Prime Reserves
PORTFOLIO OF INVESTMENTS
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
U.S. GOVERNMENT AND
AGENCY OBLIGATIONS - 51.50%
Federal Home Loan
Mortgage Corporation - 22.41%
$ 84,562,000 4.85%, 02/05/99 (A)...... $ 84,515,957
50,000,000 4.88%, 02/09/99 (A)...... 49,945,333
50,000,000 5.04%, 02/12/99 (A)...... 49,923,000
63,794,000 4.90%, 02/16/99 (A)...... 63,666,096
75,000,000 5.03%, 02/18/99 (A)...... 74,821,618
50,000,000 4.88%, 02/22/99 (A)...... 49,856,208
15,000,000 4.87%, 02/23/99 (A)...... 14,954,992
73,500,000 4.82%, 02/24/99 (A)...... 73,272,070
110,000,000 5.05%, 02/25/99 (A)...... 109,629,500
80,000,000 5.02%, 02/26/99 (A)...... 79,720,764
50,000,000 5.00%, 03/05/99 (A)...... 49,777,778
30,000,000 4.69%, 03/15/99 (A)...... 29,835,850
40,000,000 4.98%, 03/26/99 (A)...... 39,706,733
35,000,000 4.78%, 03/30/99 (A)...... 34,735,385
30,000,000 4.68%, 04/22/99 (A)...... 29,688,000
40,000,000 4.96%, 08/27/99 (C)...... 39,967,302
-------------
874,016,586
-------------
Federal National
Mortgage Association (A) - 20.74%
72,661,000 4.90%, 02/01/99.......... 72,661,000
60,000,000 4.98%, 02/02/99.......... 59,991,642
32,316,000 4.97%, 02/05/99.......... 32,298,172
25,000,000 5.04%, 02/08/99.......... 24,975,500
30,000,000 5.03%, 02/11/99.......... 29,958,083
35,000,000 5.06%, 02/16/99.......... 34,926,208
50,000,000 4.91%, 02/19/99.......... 49,877,375
50,000,000 4.93%, 02/22/99.......... 49,856,208
30,000,000 4.95%, 03/03/99.......... 29,875,000
28,586,000 4.87%, 03/05/99.......... 28,462,254
90,000,000 4.75%, 04/01/99.......... 89,283,314
50,000,000 4.75%, 04/06/99.......... 49,577,778
90,000,000 4.76%, 04/07/99.......... 89,226,500
35,000,000 4.76%, 04/08/99.......... 34,694,567
50,000,000 4.78%, 04/13/99.......... 49,528,639
45,000,000 4.69%, 04/29/99.......... 44,489,963
40,000,000 4.64%, 06/15/99.......... 39,309,156
-------------
808,991,359
-------------
Federal Home
Loan Bank (A) - 7.53%
44,273,000 5.03%, 02/03/99.......... 44,260,628
60,000,000 5.04%, 02/10/99.......... 59,924,400
35,000,000 4.92%, 02/12/99.......... 34,947,383
25,000,000 5.04%, 02/17/99.......... 24,944,000
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Federal Home
Loan Bank (continued)
$ 80,000,000 4.77%, 02/19/99.......... $79,808,200
50,000,000 4.92%, 02/26/99.......... 49,827,431
-------------
293,712,042
-------------
Federal Farm
Credit Bank - 0.82%
32,000,000 4.90%, 03/01/99.......... 32,003,813
-------------
Total U.S. Government and
Agency Obligations....... 2,008,723,800
(Cost $2,008,723,800) -------------
COMMERCIAL PAPER (A) - 28.47%
Finance - 13.80%
50,000,000 AIG Funding, Inc.
4.80%, 02/01/99.......... 50,000,000
50,000,000 Associates Corp.
of North America
4.80%, 02/01/99.......... 50,000,000
50,000,000 Associates Corp.
of North America
5.20%, 03/04/99.......... 49,776,111
25,000,000 Diageo Capital PLC
5.17%, 02/03/99 (B)...... 24,992,819
50,000,000 Ford Motor Credit Co.
5.11%, 02/04/99.......... 49,978,708
30,000,000 Ford Motor Credit Co.
4.81%, 04/09/99.......... 29,731,442
50,000,000 Ford Motor Credit Co.
4.78%, 04/23/99.......... 49,462,250
40,000,000 General Electric Capital Corp.
5.16%, 02/18/99.......... 39,902,533
40,000,000 General Electric Capital Corp.
5.07%, 03/12/99.......... 39,780,300
25,000,000 General Electric Capital Corp.
5.06%, 03/31/99.......... 24,796,195
30,000,000 General Electric Capital Corp.
4.79%, 04/19/99.......... 29,692,642
100,000,000 General Motors
Acceptance Corp.
4.82%, 02/01/99.......... 100,000,000
-------------
538,113,000
-------------
Consumer Staples - 6.73%
14,600,000 Heinz (H.J.) Co.
5.17%, 02/02/99.......... 14,597,903
</TABLE>
See Notes to Financial Statements.
1
<PAGE>
Prime Reserves
PORTFOLIO OF INVESTMENTS (continued)
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Consumer Staples (continued)
$ 34,000,000 Heinz (H.J.) Co.
5.22%, 02/12/99.......... $ 33,945,770
30,000,000 Heinz (H.J.) Co.
4.80%, 03/10/99.......... 29,852,000
50,000,000 Lilly (Eli) & Co.
4.78%, 03/12/99.......... 49,741,083
40,000,000 Proctor & Gamble Co.
5.14%, 02/11/99.......... 39,942,889
25,000,000 Proctor & Gamble Co.
4.75%, 04/23/99.......... 24,732,813
20,000,000 Proctor & Gamble Co.
4.75%, 04/26/99.......... 19,778,333
50,000,000 Sara Lee Corp.
4.83%, 02/09/99.......... 49,946,333
-------------
262,537,124
-------------
Chemical and Drugs - 3.20%
25,000,000 duPont (E.I.) deNemours & Co.
4.75%, 04/29/99.......... 24,713,021
30,000,000 Pfizer, Inc.
5.13%, 02/08/99 (B)...... 29,970,075
50,000,000 Pfizer, Inc.
5.21%, 02/11/99 (B)...... 49,927,639
20,000,000 Pfizer, Inc.
5.15%, 02/12/99 (B)...... 19,968,528
-------------
124,579,263
-------------
Utilities - 3.00%
24,500,000 Emerson Electric Co.
5.07%, 02/16/99.......... 24,448,244
14,850,000 National Rural
Utilities Cooperative
5.10%, 02/11/99.......... 14,828,963
40,000,000 National Rural
Utilities Cooperative
5.12%, 02/23/99.......... 39,874,844
25,000,000 National Rural
Utilities Cooperative
5.03%, 03/11/99.......... 24,867,264
13,050,000 National Rural
Utilities Cooperative
4.77%, 03/16/99.......... 12,975,648
-------------
116,994,963
-------------
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Technology - 1.05%
$ 41,000,000 Lucent Techologies, Inc.
5.13%, 02/04/99.......... $ 40,982,473
-------------
Basic Materials - 0.69%
27,000,000 Minnesota Mining &
Manufacturing Co.
4.76%, 02/19/99.......... 26,935,740
-------------
Total Commercial Paper... 1,110,142,563
(Cost $1,110,142,563) -------------
CORPORATE NOTES AND BONDS (C) - 15.57%
Banking - 11.06%
31,095,000 Bank One Corp., MTN
5.17%, 03/18/99.......... 31,104,219
36,405,000 Bank One Corp., MTN
5.20%, 09/15/99.......... 36,416,005
50,000,000 Comerica Bank, Bank Note
4.94%, 11/23/99.......... 49,984,070
50,000,000 First Union National Bank,
Bank Note
5.42%, 11/22/99.......... 49,992,805
50,000,000 First Union National Bank
Bank Note
5.29%, 11/29/99.......... 50,000,000
50,000,000 Huntington National Bank,
Bank Note
5.25%, 12/01/99.......... 49,985,290
50,000,000 Huntington National Bank,
Bank Note
5.28%, 12/03/99.......... 50,000,000
44,000,000 Key Bank N.A., MTN
5.00%, 06/10/99.......... 43,991,974
20,000,000 Morgan Guaranty
Trust Co., MTN
4.96%, 11/29/99.......... 19,994,100
50,000,000 NationsBank, Bank Note
4.96%, 12/15/99.......... 49,982,912
-------------
431,451,375
-------------
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
Prime Reserves
PORTFOLIO OF INVESTMENTS (continued)
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Finance - 4.51%
$ 91,000,000 Deere (John) Capital
Corp., MTN
5.21%, 12/08/99.......... $ 90,969,703
85,000,000 International Business
Machines Corp., MTN
5.21%, 12/07/99.......... 85,000,000
--------------
175,969,703
--------------
Total Corporate Notes
and Bonds................ 607,421,078
(Cost $607,421,078) --------------
ASSET-BACKED SECURITIES - 1.70%
36,394,233 Daimler-Benz
Vehicle Owner Trust
Series 1998-A, Class A1
5.27%, 01/03/00.......... 36,394,233
30,000,000 Honda Auto Receivables
Owner Trust
Series 1999-1, Class A1
4.97%, 02/15/00.......... 30,000,000
--------------
Total Asset-Backed
Securities............... 66,394,233
(Cost $66,394,233) --------------
REPURCHASE AGREEMENT - 2.57%
100,316,000 J.P. Morgan Repurchase
Agreement, 4.72%, 02/01/99,
Dated 01/29/99 Repurchase
Price $100,355,458
(Collateralized by
U.S. Treasury Notes
5.375% - 6.50%, Due 07/31/00
thru 08/15/02,
Total Par $95,922,000
Market Value $102,323,085) 100,316,000
--------------
Total Repurchase
Agreement................ 100,316,000
(Cost $100,316,000) --------------
<CAPTION>
Value
Shares (Note 2)
-------- --------
<S> <C> <C>
INVESTMENT COMPANIES - 0.30%
1,865,000 Dreyfus Cash
Manangement Fund......... $ 1,865,000
9,635,665 Prime Obligation
Money Market Fund........ 9,635,665
--------------
Total Investment
Companies................ 11,500,665
(Cost $11,500,665) --------------
Total Investments - 100.11%............ 3,904,498,339
(Cost $3,904,498,339)* --------------
Net Other Assets and Liabilities -
(0.11)% ........................... (4,456,707)
--------------
Net Assets - 100.00%...................$3,900,041,632
==============
</TABLE>
- -------------------------------
* Aggregate cost for federal tax purposes.
(A) Discount yield at time of purchase.
(B) Securities exempt from registration under Section 4(2) of the Securities
Act of 1933, as amended. These securities may only be resold, in
transactions exempt from registration, to qualified buyers. At January 31,
1999, these securities amounted to $124,859,061 or 3.20% of net assets.
(C) Variable rate securities. The rates shown reflect rates in effect at
January 31, 1999.
MTN Medium Term Note
See Notes to Financial Statements.
3
<PAGE>
Government Reserves
PORTFOLIO OF INVESTMENTS
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - 87.59%
Federal National
Mortgage Association (A) - 32.31%
$ 5,000,000 4.90%, 02/02/99.......... $ 4,999,308
5,000,000 4.97%, 02/05/99.......... 4,997,242
5,000,000 5.04%, 02/08/99.......... 4,995,100
3,000,000 5.03%, 02/11/99.......... 2,995,808
5,000,000 5.06%, 02/16/99.......... 4,989,458
7,000,000 5.02%, 02/18/99.......... 6,983,406
5,000,000 4.98%, 03/03/99.......... 4,979,250
5,000,000 4.79%, 03/05/99.......... 4,978,711
7,000,000 4.98%, 03/10/99.......... 6,964,208
5,000,000 4.56%, 04/01/99.......... 4,960,912
------------
51,843,403
------------
Federal Home Loan
Mortgage Corporation - 27.93%
5,000,000 4.99%, 02/05/99 (A)...... 4,997,228
5,000,000 5.00%, 02/10/99 (A)...... 4,993,750
5,000,000 5.09%, 02/25/99 (A)...... 4,983,050
5,000,000 5.03%, 02/26/99 (A)...... 4,982,535
5,000,000 4.95%, 03/26/99 (A)...... 4,963,342
5,000,000 4.78%, 03/30/99 (A)...... 4,962,198
5,000,000 4.68%, 04/22/99 (A)...... 4,948,000
10,000,000 4.96%, 08/27/99 (B)...... 9,991,826
------------
44,821,929
------------
Federal Home Loan Bank - 24.23%
5,000,000 5.03%, 02/03/99 (A)...... 4,998,603
5,000,000 5.04%, 02/10/99 (A)...... 4,993,700
9,000,000 4.97%, 02/12/99 (A)...... 8,986,332
5,000,000 4.93%, 02/19/99 (A)...... 4,987,675
5,000,000 4.68%, 03/26/99 (A)...... 4,965,550
5,000,000 4.68%, 04/21/99 (A)...... 4,948,650
5,000,000 4.86%, 09/08/99 (B)...... 4,998,217
------------
38,878,727
------------
Federal Farm Credit Bank - 3.12%
5,000,000 4.90%, 03/01/99.......... 5,000,596
------------
Total U.S. Government and
Agency Obligations....... 140,544,655
(Cost $140,544,655) ------------
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
REPURCHASE AGREEMENT - 9.84%
$ 15,782,000 J.P. Morgan Repurchase
Agreement, 4.72%, 02/01/99,
Dated 01/29/99
Repurchase Price $15,788,208
(Collateralized by
U.S. Treasury Note
5.625%, Due 10/31/99;
Total Par $15,767,000
Market Value $16,097,867) $ 15,782,000
------------
Total Repurchase
Agreement................ 15,782,000
(Cost $15,782,000) ------------
Shares
----------
INVESTMENT COMPANIES - 2.70%
2,699,673 Dreyfus Government
Money Market Fund........ 2,699,673
1,628,285 Federated Government
Obligation Money
Market Fund.............. 1,628,285
------------
Total Investment
Companies................ 4,327,958
(Cost $4,327,958) ------------
Total Investments - 100.13%............ 160,654,613
(Cost $160,654,613)* ------------
Net Other Assets and Liabilities -
(0.13)% ........................... (208,999)
------------
Net Assets - 100.00%................... $160,445,614
============
</TABLE>
- -------------------------------
* Aggregate cost for federal tax purposes.
(A) Discount yield at time of purchase.
(B) Interest is reset at various time intervals. The interest rate shown
reflects the rate in effect at January 31, 1999.
See Notes to Financial Statements.
4
<PAGE>
Tax-Exempt Reserves
PORTFOLIO OF INVESTMENTS
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
MUNICIPAL SECURITIES - 101.60%
Alabama - 3.83%
$ 3,600,000 Chatom, IDB, PCR
Alabama Electric Cooperative
3.05%, 02/02/99
Guaranteed: National Rural
Utilities CFC............ $ 3,600,000
2,200,000 Montgomery, IDB, PCR
Solid Waste Disposal
General Electric Co. Project
2.85%, 02/04/99.......... 2,200,000
-------------
5,800,000
-------------
Alaska - 2.38%
2,000,000 Valdez Marine Terminal
Revenue Exxon Pipeline Co.
Project, Series B
3.15%, 12/01/33 (A)
Guaranteed: Exxon Corp.. 2,000,000
1,600,000 Valdez Marine Terminal
Revenue Exxon Pipeline Co.
Project, Series C
3.15%, 12/01/33 (A)
Guaranteed: Exxon Corp.. 1,600,000
-------------
3,600,000
-------------
Florida - 2.05%
3,100,000 University Athletic
Association, Inc. Capital
Improvement Revenue
University of Florida
Stadium Project
3.30%, 02/01/20 (A)
LOC: SunTrust Bank of
Central Florida.......... 3,100,000
-------------
Idaho - 1.98%
3,000,000 Idaho State HFA
Pooled Financing Program
2.80%, 10/01/10 (A)
LOC,SPA:
U.S. Bank of Idaho....... 3,000,000
-------------
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Illinois - 3.96%
$ 3,000,000 Chicago, GO
Tender Notes
3.55%, 01/31/00
LOC: Morgan
Guaranty Trust........... $ 3,001,498
3,000,000 Illinois Educational
Facilities Authority
Pooled Financing Program
Series 95
3.15%, 02/04/99
LOC: Northern Trust
Company.................. 3,000,000
-------------
6,001,498
-------------
Indiana - 4.65%
2,000,000 Indiana State Development
Finance Authority,
Environmental Revenue
USX Corp. Project
3.00%, 12/01/22 (A)
LOC: Bank of Nova Scotia. 2,000,000
3,000,000 Mt. Vernon, Industrial
Pollution Control & Solid
Waste Disposal Revenue
General Electric Co. Project
Series A
3.00%, 12/01/22 (A)
LOC: Bank of Nova Scotia. 3,000,000
2,050,000 Sullivan, Industrial PCR
Hoosier Energy Rural
Electric Cooperative, Series L-6
3.15%, 02/18/99 (A)
Guaranteed: National Rural
Utilities, CFC........... 2,050,000
-------------
7,050,000
-------------
Kentucky - 3.96%
6,000,000 Kentucky Economic
Development Finance
Authority, Hospital
Facility Revenue, Baptist
Healthcare System
2.85%, 08/15/31 (A)
LOC: Canadian Imperial
Bank of Commerce......... 6,000,000
-------------
</TABLE>
See Notes to Financial Statements.
5
<PAGE>
Tax-Exempt Reserves
PORTFOLIO OF INVESTMENTS (continued)
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Louisiana - 7.82%
$ 3,500,000 Ascension Parish, PCR
Shell Oil Co.
2.60%, 05/01/26 (A)
Guaranteed: Shell Oil Co. $ 3,500,000
1,500,000 Lake Charles Harbor &
Terminal District
Revenue Updates
Reynolds Metals Co. Project
2.75%, 05/01/06 (A)
LOC: Canadian Imperial
Bank of Commerce......... 1,500,000
1,850,000 Louisiana State Offshore
Terminal Authority,
Deepwater Port Revenue
Loop, Inc., 1st Stage
3.15%, 09/01/06 (A)
LOC: UBSAG............... 1,850,000
5,000,000 St. James Parish, PCR
2.90%, 02/25/99
Guaranteed: Texaco, Inc.. 5,000,000
----------
11,850,000
----------
Maryland - 1.33%
2,000,000 Baltimore County, GO
5.00%, 06/01/99.......... 2,013,995
----------
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Massachusetts - 10.51%
3,000,000 Massachusetts State, GO
Series B
2.60%, 09/01/16 (A)
SPA: Toronto
Dominion Bank............ 3,000,000
3,500,000 Massachusetts State, HEFA
Capital Asset Program
Series A
2.30%, 01/01/01 (A)
LOC: First National
Bank of Chicago.......... 3,500,000
2,900,000 Massachusetts State
Housing Finance Agency
Multi-Family, Series A
2.60%, 12/01/25 (A)
Insured: GNMA
SPA: Republic National
Bank of New York......... 2,900,000
Massachusetts (continued)
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
$ 1,500,000 Massachusetts State Water
Resource Authority,
Subordinated General
Purpose, Series A
2.60%, 04/01/28 (A)
Insured: AMBAC
SPA: Bank of Nova Scotia. $ 1,500,000
2,000,000 Natick, BAN Lot A, GO
3.25%, 08/06/99.......... 2,003,295
3,000,000 Stoneham, BAN, GO
3.25%, 11/16/99.......... 3,008,048
-------------
15,911,343
-------------
Michigan - 2.64%
4,000,000 Michigan State University
Revenue, Series A-2
2.75%, 08/15/22 (A)...... 4,000,000
-------------
Minnesota - 2.31%
3,500,000 New ULM, Hospital Facility
Revenue,
Health Central System
3.05%, 08/01/14 (A)
LOC: Norwest Bank
of Minnesota............. 3,500,000
-------------
Missouri - 4.59%
4,100,000 Jackson County
Water System Revenue
3.55%, 11/01/24 (A)
Guaranteed: Chevron Corp. . 4,100,000
2,850,000 Missouri State Higher
Education Loan Authority
Student Loan Revenue
Series CC
2.95%, 08/15/99 (A)...... 2,850,000
-------------
6,950,000
-------------
Nevada - 1.12%
1,700,000 Reno Hospital Revenue
St. Mary's Regional Medical
Center, Series B
3.25%, 05/15/23 (A)
Insured: MBIA
SPA: Rabobank
Nederland NV............. 1,700,000
----------
</TABLE>
See Notes to Financial Statements.
6
<PAGE>
Tax-Exempt Reserves
PORTFOLIO OF INVESTMENTS (continued)
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
New Mexico - 3.97%
$ 2,000,000 Farmington, PCR
Arizona Public Service Co.,
Series B
3.15%, 09/01/24 (A)
LOC: Barclay's Bank PLC.. $ 2,000,000
4,000,000 New Mexico State, TRAN
Series A
3.75%, 06/30/99.......... 4,012,392
-------------
6,012,392
-------------
New York - 5.65%
2,800,000 Long Island Power Authority
New York Electric System
Revenue, Series 6
3.20%, 05/01/33 (A)
LOC: ABN-AMRO,
Morgan Guaranty Trust.... 2,800,000
1,250,000 New York State Energy
Research and Development
Authority, PCR, New York
State Electric & Gas, Series B
3.20%, 10/15/15 (A)
LOC: UBS AG.............. 1,250,000
1,000,000 New York State Energy
Research and Development
Authority, PCR, New York
State Electric & Gas, Series C
3.20%, 06/01/29 (A)
LOC: Morgan
Guaranty Trust........... 1,000,000
3,500,000 New York State Local
Government Assistance Corp.
Series F
2.35%, 04/01/25 (A)
LOC: Toronto
Dominion Bank............ 3,500,000
-------------
8,550,000
-------------
North Carolina - 3.96%
3,500,000 Wake County Industrial Facilities &
Pollution Control Financing Authority
Carolina Power & Light Co. Project
3.05%, 03/11/99
LOC: First National Bank
of Chicago............... 3,500,000
-------------
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
North Carolina (continued)
$ 2,500,000 Wake County Industrial
Facility & Pollution Control
Financing Authority, Carolina
Power & Light Co. Project
3.30%, 03/01/17 (A)(B)
LOC: First Union
National Bank............ $ 2,500,000
-------------
6,000,000
-------------
Pennsylvania - 3.17%
1,000,000 Beaver County, IDA, PCR
Duquesne-Beaver Valley
Series A
2.70%, 08/01/20 (A)
LOC: Barclays Bank Plc... 1,000,000
1,300,000 Beaver County, IDA PCR
Duquesne-Mansfield, Series B
2.70%, 08/01/09 (A)
LOC: Barclays Bank Plc... 1,300,000
1,500,000 Delaware County, IDA, PCR
Philadelphia Electric
Series 88-C
3.30%, 02/10/99
Insured: FGIC............ 1,500,000
Pennsylvania (continued)
1,000,000 Lehigh County
General Purpose Authority
Revenue Lehigh Valley
Hospital, Series A
3.15%, 07/01/28 (A)
Insured: AMBAC
SPA: Chase Manhattan
Bank, N.A................ 1,000,000
-------------
4,800,000
-------------
South Carolina - 2.93%
2,465,000 South Carolina Jobs
Economic Development
Authority, St. Francis Hospital
3.25%, 07/01/22 (A)
LOC: Chase Manhattan
Bank, N.A................ 2,465,000
</TABLE>
See Notes to Financial Statements.
7
<PAGE>
Tax-Exempt Reserves
PORTFOLIO OF INVESTMENTS (continued)
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
South Carolina (continued)
$ 1,955,000 South Carolina State
Capital Improvement, GO
Series A
5.00%, 07/01/99.......... $ 1,971,761
-----------
4,436,761
-----------
Texas - 15.49%
1,100,000 Dallas, GO
5.90%, 02/15/00.......... 1,132,305
2,600,000 Grapevine, IDC
American Airlines, Series B4
3.25%, 12/01/24 (A)
LOC: Morgan Guaranty Trust 2,600,000
3,700,000 Gulf Coast Waste Disposal
Authority PCR,
Amoco Oil Co. Project
3.15%, 10/01/17 (A)
Guaranteed: Amoco Oil Co. .. 3,700,000
2,300,000 Gulf Coast Waste Disposal
Authority, PCR, Exxon Project
3.10%, 10/01/24 (A)
Guaranteed: Exxon Corp... 2,300,000
1,200,000 Harris County, IDC
Baytank Houston, Inc. Project
2.65%, 02/01/20 (A)
LOC: Rabobank Nederland.. 1,200,000
5,000,000 Hockley County, IDC, PCR
Amoco Project
3.00%, 11/01/19 (A)...... 5,002,381
1,000,000 North Central HFDC
Hospital Revenue
Presbyterian Medical Center
Series D
3.25%, 12/01/15 (A)
Insured: MBIA
SPA: NationsBank......... 1,000,000
3,500,000 Plano, HFDC, Hospital
Revenue Updates Childrens &
Presbyterian Hospital
3.00%, 02/24/99
Insured: MBIA
SPA: Texas Commerce
Bank, N.A................ 3,500,000
3,000,000 Texas State, TRAN, GO
4.50%, 08/31/99.......... 3,020,891
-----------
23,455,577
-----------
<CAPTION>
Value
Par Value (Note 2)
--------- --------
<S> <C> <C>
Utah - 0.66%
$ 1,000,000 Utah State, GO
4.40%, 07/01/99.......... $ 1,005,301
-----------
Virginia - 2.71%
2,000,000 Peninsula Ports Authority
Coal Terminal Revenue
Dominion Terminal Project
Series A
3.00%, 07/01/16 (A)
LOC: Barclays Bank Plc... 2,000,000
2,100,000 Peninsula Ports Authority
Coal Terminal Revenue
Dominion Terminal Project
Series C
3.25%, 07/01/16 (A)
LOC: Barclays Bank Plc... 2,100,000
-----------
4,100,000
-----------
Washington - 3.32%
4,955,000 Washington State, GO
Series R-92C
5.30%, 09/01/99.......... 5,024,071
-----------
Wisconsin - 2.32%
3,500,000 Wisconsin State, GO
Series 2
4.85%, 05/01/99.......... 3,517,203
-----------
Wyoming - 4.29%
2,000,000 Kemmerer, PCR
Exxon Project
3.15%, 11/01/14 (A)
Guaranteed: Exxon Corp... 2,000,000
4,500,000 Uinta County, PCR
Chevron USA, Inc. Project
3.15%, 12/01/22 (A)
Guaranteed: Chevron Corp. .. 4,500,000
-----------
6,500,000
-----------
Total Municipal Securities 153,878,141
(Cost $153,878,141) -----------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
Tax-Exempt Reserves
PORTFOLIO OF INVESTMENTS (continued)
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Value
Shares (Note 2)
--------- --------
<S> <C> <C>
INVESTMENT COMPANIES - 2.73%
250,000 Dreyfus Tax Exempt Cash.. $ 250,000
Management
3,880,605 Federated Investors
Tax-Free Obligations
Fund..................... 3,880,605
-------------
Total Investment
Companies................ 4,130,605
(Cost $4,130,605) -------------
Total Investments - 104.33%............ 158,008,746
(Cost $158,008,746)* -------------
Net Other Assets and Liabilities -
(4.33)%.............................. (6,555,624)
-------------
Net Assets - 100.00%................... $ 151,453,122
=============
</TABLE>
- -------------------------------
* Aggregate cost for federal tax purposes.
(A) Variable rate demand notes are payable upon
not more than one, seven or thirty business days notice. Put bonds and
notes have demand features which mature within one year. The interest
rate shown reflects the rate in effect at January 31, 1999.
(B) Subject to AMT.
<TABLE>
<S> <C>
AMBAC American Municipal Bond Assurance Corp.
BAN Bond Anticipation Notes
FGIC Federal Guaranty Insurance Corp.
GNMA Government National Mortgage Association
GO General Obligation
HEFA Health and Educational Facilities Authority
HFA Health Facilities Authority
HFDC Health Facilities Development Authority
IDA Industrial Development Authority
IDB Industrial Development Board
IDC Industrial Development Corp.
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SPA Stand-by Purchase Agreement
TRAN Tax and Revenue Anticipation Notes
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
THE GALAXY FUND January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Prime Government Tax-Exempt
Reserves Reserves Reserves
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost ....................... $3,804,182,339 $ 144,872,613 $ 158,008,746
Repurchase agreements ..................... 100,316,000 15,782,000 --
-------------- -------------- --------------
Total investments at value .............. 3,904,498,339 160,654,613 158,008,746
Cash ........................................ 52,248 22,836 --
Interest and dividend receivables ........... 5,039,251 169,187 804,965
-------------- -------------- --------------
Total Assets .............................. 3,909,589,838 160,846,636 158,813,711
-------------- -------------- --------------
LIABILITIES:
Dividends payable ........................... 5,681,590 240,272 102,664
Payable for investments purchased ........... -- -- 6,954,204
Advisory fee payable (Notes 3 & 4) .......... 1,192,379 58,020 49,746
Distribution and service fee payable (Note 3) 1,492,110 58,020 51,269
Payable to Administrator (Notes 3 & 4) ...... 263,020 13,967 12,673
Trustees' fees and expenses payable (Note 3) 13,826 648 605
Payable to custodian ........................ -- -- 162,266
Accrued expenses and other payables ......... 905,281 30,095 27,162
-------------- -------------- --------------
Total Liabilities ........................ 9,548,206 401,022 7,360,589
-------------- -------------- --------------
NET ASSETS ..................................... $3,900,041,632 $ 160,445,614 $ 151,453,122
============== ============== ==============
NET ASSETS consist of:
Par value (Note 5) .......................... $ 3,900,042 $ 160,446 $ 151,453
Paid-in capital in excess of par value ...... 3,896,141,590 160,285,168 151,301,669
-------------- -------------- --------------
TOTAL NET ASSETS ............................... $3,900,041,632 $ 160,445,614 $ 151,453,122
============== ============== ==============
Shares of beneficial interest outstanding ...... 3,900,041,632 160,445,614 151,453,122
NET ASSET VALUE:
offering and redemption price per share
(Net Assets [division sign] Shares
Outstanding) ................................ $ 1.00 $ 1.00 $ 1.00
============== ============== ==============
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
STATEMENTS OF OPERATIONS
THE GALAXY FUND For the period ended January 31, 1999 (unaudited)
<TABLE>
<CAPTION>
Prime Government Tax-Exempt
Reserves(1) Reserves(1) Reserves(1)
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2) .......................... $ 67,669,801 $ 2,892,677 $ 1,610,250
Dividends (Note 2) .......................... 310,802 91,006 33,318
-------------- -------------- --------------
Total investment income ................... 67,980,603 2,983,683 1,643,568
-------------- -------------- --------------
EXPENSES:
Investment advisory fee (Note 3) ............ 4,712,040 232,616 205,800
Administration fee (Note 3) ................. 980,662 43,616 38,587
Custody fee ................................. 27,299 5,509 6,677
Fund accounting fee (Note 3) ................ 39,640 10,758 9,946
Legal fee ................................... 45,324 2,036 3,992
Audit fee ................................... 10,760 10,760 10,760
Trustees' fee (Note 3) ...................... 28,778 1,279 1,212
Transfer agent fee (Note 3) ................. 1,973 1,800 1,799
Distribution and service fee (Note 3) ....... 5,883,973 232,616 205,800
Reports to shareholders ..................... 462,214 13,810 11,086
Registration fees ........................... 392,887 17,878 15,755
Miscellaneous ............................... 15,631 971 923
-------------- -------------- --------------
Total expenses before reimbursement/waiver 12,601,181 573,649 512,337
Less: reimbursement/waiver (Note 4) ....... -- -- (1,523)
-------------- -------------- --------------
Total expenses net of reimbursement/waiver 12,601,181 573,649 510,814
-------------- -------------- --------------
NET INVESTMENT INCOME .......................... 55,379,422 2,410,034 1,132,754
-------------- -------------- --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................... $ 55,379,422 $ 2,410,034 $ 1,132,754
============== ============== ==============
</TABLE>
- ------------------------------------
(1) The Funds commenced operations on September 22, 1998.
See Notes to Financial Statements.
11
<PAGE>
THE GALAXY FUND STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Prime Government Tax-Exempt
Reserves(1) Reserves(1) Reserves(1)
---------------- ---------------- -----------------
Period ended Period ended Period ended
January 31, 1999 January 31, 1999 January 31, 1999
(unaudited) (unaudited) (unaudited)
---------------- ---------------- -----------------
<S> <C> <C> <C>
NET ASSETS at beginning of period (A) .......... $ 10 $ 10 $ 10
-------------- -------------- --------------
Increase in Net Assets resulting from operations:
Net investment income ....................... 55,379,422 2,410,034 1,132,754
-------------- -------------- --------------
Net increase in net assets
resulting from operations ............... 55,379,422 2,410,034 1,132,754
-------------- -------------- --------------
Dividends to shareholders from:
Net investment income ....................... (55,379,422) (2,410,034) (1,132,754)
-------------- -------------- --------------
Total Dividends ........................... (55,379,422) (2,410,034) (1,132,754)
-------------- -------------- --------------
Share Transactions:
Net proceeds from sale of shares ............ 10,171,509,934 329,051,880 341,773,767
Issued to shareholders in
reinvestment of dividends ................. 49,697,832 1,586,384 1,030,090
Cost of shares repurchased .................. (6,321,166,144) (170,192,660) (191,350,745)
-------------- -------------- --------------
Net increase from share transactions ...... 3,900,041,622 160,445,604 151,453,112
-------------- -------------- --------------
Net increase in net assets ................ 3,900,041,622 160,445,604 151,453,112
-------------- -------------- --------------
NET ASSETS at end of period .................... $3,900,041,632 $ 160,445,614 $ 151,453,122
============== ============== ==============
OTHER INFORMATION:
Share Transactions:
Sold ........................................ 10,171,509,934 329,051,880 341,773,767
Issued to shareholders in
reinvestment of dividends ................. 49,697,832 1,586,384 1,030,090
Repurchased ................................. (6,321,166,144) (170,192,660) (191,350,745)
-------------- -------------- --------------
Net increase in shares outstanding ........ 3,900,041,622 160,445,604 151,453,112
============== ============== ==============
</TABLE>
- --------------------------------------
(1) The Funds commenced operations on September 22, 1998.
(A) Amounts represent initial seed money.
See Notes to Financial Statements.
12
<PAGE>
FINANCIAL HIGHLIGHTS
THE GALAXY FUND For a Share outstanding throughout the period
<TABLE>
<CAPTION>
Prime Government Tax-Exempt
Reserves(1) Reserves(1) Reserves(1)
---------------- ---------------- ----------------
Period ended Period ended Period ended
January 31, 1999 January 31, 1999 January 31, 1999
(unaudited) (unaudited) (unaudited)
---------------- ---------------- ----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ........... $ 1.00 $ 1.00 $ 1.00
---------- -------- --------
Income from Investment Operations:
Net investment income(A) .................... 0.02 0.01 0.01
---------- -------- --------
Total from Investment Operations ........ 0.02 0.01 0.01
---------- -------- --------
Less Dividends:
Dividends from net investment income ........ (0.02) (0.01) (0.01)
---------- -------- --------
Total Dividends ......................... (0.02) (0.01) (0.01)
---------- -------- --------
Net increase (decrease) in net asset value ..... -- -- --
---------- -------- --------
Net Asset Value, End of Period ................. $ 1.00 $ 1.00 $ 1.00
========== ======== ========
Total Return ................................... 1.53%** 1.50%** 0.80%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) .............. $3,900,042 $160,446 $151,453
Ratios to average net assets:
Net investment income
including reimbursement/waiver ............ 4.24%* 4.14%* 2.20%*
Operating expenses including
reimbursement/waiver ...................... 0.96%* 0.99%* 0.99%*
Operating expenses excluding
reimbursement/waiver ...................... 0.96%* 0.99%* 1.00%*
</TABLE>
- --------------------------------------------------------------------------------
* Annualized
** Not annualized
(1) The Funds commenced operations on September 22, 1998.
(A) Net investment income per share before reimbursement/waiver of fees by
the Investment Advisor and/or Administrator for the period ended
January 31, 1999 was $0.02, $0.01 and $0.01 for the Prime Reserves,
Government Reserves and Tax-Exempt Reserves, respectively.
See Notes to Financial Statements.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS
THE GALAXY FUND (unaudited)
1. Organization
The Galaxy Fund, a Massachusetts business trust (the "Trust"), is registered
under the Investment Company Act of 1940, as amended, (the "1940 Act"), as an
open-end management investment company. As of the date of this report, the Trust
offered twenty-nine managed investment portfolios. The accompanying financial
statements and financial highlights are those of the Prime Reserves, Government
Reserves and Tax-Exempt Reserves Funds (individually, a "Fund", collectively,
the "Funds") only.
2. Significant Accounting Policies
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of their
financial statements.
Portfolio Valuation: Securities in the Funds are valued utilizing the amortized
cost valuation method permitted in accordance with Rule 2a-7 under the 1940 Act.
This method involves valuing a portfolio security initially at its cost and
thereafter assuming a constant amortization to maturity of any discount or
premium.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Net realized gains or losses on sales of
securities are determined by the identified cost method. Interest and dividend
income is recorded on the accrual basis.
Dividends to Shareholders: Dividends from net investment income are declared
daily and paid monthly. Net realized capital gains, if any, are distributed at
least annually.
Income dividends and capital gain 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 July 31. In addition, by
distributing in each calendar year substantially all of its net investment
income, capital gains, and certain other amounts, if any, each Fund will not be
subject to a Federal excise tax. Therefore, no Federal income or excise tax
provision is recorded.
Repurchase Agreements: Each Fund may engage in repurchase agreement
transactions with institutions that the Trust's investment 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 restric-
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
THE GALAXY FUND (unaudited)
tions 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.
3. Investment Advisory, Administration,
Distribution, Shareholder Services and
Other Fees
The Trust and Fleet Investment Advisors Inc. (the "Investment Advisor" or
"Fleet"), an indirect wholly-owned subsidiary of Fleet Financial Group, Inc.,
are parties to an investment advisory agreement under which the Investment
Advisor provides services for a fee, computed daily and paid monthly, at the
annual rate of 0.40% of the first $750,000,000 of each Fund's average daily net
assets, plus 0.35% of each Fund's average daily net assets in excess of
$750,000,000.
The Trust and First Data Investor Services Group, Inc. ("Investor Services
Group"), a wholly-owned subsidiary of First Data Corporation, are parties to an
administration agreement under which Investor Services Group (the
"Administrator") provides services for a fee, computed daily and paid monthly,
at the annual rate of 0.09% of the first $2.5 billion of the combined average
daily net assets of the Funds and the other funds offered by the Trust (whose
financial statements are provided in separate reports), 0.085% of the next $2.5
billion of combined average daily net assets, 0.075% of the next $7 billion of
combined average daily net assets, 0.065% of the next $3 billion of combined
average daily net assets, 0.06% of the next $3 billion of combined average daily
net assets and 0.0575% of combined average daily net assets in excess of $18
billion.
In addition, Investor Services Group also provides certain fund accounting,
custody administration and transfer agency services pursuant to certain fee
arrangements. In accordance with such fee arrangements, Investor Services Group
compensates the Trust's custodian bank, The Chase Manhattan Bank, for its
services.
First Data Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary of
Investor Services Group, serves as the distributor of the Trust's shares.
The Trust has adopted a distribution and services plan (the "Plan") with respect
to the Funds. Under the Plan, the Trust may pay (i) the Distributor or another
person for distribution services provided and expenses assumed and (ii)
broker-dealers or other financial institutions ("Service Organizations") for
shareholder administrative support services provided to shareholders of the
Funds. Payments by the Trust for distribution expenses may not exceed an annual
rate of 0.75% of the average daily net assets of a Fund and payments for
shareholder administrative support services may not exceed 0.25% of the average
daily net assets of a Fund's outstanding shares which are owned of record or
beneficially by a Service Organization's customers for whom the Service
Organization is the owner of record or shareholder of record or with whom it has
a servicing relationship. The Trust is currently limiting payments under the
Plan to an aggregate fee of not more than 0.45% of the average daily net asset
value of the Prime Reserves and not more than 0.40% of the average daily net
assets of the Government Reserves and Tax-Exempt Reserves.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
THE GALAXY FUND (unaudited)
For the period ended January 31, 1999, the Funds paid fees under the Plan as
follows:
<TABLE>
<CAPTION>
Shareholder
Fund Services Distribution
---- -------- ------------
<S> <C> <C>
Prime Reserves ........ $1,961,324 $3,922,649
Government Reserves ... 58,154 174,462
Tax-Exempt Reserves ... 51,450 154,350
</TABLE>
Certain officers of the Trust may be officers of the Administrator. Such
officers receive no compensation from the Trust for serving in their respective
roles. No officer, director or employee of the Investment Advisor serves as an
officer, trustee or employee of the Trust. Effective March 5, 1998, each Trustee
is entitled to receive for services as a trustee of the Trust, The Galaxy VIP
Fund ("VIP") and Galaxy Fund II ("Galaxy II") an aggregate fee of $40,000 per
annum plus certain other fees for attending or participating in meetings as well
as reimbursement for expenses incurred in attending meetings. The Chairman of
the Boards of Trustees and the President and Treasurer of the Trust, VIP and
Galaxy II are also entitled to additional fees for their services in these
capacities. These fees are allocated among the funds of the Trust, VIP and
Galaxy II, based on their relative net assets.
Each Trustee is eligible to participate in The Galaxy Fund/The Galaxy VIP
Fund/Galaxy Fund II Deferred Compensation Plan (the "Compensation Plan"), an
unfunded, non-qualified deferred compensation plan. The Compensation Plan allows
each Trustee to defer receipt of all or a percentage of fees which otherwise
would be payable for services performed.
Expenses for the period ended January 31, 1999 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 period ended January 31, 1999, the
Investment Advisor reimbursed expenses in the amount of $1,523 for the
Tax-Exempt Reserves.
5. Shares of Beneficial Interest
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest in the Funds, each with a par
value of $0.001. The Trust's shares are classified into thirty classes of
shares, each consisting of one or more series including: Class BB Shares - Prime
Reserves; Class CC Shares - Government Reserves; and Class DD Shares -
Tax-Exempt Reserves.
Each share represents an equal proportionate interest in the respective Fund,
bears the same fees and expenses and is entitled to such dividends and
distributions of income earned as are declared at the discretion of the Trust's
Board of Trustees.
Shareholders are entitled to one vote for each full share held and a
proportionate fractional vote for each fractional 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.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS (continued)
THE GALAXY FUND (unaudited)
6. Change of Accountants
On March 3, 1999, PricewaterhouseCoopers LLP ("PwC") resigned as the Funds'
independent auditors. This resignation followed the Trust's January 13, 1999
dismissal of PwC as the independent auditors for the Trust's other funds by
action of the Trust's Board of Trustees upon the recommendation of a Special
Committee of the Board. During the period September 22, 1998 (commencement of
the Funds' operations) through March 3, 1999 (the "Period"), (i) PwC did not
issue any report on the Funds' financial statements, (ii) there were no
disagreements with PwC on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of PwC, would have caused it
to make reference to the subject matter of the disagreements in connection with
its report on the financial statements for such period, and (iii) there were no
"reportable events" of the kind described in Item 304(a)(1)(v) of Regulation S-K
under the Securities Exchange Act of 1934, as amended.
On March 4, 1999, the Trust by action of its Board of Trustees engaged Ernst &
Young LLP ("E&Y") as the independent auditors to audit the Funds' financial
statements for the fiscal year ending July 31, 1999. During the Period, neither
the Trust, the Funds nor anyone on their behalf has consulted E&Y on items which
(i) concerned the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Funds' financial statements or (ii) concerned the
subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of
Regulation S-K) or reportable events (as described in paragraph (a)(1)(v) of
said Item 304).
17
<PAGE>
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<PAGE>
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<PAGE>
[cover]
Galaxy Money Market Portfolios
The Galaxy Funds
Semi-Annual
Report
January 31, 1999
Galaxy Prime Reserves
Galaxy Tax-Exempt Reserves
Galaxy Government Reserves
[logo: Galaxy
Funds]
1/31/99
