA: Credit Suisse First Boston ............. 2,700,000
2,000,000 Massachusetts State HEFA
Capital Asset Program, Series G-1
3.40%, 01/01/19 (A)
Insured: MBIA ............................... 2,000,000
2,050,000 Massachusetts State HEFA
Community Health
Center Capital Fund
Series A
3.55%, 03/01/15 (A)
LOC: BankBoston N.A. ........................ 2,050,000
1,000,000 Massachusetts State HEFA
Endicott College, Series A
3.50%, 10/01/11 (A)
LOC: BankBoston, N.A. ....................... 1,000,000
2,500,000 Massachusetts State HEFA
Harvard University
3.50%, 08/01/17 (A) ......................... 2,500,000
1,000,000 Massachusetts State HEFA
Harvard University, Series Q
3.50%, 09/01/40 (A) ......................... 1,000,000
2,835,000 Massachusetts State HEFA
Institute Of Technology, Series G
3.35%, 07/01/21 (A) ......................... 2,835,000
2,000,000 Massachusetts State HEFA
Newton Wellesley Hospital, Series F
3.50%, 07/01/25 (A)
Insured: MBIA ............................... 2,000,000
2,000,000 Massachusetts State HEFA
Partners Healthcare System, Series P-2
3.60%, 07/01/27 (A)
Insured: FSA ................................ 2,000,000
1,000,000 Massachusetts State
Housing Finance Agency
Multi-Family, Series A
3.50%, 12/01/25 (A) ......................... 1,000,000
1,800,000 Massachusetts State
Industrial Finance Agency
Buckingham Browne Issue
3.50%, 05/01/27 (A)
LOC: State Street ........................... 1,800,000
1,000,000 Massachusetts State
Industrial Finance Agency
Governor Dummer Academy
3.50%, 07/01/26 (A)
LOC: State Street ........................... 1,000,000
2,400,000 Massachusetts State
Industrial Finance Agency
Ogden Haverhill Project, Series A
3.50%, 12/01/06 (A)
LOC: Union Bank of Switzerland .............. 2,400,000
3,000,000 Massachusetts State Port Authority
3.55%, 11/07/97
LOC: Canadian
Imperial Bank of Commerce ................... 3,000,000
1,000,000 Massachusetts State
Water Resource Authority
Series 1994
3.70%, 12/10/97
LOC: Morgan Guaranty Trust Co. .............. 1,000,000
2,000,000 Massachusetts State
Water Resource Authority
Subordinated, General Purpose, Series A
3.50%, 04/01/28 (A)
Insured: AMBAC .............................. 2,000,000
2,500,000 Natick, BAN, GO
3.75%, 02/27/98 ............................. 2,501,710
1,179,000 North Attleborough, GO
4.25%, 03/01/98
Insured: AMBAC .............................. 1,181,638
1,210,000 Peabody, BAN, GO
4.10%, 04/14/98 ............................. 1,212,304
2,768,000 Stow, BAN, GO
4.25%, 08/20/98 ............................. 2,777,526
2,500,000 Wellesley, BAN, GO
4.00%, 06/11/98 ............................. 2,504,082
2,500,000 Weston, BAN GO
3.60%, 03/04/98 ............................. 2,500,969
----------
59,672,158
----------
MICHIGAN - 2.72%
1,800,000 Cornell Township
Environmental Improvement
Mead-Escanaba Paper Co.
4.00%, 11/01/16 (A)
LOC: Swiss Bank Corp. ....................... 1,800,000
400,000 Kent Hospital Finance Authority
Butterworth Hospital, Series A
3.60%, 01/15/20 (A)
LOC: Rabobank Nederland NV .................. 400,000
----------
2,200,000
----------
MISSOURI - 0.49%
400,000 Missouri State HEFA
St. Louis University
4.05%, 12/01/05 (A)
Insured: FGIC
SPA: Morgan Guaranty Trust Co. .............. 400,000
-----------
PENNSYLVANIA - 1.98%
1,600,000 Lehigh County General Purpose Authority
Lehigh Valley Hospital, Series A
4.00%, 07/01/28 (A)
Insured: AMBAC .............................. 1,600,000
-----------
PUERTO RICO - 4.66%
2,650,000 Puerto Rico Commonwealth
Government Development Bank
3.35%, 12/01/15 (A)
LOC: Credit Suisse First Boston ............. 2,650,000
1,122,400 Puerto Rico Commonwealth
Highway & Transportation Authority
Series X
3.35%, 07/01/99 (A)
LOC: Union Bank of Switzerland .............. 1,122,400
----------
3,772,400
----------
TEXAS - 8.06%
1,500,000 Austin Utility System, Series A
3.70%, 12/01/97
LOC: Morgan Guaranty Trust Co. .............. 1,500,000
1,500,000 Guadalupe-Blanco River Authority
PCR, Central Power & Light Co. Project
4.25%, 11/01/15 (A)
LOC: ABN-AMRO Bank NV ....................... 1,500,000
1,500,000 Gulf Coast Waste Disposal Authority
PCR, Amoco Oil Co. Project
4.15%, 10/01/17 (A)
Guaranteed: Amoco Oil Co. ................... 1,500,000
200,000 Lone Star Airport
Improvement Authority
Multiple Mode, Series A2
4.05%, 12/01/14 (A)
LOC: Royal Bank of Canada ................... 200,000
900,000 Lone Star Airport
Improvement Authority
Multiple Mode, Series B2
4.05%, 12/01/14 (A)
LOC: Royal Bank of Canada ................... 900,000
700,000 Sabine River Authority, PCR
Texas Utilities Project, Series A
4.25%, 03/01/26 (A)
Insured: AMBAC .............................. 700,000
230,000 Texas Higher Education Authority, Inc.
Educational Equipment & Improvement
Series B
3.65%, 12/01/25 (A)
Insured: FGIC ............................... 230,000
----------
6,530,000
----------
WASHINGTON - 0.12%
100,000 Washington State Public Power
Supply System Nuclear Project
No.1 Revenue, Series 1A-1
3.65%, 07/01/17 (A)
LOC: Bank of America NT & SA ................ 100,000
----------
TOTAL MUNICIPAL SECURITIES .................. 80,174,558
(Cost $80,174,558) ----------
Shares
- ------
INVESTMENT COMPANIES - 0.60%
413,912 Dreyfus Massachusetts Tax
Exempt Money Market ......................... 413,912
72,445 Federated Municipal Trust
Massachusetts Municipal Cash Trust .......... 72,445
-----------
TOTAL INVESTMENTS COMPANIES ................. 486,357
(Cost $486,357) -----------
TOTAL INVESTMENTS - 99.62% .................................... 80,660,915
(Cost $80,660,915)* -----------
NET OTHER ASSETS AND LIABILITIES - 0.38% ...................... 304,656
-----------
NET ASSETS - 100.00% .......................................... $80,965,571
===========
- ---------------------------
* Aggregate cost for federal tax purposes.
(A) Variable rate demand notes are payable upon not more than one, seven
or thirty business days notice. Put bonds and notes have demand
features which mature within one year. The interest rate shown
reflects the rate in effect at October 31, 1997.
AMBAC American Municipal Bond Assurance Company
BAN Bond Anticipation Notes
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
HEFA Health and Education Facilities Authority
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SPA Stand-by Purchase Agreement
See Notes to Financial Statements.
<PAGE>
---------------
STATEMENTS OF ASSETS AND LIABILITIES
THE GALAXY FUND October 31, 1997
---------------
<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 ............................... $2,884,410,696 $ 888,407,378 $ 319,869,065 $978,367,342
Repurchase agreement ........................................ 152,401,963 92,101,485 -- --
-------------- ------------- ------------- ------------
Total investments at value ................................. 3,036,812,659 980,508,863 319,869,065 978,367,342
Cash ........................................................ -- -- -- 2,196
Receivable for shares sold .................................. 637,173 8,337 475,390 53,386
Interest and dividends receivable ........................... 7,010,703 4,131,438 1,527,376 3,882,382
Receivable from investment adviser (Note 4) ................. -- -- -- --
-------------- ------------- ------------- ------------
Total Assets .............................................. 3,044,460,535 984,648,638 321,871,831 982,305,306
-------------- ------------- ------------- ------------
LIABILITIES:
Dividends payable. .......................................... 4,911,387 2,690,593 446,338 1,479,067
Payable for shares repurchased .............................. 20,838,723 19,935 -- 1,156,242
Investment advisory fee payable (Note 3) .................... 928,668 328,306 112,739 320,248
Payable to Fleet affiliates (Note 3) ........................ 232,453 30,853 14,387 58,686
Payable to Administrator (Note 3) ........................... 343,836 104,405 32,687 82,906
Trustees' fees and expenses payable (Note 3) ................ 24,813 13,932 4,723 11,405
Payable to custodian ........................................ 7,645 -- -- --
Accrued expenses and other payables ......................... 349,614 88,697 38,839 52,686
-------------- ------------- ------------- ------------
Total Liabilities ......................................... 27,637,139 3,276,721 649,713 3,161,240
-------------- ------------- ------------- ------------
NET ASSETS .................................................. $3,016,823,396 $ 981,371,917 $ 321,222,118 $ 979,144,066
============== ============= ============= =============
NET ASSETS CONSIST OF:
Par value (Note 6) .......................................... $3,017,958 $ 982,289 $ 321,374 $979,603
Paid-in capital in excess of par value ...................... 3,014,932,510 981,306,260 321,052,256 978,623,309
Undistributed (overdistributed) net investment income (loss) 225,864 (45,378) (19,941) 316,530
Accumulated net realized gain (loss) on investments sold. ... (1,352,936) (871,254) (131,571) (775,376)
-------------- ------------- ------------- ------------
TOTAL NET ASSETS ............................................. $3,016,823,396 $ 981,371,917 $ 321,222,118 $ 979,144,066
============== ============= ============= =============
Retail Shares:
Net assets .................................................. $1,877,889,124 $ 350,513,008 $ 151,906,518 $585,968,724
Shares of beneficial interest outstanding ................... 1,878,546,452 350,695,086 151,962,949 586,186,641
NET ASSET VALUE, offering and redemption price per share .... $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============= ============= =============
Retail B Shares:
Net assets .................................................. $ 748,986 N/A N/A N/A
Shares of beneficial interest outstanding ................... 748,988 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 .................................................. $1,138,185,286 $ 630,858,909 $ 169,315,600 $393,175,342
Shares of beneficial interest outstanding ................... 1,138,662,931 631,593,463 169,410,680 393,416,268
NET ASSET VALUE, offering and redemption price per share .... $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============= ============= =============
- ----------
* 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.
</TABLE>
<PAGE>
---------------
STATEMENTS OF ASSETS AND LIABILITIES
THE GALAXY FUND October 31, 1997
---------------
<TABLE>
<CAPTION>
CONNECTICUT MASSACHUSETTS
MUNICIPAL MUNICIPAL
MONEY MARKET MONEY MARKET
FUND FUND
------------ ------------
<S> <C> <C>
ASSETS:
Investments (Note 2):
Investments at amortized cost ............................... $ 136,494,573 $80,660,915
Repurchase agreement ........................................ -- --
-------------- -----------
Total investments at value ................................. 136,494,573 80,660,915
Cash ........................................................ -- --
Receivable for shares sold .................................. -- 500
Interest and dividends receivable ........................... 800,923 453,054
Receivable from investment adviser (Note 4) ................. 12,007 11,497
-------------- -----------
Total Assets .............................................. 137,307,503 81,125,966
-------------- -----------
LIABILITIES:
Dividends payable. .......................................... 98,911 85,986
Payable for shares repurchased .............................. 7,120 10,148
Investment advisory fee payable (Note 3) .................... 44,455 26,913
Payable to Fleet affiliates (Note 3) ........................ 11,744 6,971
Payable to Administrator (Note 3) ........................... 12,835 4,144
Trustees' fees and expenses payable (Note 3) ................ 1,725 760
Payable to custodian ........................................ -- --
Accrued expenses and other payables ......................... 36,053 25,473
-------------- -----------
Total Liabilities ......................................... 212,843 160,395
-------------- -----------
NET ASSETS .................................................. $ 137,094,660 $80,965,571
============== ===========
NET ASSETS CONSIST OF:
Par value (Note 6) .......................................... $ 137,101 $80,978
Paid-in capital in excess of par value ...................... 136,970,084 80,897,173
Undistributed (overdistributed) net investment income (loss) (5,089) --
Accumulated net realized gain (loss) on investments sold. ... (7,436) (12,580)
-------------- -----------
TOTAL NET ASSETS ............................................. $ 137,094,660 $80,965,571
============== ===========
Retail Shares:
Net assets .................................................. $ 137,094,660 $80,965,571
Shares of beneficial interest outstanding ................... 137,100,566 80,977,987
NET ASSET VALUE, offering and redemption price per share .... $ 1.00 $ 1.00
============== ===========
Retail B Shares:
Net assets .................................................. N/A N/A
Shares of beneficial interest outstanding ................... N/A N/A
NET ASSET VALUE and offering price per share* ............... N/A N/A
============== ===========
Trust Shares:
Net assets .................................................. N/A N/A
Shares of beneficial interest outstanding ................... N/A N/A
NET ASSET VALUE, offering and redemption price per share .... N/A N/A
============== ===========
- ----------
* 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.
</TABLE>
<PAGE>
---------------
STATEMENTS OF OPERATIONS
THE GALAXY FUND For the year ended October 31, 1997
---------------
<TABLE>
<CAPTION>
MONEY MARKET GOVERNMENT TAX-EXEMPT U.S. TREASURY
FUND FUND FUND FUND
------------ ---------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2) ........................................... $143,814,788 $ 59,750,089 $ 11,485,784 $46,576,882
Dividends (Note 2) .......................................... -- -- 108,075 --
------------ ------------ ------------ -----------
Total Investment Income ................................... 143,814,788 59,750,089 11,593,859 46,576,882
------------ ------------ ------------ -----------
EXPENSES:
Investment advisory fee (Note 3) ............................ 10,381,253 4,388,525 1,291,478 3,464,499
Administration fee (Note 3) ................................. 2,118,433 895,995 263,643 720,691
Custodian fee (Note 3) ...................................... 70,686 28,774 27,123 24,411
Fund accounting fee (Note 3) ................................ 127,931 130,930 54,097 97,324
Legal fee (Note 3) .......................................... 114,120 35,070 10,588 39,471
Audit fee ................................................... 21,749 17,701 19,214 17,842
Shareholder servicing fee (Note 3) .......................... 1,430,359 346,517 133,048 507,400
Transfer agent fee (Note 3) ................................. 2,085,098 404,401 78,665 444,328
12b-1 fee ................................................... 2,157 -- -- --
Trustees' fees and expenses (Note 3). ....................... 52,505 22,978 7,949 18,672
Reports to shareholders (Note 3) ............................ 425,755 82,317 14,025 65,231
Registration fee ............................................ 100,960 24,752 10,856 81,656
Insurance ................................................... 23,762 2,353 4,126 8,442
Miscellaneous ............................................... 34,095 37,672 17,552 34,477
------------ ------------ ------------ -----------
Total expenses before reimbursement/waiver (Note 4) ....... 16,988,863 6,417,985 1,932,364 5,524,444
------------ ------------ ------------ -----------
Less: reimbursement/waiver (Note 4) ....................... (922,674) (174,108) (15,751) (25,108)
------------ ------------ ------------ -----------
Total expenses net of reimbursement/waiver .............. 16,066,189 6,243,877 1,916,613 5,499,336
------------ ------------ ------------ -----------
NET INVESTMENT INCOME .......................................... 127,748,599 53,506,212 9,677,246 41,077,546
------------ ------------ ------------ -----------
NET REALIZED GAIN ON INVESTMENTS SOLD (NOTE 2) ................. 352 1,250 -- 19,124
------------ ------------ ------------ -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........... $127,748,951 $ 53,507,462 $ 9,677,246 $41,096,670
============ ============ ============ ===========
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT MUNICIPAL MASSACHUSETTS MUNICIPAL
MONEY MARKET FUND MONEY MARKET FUND
--------------------- -----------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest (Note 2) ................................... $ 4,291,208 $ 2,166,555
Dividends (Note 2) .................................. 67,741 32,885
- ----------- -----------
Total Investment Income ........................... 4,358,949 2,199,440
- ----------- -----------
EXPENSES:
Investment advisory fee (Note 3) .................... 497,713 251,050
Administration fee (Note 3) ......................... 101,578 51,212
Custodian fee (Note 3) .............................. 13,414 10,608
Fund accounting fee (Note 3) ........................ 29,471 26,961
Legal fee (Note 3) .................................. 4,324 2,259
Audit fee ........................................... 17,075 16,740
Shareholder servicing fee (Note 3) .................. 111,361 58,905
Transfer agent fee (Note 3) ......................... 13,561 8,383
12b-1 fee ........................................... -- --
Trustees' fees and expenses (Note 3) ................ 2,566 1,163
Reports to shareholders (Note 3) .................... 962 913
Registration fee .................................... 2,998 6,794
Insurance ........................................... 1,475 163
Miscellaneous ....................................... 7,635 305
- ----------- -----------
Total expenses before reimbursement/waiver (Note 4) 804,133 435,456
- ----------- -----------
Less: reimbursement/waiver (Note 4) ............... (62,664) (54,862)
- ----------- -----------
Total expenses net of reimbursement/waiver ...... 741,469 380,594
- ----------- -----------
NET INVESTMENT INCOME .................................. 3,617,480 1,818,846
- ----------- -----------
NET REALIZED GAIN ON INVESTMENTS SOLD (NOTE 2) ......... -- --
- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ... $ 3,617,480 $ 1,818,846
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
----------------
THE GALAXY FUND
STATEMENTS OF CHANGES IN NET ASSETS
----------------
MONEY MARKET FUND GOVERNMENT FUND
----------------------------------- -----------------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
----------------------------------- -----------------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
NET ASSETS AT BEGINNING OF PERIOD .............. $2,083,533,947 $ 914,816,047 $1,060,170,053 $ 999,474,334
-------------- -------------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS:
Net investment income ....................... 127,748,599 87,543,598 53,506,212 46,499,874
Net realized gain (loss) on investments sold 352 (43,235) 1,250 47,761
-------------- -------------- -------------- --------------
Net increase in net assets resulting
from operations ......................... 127,748,951 87,500,363 53,507,462 46,547,635
-------------- -------------- -------------- --------------
DIVIDENDS TO SHAREHOLDERS FROM:
RETAIL SHARES:
Net investment income ..................... (76,502,698) (44,808,226) (16,580,573) (14,950,690)
Dividends in excess of net
investment income ....................... -- -- -- (14,560)
-------------- -------------- -------------- --------------
Total Dividends .............................. (76,502,698) (44,808,226) (16,580,573) (14,965,250)
-------------- -------------- -------------- --------------
RETAIL B SHARES:
Net investment income ..................... (12,281) N/A N/A N/A
Dividends in excess of net investment
income .................................. -- N/A N/A N/A
-------------- -------------- -------------- --------------
Total Dividends ......................... (12,281) N/A N/A N/A
-------------- -------------- -------------- --------------
TRUST SHARES:
Net investment income ..................... (51,241,328) (42,735,672) (36,925,639) (31,503,806)
Dividends in excess of net investment
income .................................. -- -- -- (30,818)
-------------- -------------- -------------- --------------
Total Dividends ......................... (51,241,328) (42,735,672) (36,925,639) (31,534,624)
-------------- -------------- -------------- --------------
Total Dividends to shareholders ......... (127,756,307) (87,543,898) (53,506,212) (46,499,874)
-------------- -------------- -------------- --------------
NET INCREASE (DECREASE) FROM SHARE
TRANSACTIONS(1) .............................. 933,296,805 1,168,761,435 (78,799,386) 60,647,958
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets ....... 933,289,449 1,168,717,900 (78,798,136) 60,695,719
-------------- -------------- -------------- --------------
NET ASSETS AT END OF PERIOD (INCLUDING LINE A) . $3,016,823,396 $2,083,533,947 $ 981,371,917 $1,060,170,053
============== ============== ============== ==============
(A) Undistributed (overdistributed) net
investment income (loss) .................... $ 225,864 $ 233,572 $ (45,378) $ (45,378)
============== ============== ============== ==============
- ----------
(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.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT MUNICIPAL MASSACHUSETTS MUNICIPAL
TAX-EXEMPT FUND U.S. TREASURY FUND MONEY MARKET FUND MONEY MARKET FUND
-------------------------- -------------------------- -------------------------- ------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
-------------------------- -------------------------- -------------------------- ------------------------
1997 1996 1997 1996 1997 1996 1997 1996
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSETS AT
BEGINNING OF
PERIOD ............ $301,854,872 $307,761,973 $797,561,471 $589,657,171 $110,544,441 $102,636,161 $47,066,054 $40,326,146
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
INCREASE (DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS:
Net investment
income ......... 9,677,246 9,214,855 41,077,546 31,369,614 3,617,480 2,937,544 1,818,846 1,170,106
Net realized gain
(loss) on
investments sold. -- (7,422) 19,124 113,403 -- (817) -- (12,416)
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
Net increase
in net assets
resulting from
operations ... 9,677,246 9,207,433 41,096,670 31,483,017 3,617,480 2,936,727 1,818,846 1,157,690
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
DIVIDENDS TO
SHAREHOLDERS FROM:
RETAIL SHARES:
Net investment
income ....... (3,944,381) (3,693,979) (23,823,527) (16,420,997) (3,614,319) (2,937,544) (1,818,846) (1,170,106)
Dividends in
excess of net
investment
income ....... -- (7,790) -- -- -- (8,250) -- --
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
Total Dividends .. (3,944,381) (3,701,769) (23,823,527) (16,420,997) (3,614,319) (2,945,794) (1,818,846) (1,170,106)
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
RETAIL B SHARES:
Net investment
income ....... N/A N/A N/A N/A N/A N/A N/A N/A
Dividends in
excess of net
investment
income ....... N/A N/A N/A N/A N/A N/A N/A N/A
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
Total
Dividends .. N/A N/A N/A N/A N/A N/A N/A N/A
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
TRUST SHARES:
Net investment
income ....... (5,732,832) (5,500,678) (17,254,019) (14,948,617) N/A N/A N/A N/A
Dividends in
excess of net
investment
income ...... -- (12,184) -- -- N/A N/A N/A N/A
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
Total
Dividends .. (5,732,832) (5,512,862) (17,254,019) (14,948,617) N/A N/A N/A N/A
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
Total
Dividends to
shareholders. (9,677,213) (9,214,631) (41,077,546) (31,369,614) (3,614,319) (2,945,794) (1,818,846) (1,170,106)
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
NET INCREASE
(DECREASE) FROM
SHARE
TRANSACTIONS(1) .... 19,367,213 (5,899,903) 181,563,471 207,790,897 26,547,058 7,917,347 33,899,517 6,752,324
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
Net increase
(decrease) in net
assets .......... 19,367,246 (5,907,101) 181,582,595 207,904,300 26,550,219 7,908,280 33,899,517 6,739,908
------------ ------------ ------------ ------------ ------------ ------------ ----------- -----------
NET ASSETS AT END OF
PERIOD (INCLUDING
LINE A) ............ $321,222,118 $301,854,872 $979,144,066 $797,561,471 $137,094,660 $110,544,441 $80,965,571 $47,066,054
============ ============ ============ ============ ============ ============ =========== ===========
(A) Undistributed
(overdistributed)
net investment
income (loss) ..... $ (19,941) $ (19,974) $ 316,530 $ 316,530 $ (5,089) $ (8,250) $ -- $ --
============ ============ ============ ============ ============ ============ =========== ===========
</TABLE>
<PAGE>
---------------
STATEMENTS OF CHANGES IN NET ASSETS -
THE GALAXY FUND Capital Stock Activity
---------------
<TABLE>
<CAPTION>
MONEY MARKET FUND GOVERNMENT FUND TAX-EXEMPT FUND
--------------------------------- --------------------------------- --------------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
--------------------------------- --------------------------------- --------------------------------
1997 1996 1997 1996 1997 1996
--------------- --------------- --------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
RETAIL SHARES:
Sold ................... $ 4,623,828,689 $ 2,569,450,390 $ 729,544,101 $ 690,219,757 $ 405,375,839 $ 320,444,954
Issued in connection
with acquisition
(Note 9) .............. -- 267,075,370 -- -- -- --
Issued to shareholders
in reinvestment of
dividends .............. 75,954,856 44,351,046 16,519,769 14,857,984 3,935,706 3,692,232
Repurchased ............ (3,981,201,650) (2,302,302,319) (721,962,501) (699,477,779) (374,953,462) (333,641,800)
--------------- --------------- --------------- --------------- --------------- --------------
Net increase (decrease)
in shares outstanding $ 718,581,895 $ 578,574,487 $ 24,101,369 $ 5,599,962 $ 34,358,083 $ (9,504,614)
=============== =============== =============== =============== =============== ==============
RETAIL B SHARES:
Sold .................. $ 1,047,623 N/A N/A N/A N/A N/A
Issued to shareholders
in reinvestment of
dividends ............ 12,123 N/A N/A N/A N/A N/A
Repurchased ........... (310,758) N/A N/A N/A N/A N/A
--------------- --------------- --------------- --------------- --------------- --------------
Net increase in shares
outstanding .......... $ 748,988 N/A N/A N/A N/A N/A
=============== =============== =============== =============== =============== ==============
TRUST SHARES:
Sold .................. $ 2,442,712,102 $ 2,715,304,160 $ 1,419,192,696 $ 1,594,273,956 $ 232,513,701 $ 224,132,385
Issued in connection
with acquisition
(Note 9) ............. -- 511,455,645 -- -- -- --
Issued to shareholders
in reinvestment of
dividends ............ 824,412 601,681 779,351 657,170 35,548 27,737
Repurchased ........... (2,229,570,592) (2,637,174,538) (1,522,872,802) (1,539,883,130) (247,540,119) (220,555,411)
--------------- --------------- --------------- --------------- --------------- --------------
Net increase (decrease)
in shares outstanding. $ 213,965,922 $ 590,186,948 $ (102,900,755) $ 55,047,996 $ (14,990,870) $ 3,604,711
=============== =============== =============== =============== =============== ==============
SHARE ACTIVITY
RETAIL SHARES:
Sold .................. 4,623,828,689 2,569,450,390 729,544,101 690,219,757 405,375,839 320,444,954
Issued in connection
with acquisition
(Note 9) ............. -- 267,079,142 -- -- -- --
Issued to shareholders
in reinvestment of
dividends ............ 75,954,856 44,351,046 16,519,769 14,857,984 3,935,706 3,692,232
Repurchased ........... (3,981,201,650) (2,302,302,319) (721,962,501) (699,477,779) (374,953,462) (333,641,800)
--------------- --------------- --------------- --------------- --------------- --------------
Net increase (decrease)
in shares outstanding 718,581,895 578,578,259 24,101,369 5,599,962 34,358,083 (9,504,614)
=============== =============== =============== =============== =============== ==============
RETAIL B SHARES:
Sold .................. 1,047,623 N/A N/A N/A N/A N/A
Issued to shareholders
in reinvestment of
dividends ............ 12,123 N/A N/A N/A N/A N/A
Repurchased ........... (310,758) N/A N/A N/A N/A N/A
--------------- --------------- --------------- --------------- --------------- --------------
Net increase in shares
outstanding .......... 748,988 N/A N/A N/A N/A N/A
=============== =============== =============== =============== =============== ==============
TRUST SHARES:
Sold .................. 2,442,712,102 2,715,304,160 1,419,192,696 1,594,273,956 232,513,701 224,132,385
Issued in connection
with acquisition
(Note 9) ............ -- 511,462,955 -- -- -- --
Issued to shareholders
in reinvestment of
dividends ............ 824,412 601,681 779,351 657,170 35,548 27,737
Repurchased ........... (2,229,570,592) (2,637,174,538) (1,522,872,802) (1,539,883,130) (247,540,119) (220,555,411)
--------------- --------------- --------------- --------------- --------------- --------------
Net increase (decrease)
in shares outstanding. 213,965,922 590,194,258 (102,900,755) 55,047,996 (14,990,870) 3,604,711
=============== =============== =============== =============== =============== ==============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONNECTICUT MUNICIPAL MASSACHUSETTS MUNICIPAL
U.S. TREASURY FUND MONEY MARKET FUND MONEY MARKET FUND
--------------------------------- --------------------------------- --------------------------------
YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31, YEARS ENDED OCTOBER 31,
--------------------------------- --------------------------------- --------------------------------
1997 1996 1997 1996 1997 1996
--------------- --------------- --------------- --------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
RETAIL SHARES:
Sold ................... $ 1,252,641,737 $ 853,166,073 $ 308,300,041 $ 259,542,285 $ 164,854,517 $ 72,519,201
Issued in connection
with acquisition
(Note 9) .............. -- -- -- -- -- --
Issued to shareholders
in reinvestment of
dividends .............. 23,742,666 16,296,206 2,576,197 1,891,469 1,161,644 679,571
Repurchased ............ (1,133,657,607) (744,916,145) (284,329,180) (253,516,407) (132,116,644) (66,446,448)
--------------- --------------- --------------- --------------- --------------- --------------
Net increase (decrease)
in shares outstanding. $ 142,726,796 $ 124,546,134 $ 26,547,058 $ 7,917,347 $ 33,899,517 $ 6,752,324
=============== =============== =============== =============== =============== ==============
RETAIL B SHARES:
Sold .................. N/A N/A N/A N/A N/A N/A
Issued to shareholders
in reinvestment of
dividends ............ N/A N/A N/A N/A N/A N/A
Repurchased ........... N/A N/A N/A N/A N/A N/A
--------------- --------------- --------------- --------------- --------------- --------------
Net increase in shares
outstanding .......... N/A N/A N/A N/A N/A N/A
=============== =============== =============== =============== =============== ==============
TRUST SHARES:
Sold .................. $ 1,081,964,225 $ 884,449,801 N/A N/A N/A N/A
Issued in connection
with acquisition
(Note 9) ............. -- -- N/A N/A N/A N/A
Issued to shareholders
in reinvestment of
dividends ............ 520,650 282,478 N/A N/A N/A N/A
Repurchased ........... (1,043,648,200) (801,487,516) N/A N/A N/A N/A
--------------- --------------- --------------- --------------- --------------- --------------
Net increase (decrease)
in shares outstanding. $ 38,836,675 $ 83,244,763 N/A N/A N/A N/A
=============== =============== =============== =============== =============== ==============
SHARE ACTIVITY
RETAIL SHARES:
Sold .................. 1,252,641,737 853,166,073 308,300,041 259,542,285 164,854,517 72,519,201
Issued in connection
with acquisition
(Note 9) ............. -- -- -- -- -- --
Issued to shareholders
in reinvestment of
dividends ............ 23,742,666 16,296,206 2,576,197 1,891,469 1,161,644 679,571
Repurchased ........... (1,133,657,607) (744,916,145) (284,329,180) (253,516,407) (132,116,644) (66,446,448)
--------------- --------------- --------------- --------------- --------------- --------------
Net increase (decrease)
in shares outstanding 142,726,796 124,546,134 26,547,058 7,917,347 33,899,517 6,752,324
=============== =============== =============== =============== =============== ==============
RETAIL B SHARES:
Sold .................. N/A N/A N/A N/A N/A N/A
Issued to shareholders
in reinvestment of
dividends ............ N/A N/A N/A N/A N/A N/A
Repurchased ........... N/A N/A N/A N/A N/A N/A
--------------- --------------- --------------- --------------- --------------- --------------
Net increase in shares
outstanding .......... N/A N/A N/A N/A N/A N/A
=============== =============== =============== =============== =============== ==============
TRUST SHARES:
Sold .................. 1,081,964,225 884,449,801 N/A N/A N/A N/A
Issued in connection
with acquisition
(Note 9) ............ -- -- N/A N/A N/A N/A
Issued to shareholders
in reinvestment of
dividends ............ 520,650 282,478 N/A N/A N/A N/A
Repurchased ........... (1,043,648,200) (801,487,516) N/A N/A N/A N/A
--------------- --------------- --------------- --------------- --------------- --------------
Net increase (decrease)
in shares outstanding. 38,836,675 83,244,763 N/A N/A N/A N/A
=============== =============== =============== =============== =============== ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------
MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
THE GALAXY FUND FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
---------------
RETAIL A SHARES
YEARS ENDED OCTOBER 31,
--------------------------------------------------------------
1997 1996 1995(1) 1994(1) 1993(1)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ........................ 0.05 0.05 0.05 0.03 0.03
Net realized gain (loss) on investments .......... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from Investment Operations: .............. 0.05 0.05 0.05 0.03 0.03
---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income ............. (0.05) (0.05) (0.05) (0.03) (0.03)
Dividends from net realized capital gains ........ -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total Dividends: ............................... (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
========== ========== ========== ========== ==========
Total Return (B) ................................... 4.93% 4.78% 5.23% 3.35% 2.78%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................. $1,877,889 $1,159,312 $ 580,762 $ 797,399 $ 577,558
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.85% 4.67% 5.12% 3.38% 2.74%
Operating expenses including reimbursement/waiver 0.69% 0.77% 0.74% 0.64% 0.63%
Operating expenses excluding reimbursement/waiver 0.73% 0.80% 0.76% 0.64% 0.63%
- ---------------
* 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 years ended October 31, 1997, 1996, 1995, 1994 and 1993 were $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 years ended October 31, 1997, 1996 and 1995 were $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 period ended October 31, 1997 was $0.03.
(B) Total return for 1994 includes the effect of the voluntary capital contribution from the Investment Advisor (see Note 5).
Without this capital contribution, the total return would have been 3.35%. Calculation does not include the effect of any
sales charge for Retail B Shares.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRUST SHARES
YEARS ENDED OCTOBER 31, RETAIL B SHARES
------------------------------------- PERIOD ENDED
1997 1996 1995(1) OCTOBER 31, 1997(2)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ........................ 0.05 0.05 0.05 0.03
Net realized gain (loss) on investments .......... -- -- -- --
---------- ---------- ---------- ----------
Total from Investment Operations: .............. 0.05 0.05 0.05 0.03
---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income ............. (0.05) (0.05) (0.05) (0.03)
Dividends from net realized capital gains ........ -- -- -- --
---------- ---------- ---------- ----------
Total Dividends: ............................... (0.05) (0.05) (0.05) (0.03)
---------- ---------- ---------- ----------
Net increase (decrease) in net asset value ......... -- -- -- --
---------- ---------- ---------- ----------
Net Asset Value, End of Period ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ==========
Total Return (B) ...................................
5.13% 5.00% 5.43% 2.66%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................. $1,138,185 $ 924,222 $ 334,054 $ 749
Ratios to average net assets:
Net investment income including reimbursement/waiver 5.04% 4.89% 5.30% 4.27%*
Operating expenses including reimbursement/waiver 0.50% 0.55% 0.55% 1.38%*
Operating expenses excluding reimbursement/waiver 0.54% 0.58% 0.56% 1.42%*
- ---------------
* 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 years ended October 31, 1997, 1996, 1995, 1994 and 1993 were $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 years ended October 31, 1997, 1996 and 1995 were $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 period ended October 31, 1997 was $0.03.
(B) Total return for 1994 includes the effect of the voluntary capital contribution from the Investment Advisor (see Note 5).
Without this capital contribution, the total return would have been 3.35%. Calculation does not include the effect of any
sales charge for Retail B Shares.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------
GOVERNMENT FUND
FINANCIAL HIGHLIGHTS
THE GALAXY FUND FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
---------------
RETAIL A SHARES
YEARS ENDED OCTOBER 31,
------------------------------------------------------------------
1997 1996 1995(1) 1994(1) 1993(1)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ......................... 0.05 0.05 0.05 0.03 0.03
Net realized gain (loss) on investments ........... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from Investment Operations: ............... 0.05 0.05 0.05 0.03 0.03
---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income .............. (0.05) (0.05) (0.05) (0.03) (0.03)
Dividends from net realized capital gains ......... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total Dividends: ................................ (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
========== ========== ========== ========== ==========
Total Return (B) .................................... 4.85% 4.72% 5.20% 3.49% 2.83%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ................... $ 350,513 $ 326,411 $ 320,795 $ 759,106 $ 685,304
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.74% 4.62% 5.11% 3.36% 2.79%
Operating expenses including reimbursement/waiver . 0.71% 0.75% 0.73% 0.54% 0.55%
Operating expenses excluding reimbursement/waiver . 0.72% 0.76% 0.74% 0.54% 0.55%
- ----------------
(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 years ended October 31, 1997, 1996, 1995, 1994 and 1993 were $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 years ended October 31, 1997, 1996 and 1995 were $0.05, $0.05 and $0.05, respectively.
(B) Total return for 1994 includes the effect of the voluntary capital contribution from the Investment Adviser (see Note 5).
Without this capital contribution, the total return would have been 3.49%.
See Notes to Financial Statements.
</TABLE>
<PAGE>
TRUST SHARES
<TABLE>
<CAPTION>
YEARS ENDED OCTOBER 31,
-------------------------------------
1997 1996 1995(1)
---------- ---------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ................ $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ......................... 0.05 0.05 0.05
Net realized gain (loss) on investments ........... -- -- --
---------- ---------- ----------
Total from Investment Operations: ............... 0.05 0.05 0.05
---------- ---------- ----------
Less Dividends:
Dividends from net investment income .............. (0.05) (0.05) (0.05)
Dividends from net realized capital gains ......... -- -- --
---------- ---------- ----------
Total Dividends: ................................ (0.05) (0.05) (0.05)
---------- ---------- ----------
Net increase (decrease) in net asset value ........ -- -- --
---------- ---------- ----------
Net Asset Value, End of Period ...................... $ 1.00 $ 1.00 $ 1.00
========== ========== ==========
Total Return (B) .................................... 5.06% 4.95% 5.39%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ................... $ 630,859 $ 733,759 $ 678,679
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.94% 4.85% 5.27%
Operating expenses including reimbursement/waiver . 0.51% 0.52% 0.53%
Operating expenses excluding reimbursement/waiver . 0.52% 0.53% 0.54%
- ----------------
(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 years ended October 31, 1997, 1996, 1995, 1994
and 1993 were $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 years ended October 31, 1997, 1996 and 1995 were $0.05, $0.05 and $0.05,
respectively.
(B) Total return for 1994 includes the effect of the voluntary capital contribution from the
Investment Adviser (see Note 5). Without this capital contribution, the total return would have
been 3.49%.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------
TAX-EXEMPT FUND
FINANCIAL HIGHLIGHTS
THE GALAXY FUND FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
---------------
RETAIL A SHARES
YEARS ENDED OCTOBER 31,
-----------------------------------------------------------------
1997 1996 1995(1) 1994(1) 1993(1)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ......................... 0.03 0.03 0.03 0.02 0.02
Net realized gain (loss) on investments ........... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from Investment Operations: ............... 0.03 0.03 0.03 0.02 0.02
---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income .............. (0.03) (0.03) (0.03) (0.02) (0.02)
Dividends from net realized capital gains ......... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total Dividends: ................................ (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
========== ========== ========== ========== ==========
Total Return ......................................... 2.95% 2.82% 3.16% 2.24% 1.93%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................... $ 151,907 $ 117,548 $ 127,056 $ 271,050 $ 301,399
Ratios to average net assets:
Net investment income including reimbursement/waiver 2.92% 2.78% 3.12% 2.12% 1.92%
Operating expenses including reimbursement/waiver . 0.68% 0.68% 0.68% 0.58% 0.59%
Operating expenses excluding reimbursement/waiver . 0.69% 0.69% 0.71% 0.58% 0.59%
- ------------------
(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 years ended October 31, 1997, 1996, 1995, 1994 and 1993 were $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 years ended October 31, 1997, 1996 and 1995 were $0.03, $0.03 and $0.03, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRUST SHARES
YEARS ENDED OCTOBER 31,
--------------------------------------
1997 1996 1995(1)
---------- ---------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ......................... 0.03 0.03 0.03
Net realized gain (loss) on investments ........... -- -- --
---------- ---------- ----------
Total from Investment Operations: ............... 0.03 0.03 0.03
---------- ---------- ----------
Less Dividends:
Dividends from net investment income .............. (0.03) (0.03) (0.03)
Dividends from net realized capital gains ......... -- -- --
---------- ---------- ----------
Total Dividends: ................................ (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
========== ========== ==========
Total Return ......................................... 3.10% 2.97% 3.29%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................... $ 169,316 $ 184,307 $ 180,706
Ratios to average net assets:
Net investment income including reimbursement/waiver 3.05% 2.92% 3.24%
Operating expenses including reimbursement/waiver . 0.53% 0.54% 0.55%
Operating expenses excluding reimbursement/waiver . 0.53% 0.54% 0.56%
- ------------------
(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 years ended October 31, 1997, 1996, 1995, 1994
and 1993 were $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 years ended October 31, 1997, 1996 and 1995 were $0.03, $0.03 and $0.03,
respectively.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------
U.S. TREASURY FUND
FINANCIAL HIGHLIGHTS
THE GALAXY FUND FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
---------------
RETAIL A SHARES
YEARS ENDED OCTOBER 31,
-----------------------------------------------------------------
1997 1996 1995(1) 1994(1) 1993(1)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ......................... 0.05 0.05 0.05 0.03 0.03
Net realized gain (loss) on investments ........... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from Investment Operations: ............... 0.05 0.05 0.05 0.03 0.03
---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income .............. (0.05) (0.05) (0.05) (0.03) (0.03)
Dividends from net realized capital gains ......... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total Dividends: ................................ (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
========== ========== ========== ========== ==========
Total Return (B) ..................................... 4.67% 4.63% 4.99% 3.30% 2.75%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................... $ 585,969 $ 443,230 $ 318,621 $ 466,993 $ 447,960
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.58% 4.53% 4.90% 3.24% 2.71%
Operating expenses including reimbursement/waiver . 0.69% 0.69% 0.73% 0.56% 0.55%
Operating expenses excluding reimbursement/waiver . 0.70% 0.69% 0.73% 0.56% 0.55%
- -----------------
(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 years ended October 31, 1997, 1996, 1995, 1994 and 1993 were $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 years ended October 31, 1997, 1996 and 1995 were $0.05, $0.05 and $0.05, respectively.
(B) Total return for 1994 includes the effect of the voluntary capital contribution from the Investment Advisor (see Note 5).
Without this capital contribution, the total return would have been 3.30%.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TRUST SHARES
YEARS ENDED OCTOBER 31,
--------------------------------------
1997 1996 1995(1)
---------- ---------- ----------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 1.00 $ 1.00 $ 1.00
---------- ---------- ----------
Income from Investment Operations:
Net investment income (A) ......................... 0.05 0.05 0.05
Net realized gain (loss) on investments ........... -- -- --
---------- ---------- ----------
Total from Investment Operations: ............... 0.05 0.05 0.05
---------- ---------- ----------
Less Dividends:
Dividends from net investment income .............. (0.05) (0.05) (0.05)
Dividends from net realized capital gains ......... -- -- --
---------- ---------- ----------
Total Dividends: ................................ (0.05) (0.05) (0.05)
---------- ---------- ----------
Net increase (decrease) in net asset value ........... -- -- --
---------- ---------- ----------
Net Asset Value, End of Period ....................... $ 1.00 $ 1.00 $ 1.00
========== ========== ==========
Total Return (B) ..................................... 4.85% 4.80% 5.18%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................... $ 393,175 $ 354,331 $ 271,036
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.75% 4.69% 5.06%
Operating expenses including reimbursement/waiver . 0.52% 0.53% 0.55%
Operating expenses excluding reimbursement/waiver . 0.53% 0.53% 0.55%
- -----------------
(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 years ended October 31, 1997, 1996, 1995, 1994
and 1993 were $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 years ended October 31, 1997, 1996 and 1995 were $0.05, $0.05 and $0.05,
respectively.
(B) Total return for 1994 includes the effect of the voluntary capital contribution from the
Investment Advisor (see Note 5). Without this capital contribution, the total return would have
been 3.30%.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------
CONNECTICUT MUNICIPAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
THE GALAXY FUND FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
---------------
YEARS ENDED OCTOBER 31,
----------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
---------- ---------- --------------------- ----------------------- ----------
INVESTMENT TRUST INVESTMENT TRUST INVESTMENT
SHARES SHARES(3) SHARES SHARES SHARES SHARES(2) SHARES(1)
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period ....................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from Investment
Operations:
Net investment income (A)(C) 0.03 0.03 0.03 0.03 0.02 0.02 --
Net realized gain (loss) on
investments ............... -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total from Investment
Operations: (A) ....... 0.03 0.03 0.03 0.03 0.02 0.02 --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment
income (A) ................ (0.03) (0.03) (0.03) (0.03) (0.02) (0.02) --
Dividends from net realized
capital gains ............. -- -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Total Dividends: (A) ...... (0.03) (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 $ 1.00
========== ========== ========== ========== ========== ========== ==========
Total Return (B) .............. 2.94% 2.83% 2.94% 3.19% 1.83% 2.08%** 0.14%**
Ratios/Supplemental Data:
Net Assets, End of Period
(000's) ...................... $ 137,095 $ 110,544 $ 71,472 $ 31,164 $ 80,663 $ 34,354 $ 6,582
Ratios to average net assets:
Net investment income
including reimbursement/
waiver .................... 2.91% 2.79% 2.88% 3.14% 1.99% 2.24%* 2.12%*
Operating expenses
including reimbursement/
waiver .................... 0.60% 0.64% 0.82% 0.57% 0.78% 0.53%* 0.36%*
Operating expenses
excluding reimbursement/
waiver .................... 0.65% 0.73% 1.29% 0.79% 1.50% 1.00%* 5.82%*
- ------------------
* 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 (Note 9).
(4) Unaudited
(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
years ended October 31, 1997 and 1996 were $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(4), 1994(4) and the period ended October 31, 1993(4) were $0.03, $0.01 and $0.03, 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(4) and the period ended October 31, 1994(4) were $0.02 and $0.01, respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
---------------
MASSACHUSETTS MUNICIPAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
THE GALAXY FUND FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
---------------
YEARS ENDED OCTOBER 31,
------------------------------------------------------------------
1997 1996(2) 1995 1994 1993(1)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income from Investment Operations:
Net investment income (A)(B) ...................... 0.03 0.03 0.03 0.02 --
Net realized gain (loss) on investments ........... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from Investment Operations: (A) ......... 0.03 0.03 0.03 0.02 --
---------- ---------- ---------- ---------- ----------
Less Dividends:
Dividends from net investment income (A) .......... (0.03) (0.03) (0.03) (0.02) --
Dividends from net realized capital gains ......... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total Dividends: (A) ............................ (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
========== ========== ========== ========== ==========
Total Return ........................................ 2.92% 2.83% 3.21% 1.99% 0.12%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .................... $ 80,966 $ 47,066 $ 40,326 $ 31,516 $ 1,237
Ratios to average net assets:
Net investment income including reimbursement/waiver 2.90% 2.78% 3.16% 2.00% 2.75%*
Operating expenses including reimbursement/waiver . 0.61% 0.62% 0.57% 0.53% 0.11%*
Operating expenses excluding reimbursement/waiver . 0.69% 0.83% 1.06% 1.21% 35.42%*
- -----------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on October 5, 1993 as a separate investment portfolio (the "Predecessor Fund") of The Shawmut
Funds.
(2) On December 4, 1995, the Predecessor Fund was reorganized as a new portfolio of the Trust (Note 9).
(3) Unaudited.
(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
years ended October 31, 1997, 1996, 1995(3), 1994(3) and the period ended October 31, 1993(3) were $0.03, $0.03, $0.03, $0.01
and $(0.01), respectively.
See Notes to Financial Statements.
</TABLE>
<PAGE>
---------------
THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS
---------------
1. ORGANIZATION
The Galaxy Fund, a Massachusetts business trust (the "Trust"), is registered
under the Investment Company Act of 1940, as amended, as an open-end management
investment company. As of the date of this report, the Trust offered twenty-four
managed investment portfolios. The accompanying financial statements and
financial highlights are those of the Money Market, Government, Tax-Exempt, U.S.
Treasury, Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds (individually, a "Fund," collectively, the "Funds") only.
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) series specific expenses
(distribution and/or shareholder servicing fees and transfer agent fees) are
borne by the specific series of shares to which they relate. 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 the
financial statements.
PORTFOLIO VALUATION: Securities in the Funds are valued utilizing the
amortized cost valuation method permitted in accordance with Rule 2a-7 under the
1940 Act. This method involves valuing a portfolio security initially at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
accounted for on a trade date basis. Net realized gains or losses on sales of
securities are determined by the identified cost method. Interest income is
recorded on the accrual basis. Investment income and realized and unrealized
gains and losses are allocated to the separate series of a Fund based upon the
outstanding shares of each series.
DIVIDENDS TO SHAREHOLDERS: Dividends from net investment income are determined
separately for each series of a Fund and are declared daily and paid monthly.
Net realized capital gains, if any, are distributed at least annually.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
FEDERAL INCOME TAXES: The Trust treats each Fund as a separate entity for
Federal income tax purposes. Each Fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. By so qualifying, each Fund will not be subject to Federal
income taxes to the extent that it distributes substantially all of its taxable
or tax-exempt income, if any, for its tax year ending October 31. In addition,
by distributing in each calendar year substantially all of its net investment
income, capital gains, and certain other amounts, if any, each Fund will not be
subject to a Federal excise tax. Therefore, no Federal income or excise tax
provision is recorded.
REPURCHASE AGREEMENTS: Each Fund, except the U.S. Treasury Fund, may engage in
repurchase agreement transactions with institutions that the Trust's investment
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 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, 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.
Prior to December 4, 1995, Shawmut Bank, N.A. ("Shawmut Bank") provided
investment advisory services to the Shawmut Connecticut Municipal Money Market
and Shawmut Massachusetts Municipal Money Market Funds, predecessor funds of the
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds, respectively (collectively, the "Predecessor Funds", see Note 9). Shawmut
Bank was paid a fee for its services at the annual rate of 0.50% of each
Predecessor Fund's average daily net assets (see also Note 4).
The Trust and First Data Investor Services Group, Inc. ("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. Prior to September 5, 1996, Investor Services
Group was entitled to receive administration fees, computed daily and paid
monthly, at the annual rate of 0.09% of the first $2.5 billion of the combined
average daily net assets of the Funds and the other funds offered by the Trust,
0.085% of the next $2.5 billion of combined average daily net assets and 0.08%
of combined average daily net assets over $5 billion.
In addition, 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, Chase Manhattan Bank, N.A. for its
services.
Prior to December 4, 1995, Federated Administrative Services ("FAS") provided
certain administrative and other services to the Predecessor Funds. The fee paid
to FAS was based on the average aggregate net assets of The Shawmut Funds. In
addition, prior to December 4, 1995, Federated Services Company ("FSC") provided
transfer agency and dividend disbursing services to the Predecessor Funds in
return for fees at rates based on the size, type and number of accounts and
transactions made by shareholders. FSC also maintained accounting records for
the Predecessor Funds and was paid fees based on each Predecessor Fund's average
net assets plus out-of-pocket expenses.
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 the
Institution's Customers. 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 the
Institution's Customers. For the year ended October 31, 1997, the Funds paid
fees under the Services Plan and 12b-1 Plan as follows:
12B-1 PLAN
SERVICES ----------
FUND PLAN SERVICES DISTRIBUTION
---------------------------------------------------------------
Money Market Fund ......... $1,430,359 $ 288 $1,869
Government Fund ........... 346,517 N/A N/A
Tax-Exempt Fund ........... 133,048 N/A N/A
U.S. Treasury Fund ........ 507,400 N/A N/A
Connecticut Municipal
Money Market Fund ......... 111,361 N/A N/A
Massachusetts Municipal
Money Market Fund ......... 58,905 N/A N/A
Prior to December 4, 1995, Federated Securities Corp. (the "Shawmut
Distributor") served as the principal distributor of the Predecessor Funds. The
Predecessor Funds had adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the terms of the Plan, the Predecessor Funds
compensated the Shawmut Distributor, from the net assets of the Predecessor
Funds, to finance activities primarily intended to result in the sale of the
Predecessor Funds' Investment Shares. The Plan permitted the Predecessor Funds
to incur distribution expenses of up to 1/2 of 1% of the average daily net
assets of the Investment Shares for the Connecticut Municipal Money Market Fund
and shares of the Massachusetts Municipal Money Market Fund.
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 the 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 year ended October 31, 1997, transfer agent charges for each series were
as follows:
FUND RETAIL RETAIL B TRUST
- -------------------------------------------------------------------
Money Market Fund ......... $1,887,569 $ 461 $197,068
Government Fund ........... 371,122 N/A 33,279
Tax-Exempt Fund ........... 78,563 N/A 102
U.S. Treasury Fund ........ 429,079 N/A 15,249
Connecticut Municipal
Money Market Fund ......... 13,561 N/A N/A
Massachusetts Municipal
Money Market Fund ......... 8,383 N/A N/A
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. 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 $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. Prior to November 1, 1996, each Trustee was entitled to
receive for services as a trustee of the Trust and VIP an aggregate fee of
$18,000 per annum plus certain other fees for attending or participating in
meetings as well as reimbursement for expenses incurred in attending meetings.
The Chairman of the Boards of Trustees of the Trust and VIP and the President
and Treasurer of the Trust and VIP were entitled to additional annual fees for
their services in these capacities.
Each Trustee is eligible to participate in the Trust's Deferred Compensation
Plan (the "Plan"), an unfunded, non-qualified deferred compensation plan. The
Plan allows each Trustee to defer receipt of all or a percentage of fees which
otherwise would be payable for services performed. On January 1, 1997, the Plan
was merged into a combined Deferred Compensation Plan for the Trust, VIP and
Galaxy II.
Expenses for the year ended October 31, 1997 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
The Investment Advisor voluntarily agreed to waive a portion of its fees
and/or reimburse the Funds for certain expenses so that total expenses would not
exceed certain expense limitations established for each Fund. The Investment
Advisor, at its discretion, may revise or discontinue the voluntary fee waivers
and/or expense reimbursements at any time. For the year ended October 31, 1997,
the Investment Advisor waived fees and/or reimbursed expenses with respect to
the Funds in the following amounts:
FEES WAIVED BY
FUND INVESTMENT ADVISOR
- ------ ----------------------
Money Market Fund .............. $ 922,657
Government Fund ................ 173,566
EXPENSES REIMBURSED BY
FUND INVESTMENT ADVISOR
- ----- -------------------
Money Market Fund .............. $ 17
Government Fund ................ 542
Tax-Exempt Fund ................ 15,751
U.S. Treasury Fund ............. 25,108
Connecticut Municipal
Money Market Fund ............ 62,664
Massachusetts Municipal
Money Market Fund ............ 54,862
5. CAPITAL CONTRIBUTIONS
During the period June 20, 1994 through July 6, 1994, the Investment Advisor
voluntarily contributed capital to the Money Market Fund, Government Fund and
U.S. Treasury Fund in the amounts of approximately $1.6 million, $2.3 million
and $1.0 million, respectively. These amounts were contributed to offset losses
realized on the sale of certain securities held by the Funds. The Investment
Advisor received no shares of beneficial interest or other consideration in
exchange for these contributions which maintained the net asset value of each
Fund at approximately $1.00 per share.
6. SHARES OF BENEFICIAL INTEREST
The Trust's Declaration of Trust authorizes the Trustees to issue an unlimited
number of shares of beneficial interest in the Funds, each with a par value of
$0.001. The Trust's shares are classified into twenty-four classes of shares,
each consisting of one or more series including: Class A Shares (Retail A
Shares), 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 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 each 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.
Prior to November 1, 1994, the Money Market, Government, Tax Exempt and U.S.
Treasury Funds each offered a single series of shares. As of such date, the
existing series of shares of each such Fund was designated as Retail A Shares
and each such Fund began issuing a second series of shares designated as Trust
Shares. At such time, certain eligible holders of Retail A Shares of such Funds
exchanged their shares for Trust Shares of the same Funds. Prior to December 4,
1995, the Predecessor Connecticut Municipal Money Market Fund offered two series
of shares, Investment Shares and Trust Shares. The shareholders of such
Predecessor Fund exchanged shares of each series for shares in the Galaxy
Connecticut Municipal Money Market Fund. The Predecessor Massachusetts Municipal
Money Market Fund sold shares without class designation.
Shareholders are entitled to one vote for each full share held and will vote
in the aggregate and not by class or series, except as otherwise expressly
required by law or when the Board of Trustees determines that the matter to be
voted on affects only the interests of shareholders of a particular class or
series.
7. CONCENTRATION OF CREDIT
The Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds invest primarily in debt obligations issued by the State of
Connecticut and the Commonwealth of Massachusetts, respectively, and their
respective political subdivisions, agencies and public authorities to obtain
funds for various public purposes. 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.
<PAGE>
8. FEDERAL TAX INFORMATION
At October 31, 1997, the following Funds had capital loss carryforwards:
FUND AMOUNT EXPIRATION
- ----- -------- ------------
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
9. ACQUISITION OF THE SHAWMUT FUNDS
At a meeting held on June 12, 1995, the Board of Trustees of the Trust
approved an Agreement and Plan of Reorganization (the "Agreement") for the
acquisition of The Shawmut Funds ("Shawmut") by the Trust. Pursuant to the
Agreement, all of the assets and liabilities of the Shawmut Prime Money Market
Fund were transferred to the Galaxy Money Market Fund in exchange for shares of
the Galaxy Money Market Fund. In addition, all of the assets and liabilities of
the Shawmut Connecticut Municipal Money Market Fund and the Shawmut
Massachusetts Municipal Money Market Fund were transferred to the Galaxy
Connecticut Municipal Money Market Fund and the Galaxy Massachusetts Municipal
Money Market Fund, respectively, new portfolios of the Trust, in exchange for
shares of the Galaxy Connecticut Municipal Money Market Fund and the Galaxy
Massachusetts Municipal Money Market Fund, respectively. Accordingly, the net
assets attributable to Investment Shares and Trust Shares of the Shawmut Prime
Money Market Fund were exchanged for 267,079,142 Retail A Shares and 511,462,955
Trust Shares, respectively, of the Galaxy Money Market Fund, the net assets
attributable to Investment Shares and Trust Shares of the Shawmut Connecticut
Municipal Money Market Fund were exchanged for 99,969,877 shares of the Galaxy
Connecticut Municipal Money Market Fund and the net assets of the Shawmut
Massachusetts Municipal Money Market Fund were exchanged for 39,189,008 shares
of the Galaxy Massachusetts Municipal Money Market Fund. In related
transactions, the assets and liabilities of other Shawmut portfolios were
transferred to corresponding Galaxy portfolios in exchange for shares in such
Galaxy portfolios. The reorganization, which qualified as a tax-free
reorganization for Federal income tax purposes, was completed on December 4,
1995 following the approval of the reorganization by Shawmut shareholders.
Certain share registration fees incurred in connection with the reorganization
were borne by the Trust. The following is a summary of the Net Assets, Shares
Outstanding and Net Asset Values per share associated with the transaction:
<PAGE>
<TABLE>
<CAPTION>
Before Acquisition After Acquisition
------------------------------------------- ----------------------------------
Galaxy Galaxy Shawmut Shawmut Galaxy Galaxy
Money Market Money Market Prime Money Prime Money Money Market Money Market
Fund Fund Market Fund Market Fund Fund Fund
Retail A Shares Trust Shares Investment Shares Trust Shares Retail A Shares Trust Shares
--------------- ------------ ----------------- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Assets ................ $ 614,802,390 $ 318,554,689 $ 267,075,370 $ 511,455,645 $ 881,877,760 $ 830,010,334
Shares outstanding ........ 615,427,194 319,003,229 267,079,142 511,462,955 882,506,336 830,466,184
Net Asset Value, per share $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
<CAPTION>
Before Acquisition After Acquisition
-------------------------------------------------------------- ------------------
Galaxy Shawmut Shawmut Galaxy
Connecticut Municipal Connecticut Municipal Connecticut Municipal Connecticut Municipal
Money Market Fund Money Market Fund Money Market Fund Money Market Fund
Shares Investment Shares Trust Shares Shares
------ ----------------- ------------ ------
<S> <C> <C> <C> <C>
Net Assets ................ $ 10.00 $ 67,149,096 $ 32,820,781 $ 99,969,887
Shares outstanding ........ 10.00 67,149,096 32,820,781 99,969,887
Net Asset Value, per share $ 1.00 $ 1.00 $ 1.00 $ 1.00
<CAPTION>
Before Acquisition After Acquisition
------------------------------------------------- ------------------
Galaxy Shawmut Galaxy
Massachusetts Municipal Massachusetts Municipal Massachusetts Municipal
Money Market Fund Money Market Fund Money Market Fund
Shares Investment Shares Shares
------ ----------------- ------
<S> <C> <C> <C>
Net Assets ................ $ 10.00 $ 39,189,008 $ 39,189,018
Shares outstanding ........ 10.00 39,189,008 39,189,018
Net Asset Value, per share $ 1.00 $ 1.00 $ 1.00
</TABLE>
TAX INFORMATION (UNAUDITED):
During the fiscal year ended October 31, 1997, the following Funds earned
income from direct obligations of the U.S Government:
U.S. GOVERNMENT
FUND INCOME
- ---- ------
Money Market Fund 7.11%
Government Fund 37.62%
U.S. Treasury Fund 99.99%
Appropriate tax information detailing government income percentages on a
calendar year basis will accompany each shareholder's year-end tax statement. As
each state's rules on the exemption of this income differ, please consult your
tax advisor regarding specific tax treatment. 100% of the income earned by the
Tax Exempt Fund, the Connecticut Municipal Money Market Fund, and the
Massachusetts Municipal Money Market Fund will generally qualify as exempt from
federal and state taxation.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Shareholders and the Board of Trustees of
The Galaxy Fund:
We have audited the accompanying statements of assets and liabilities
of the Money Market Fund, Government Fund, Tax-Exempt Fund and U.S. Treasury
Fund, (four series of The Galaxy Fund), including the portfolios of investments,
as of October 31, 1997, and the related statements of operations, the statements
of changes in net assets, and financial highlights for each of the periods
indicated therein. In addition, we have audited the accompanying statements of
assets and liabilities of the Connecticut Municipal Money Market Fund and
Massachusetts Municipal Money Market Fund, (two series of The Galaxy Fund),
including the portfolios of investments, as of October 31, 1997, and the related
statements of operations for the year then ended, and the statements of changes
in net assets and the financial highlights for each of the two years in the
period then ended. These financial statements and financial highlights are the
responsibility of The Galaxy Fund's management. Our responsibility is to express
an opinion on these financial statements and financial highlights based on our
audits.
The financial highlights for the period October 4, 1993 (commencement
of operations) through October 31, 1993 and for each of the two years in the
period ended October 31, 1995 for the Connecticut Municipal Money Market Fund
and the financial highlights for the period October 5, 1993 (commencement of
operations) through October 31, 1993 and for each of the two years in the period
ended October 31, 1995 for the Massachusetts Municipal Money Market Fund,
presented herein, were audited by other auditors whose report dated November 27,
1995 expressed an unqualified opinion on such financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1997, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to in the first paragraph above present fairly, in all material
respects, the financial position of each of the aforementioned series of The
Galaxy Fund as of October 31, 1997, the results of their operations, the changes
in their net assets, and their financial highlights for each of the periods
referenced therein, in conformity with generally accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand L.L.P.
December 19, 1997
<PAGE>
- ----------------- ---------------
4400 Computer Drive BULK RATE
GALAXY Box 5108 U.S. POSTAGE
FUNDS Westborough, MA 01581-5108 PAID
PERMIT NO. 105
- ----------------- N. READING, MA
---------------
FN-082 (12/97) Date of first use 12/31/97
