[GRAPHIC]
Galaxy Tax-Exempt Bond Funds
Galaxy Funds
Annual Report
October 31, 1999
Galaxy Tax-Exempt Bond Fund
Galaxy New Jersey Municipal
Bond Fund
Galaxy New York Municipal
Bond Fund
Galaxy Connecticut Municipal
Bond Fund
Galaxy Massachusetts Municipal
Bond Fund
Galaxy Rhode Island Municipal
Bond Fund
[LOGO] Galaxy
Funds
<PAGE>
Chairman's Message
Dear Shareholder:
Enclosed is the annual report for the Galaxy Tax-Exempt Bond Funds that
covers the fiscal year ended October 31, 1999. The report includes a Market
Overview that explains the different economic and market factors influencing
bond investments during this time. Following the Market Overview are individual
reviews that describe how Fleet Investment Advisors Inc. managed each of the
Funds' portfolios in this climate. Financial statements and a list of portfolio
holdings for each of the Funds as of October 31, 1999 appears at the end of the
report.
Unexpected economic strength, inflation concerns, and a tighter monetary
policy drove bond yields higher during the reporting period. After cutting
short-term interest rates by 25 basis points (0.25%) at the start of the period,
the Federal Reserve became concerned that the economy was advancing strongly
enough to prompt inflation that would curb future growth. This resulted in rate
increases later in the period totaling 50 basis points. As bond yields rose, the
prices for bonds fell sharply. When investors were most uncertain about the
direction of interest rates, many moved back into securities with the strongest
credit quality and liquidity. While municipal bonds underperformed Treasury
issues at these times, the Galaxy Tax-Exempt Bond Funds benefited from an
emphasis on higher-quality issues with good liquidity.
Although market changes like those of the past year can be unnerving, they
are typical of the ups and downs that occur with most investments. Even so, this
may be a good time to meet with a financial advisor who can help you determine
whether your current strategies suit your long-term goals. Investment
professionals at Fleet Bank branches can provide you with a no-obligation
analysis that will help you make this comparison and get the most from your
portfolio.
If you have any questions about the Galaxy Tax-Exempt Bond Funds or the
information in this report, please contact the Galaxy Information Center
toll-free at 1-877-BUY-GALAXY (1-877-289-4252). You can also visit one of our
investment professionals located at Fleet Bank branches.
Sincerely,
/s/ Dwight E. Vicks, Jr.
Dwight E. Vicks, Jr.
Chairman of the Board of Trustees
- --------------------------------------------------------------------------------
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>
Market Overview
"By shortening the portfolio duration (a measure of interest rate sensitivity)
during the reporting period and maintaining our standards of high credit
quality, the Galaxy Tax-Exempt Bond Funds generally outperformed funds with
similar investment objectives."
Bond Market Overview
By Fleet Investment Advisors Inc.
Bond prices declined substantially in the past year, as improving economic
conditions abroad kept growth strong enough at home to raise concern about
higher inflation and interest rates. Yields in the municipal market were higher
by 80 to 100 basis points (0.80% to 1.00%) over the last year, compared with an
increase of 110 to 170 basis points for U.S Treasury yields. The supply of new
issues of municipal bonds was down approximately 20% from 1998, which was a
record year.
Although inflation remained relatively modest, interest rates rose for
most of the period. This was due largely to efforts by the Federal Reserve (the
"Fed") to keep inflation under control. After cutting the Fed Funds rate three
times for a total rate cut of 75 basis points since September 1998, the Fed
raised rates by 25 basis points each at meetings in June and August of 1999.
By shortening the portfolio duration (a measure of interest rate
sensitivity) during the reporting period and maintaining our standards of high
credit quality, the Galaxy Tax-Exempt Bond Funds generally outperformed funds
with similar investment objectives.
Strong Growth Boosts Yields
When the reporting period started, 30-year Treasury bonds were yielding
5.20%, the Lehman Brothers Municipal Bond Index was yielding 4.38%, and
inflation was about 1.6%. Following an annualized growth rate of 3.7% in the
third quarter of 1998, the gross domestic product ("GDP"), which measures the
output of U.S. goods and services, increased by 6% in the fourth quarter of
1998. With economies in Asia and other emerging markets still in crisis,
however, investors sought safety in Treasuries. To restore confidence in other
fixed-income markets, the Fed cut interest rates in November.
As foreign economies rebounded strongly in the first quarter of 1999, U.S.
growth, as measured by GDP, improved by 4.3%. This raised concern that the Fed
would start raising interest rates to keep inflation at bay. Although low levels
of current inflation discouraged Fed action at this time, the yield for 30-year
Treasuries rose to 5.62% by the end of March.
GDP growth slowed to a rate of 1.8% in the second quarter of 1999.
However, signs of faster growth raised enough concern about inflation for the
Fed to boost short-term rates for the first time since February 1995. While
inflation remained under control in the third quarter, GDP growth accelerated to
an estimated 5.5% rate. The stronger growth, plus inflation concerns prompted by
weakness in the U.S. dollar, caused the Fed to raise short-term rates again in
August. In anticipation of this rate hike, 30-year Treasury yields rose as high
as 6.28%.
Investors continued to worry into October that the Fed would raise rates
again and effectively erase the 75 basis point cut from 1998. With annualized
inflation at just 2.8%, however, another rate hike seemed less likely. As
sentiment shifted, the yield for long-term Treasuries edged lower, reaching
6.16% on October 31. At the end of the reporting period the Lehman Brothers
Municipal Bond Index had a yield of 5.32%.
Municipal Bonds Outperform
With investors seeking safety in U.S. Treasury issues during the fall of
1998, municipal bonds had significantly underperformed on a total return basis
versus Treasuries. Municipals were also hurt as low absolute yields discouraged
demand by retail investors, while new issue supply set a record at $280 billion.
By the beginning of 1999, yields for municipal bonds as a percentage of U.S.
Treasuries had reached unusually high levels.
Municipal bonds performed fairly well in the first quarter of 1999,
falling only slightly in price. The summer then brought the start of two very
dif-
2
<PAGE>
"After averaging growth rates of 3.9% and 3.8% in 1998 and 1999, respectively,
we believe that GDP may only improve by 2.5% next year."
ferent faces in the municipal market. As municipal bond mutual funds received
very little new cash and witnessed redemptions that caused them to sell
long-term bonds, insurance companies were underweighting municipals in favor of
taxable issues with attractive yield spreads.
At the same time, retail investors started buying municipal bonds with
short- to intermediate-term maturities. The retail sector remained the dominant
buyer of municipals for the remainder of the fiscal year, and mutual funds
continued to be net sellers. This caused the yield curve to steepen, which
increased the underperformance of longer-term bonds.
In addition to greater demand, shorter maturities benefited from the
reduced sensitivity of their prices to rising interest rates. By replacing the
longer maturities that had performed well when interest rates were falling in
1998 with intermediate-term issues, we helped the Galaxy Tax-Exempt Bond Funds
outperform other funds with similar investment objectives. The Funds also
benefited from sizable investments in issues with premium coupons, strong credit
quality, and good liquidity. Investors tended to favor municipals with these
attributes as bond prices weakened.
Volatility to Continue
We predict bond prices will remain volatile in coming months. If economic
growth is robust, further rate hikes could follow. There are now many signs,
however, that previous rate hikes are creating an environment for slower growth.
After averaging growth rates of 3.9% and 3.8% in 1998 and 1999, respectively, we
believe that GDP may only improve by 2.5% next year. Under that scenario,
inflation should remain under control, interest rates should retrace their
recent rise, and bond prices should strengthen.
At current yield levels municipal bonds should remain attractive to
investors. Longer intermediate-term municipals offer yields near 5.40%, which is
equivalent to a taxable yield of 8.44% for individuals in the 36% federal income
bracket.
3
<PAGE>
PERFORMANCE AT-A-GLANCE
AVERAGE ANNUAL TOTAL RETURNS -- TRUST SHARES
<TABLE>
<CAPTION>
As of October 31, 1999 1 Year 3 Years 5 Years Life of Fund
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Bond Fund
(Inception date 12/30/91) -3.25% 3.98% 6.06% 5.71%
- ----------------------------------------------------------------------------------------------------------
New Jersey Municipal Bond Fund
(Inception date 4/3/98) -3.06 N/A N/A 0.81
- ----------------------------------------------------------------------------------------------------------
New York Municipal Bond Fund
(Inception date 12/31/91) -3.54 4.01 6.09 5.47
- ----------------------------------------------------------------------------------------------------------
Connecticut Municipal Bond Fund
(Inception date 12/14/90) -2.68 4.27 6.43 4.66
- ----------------------------------------------------------------------------------------------------------
Massachusetts Municipal Bond Fund
(Inception date 12/31/91) -3.17 3.97 6.10 4.34
- ----------------------------------------------------------------------------------------------------------
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS -- RETAIL A SHARES+
<TABLE>
<CAPTION>
As of October 31, 1999 1 Year 3 Years 5 Years Life of Fund
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax-Exempt Bond Fund
(Inception date 12/30/91) -7.07% 2.43% 5.01% 5.15%
- ----------------------------------------------------------------------------------------------------------
New Jersey Municipal Bond Fund
(Inception date 4/3/98) -6.87 N/A N/A -1.80
- ----------------------------------------------------------------------------------------------------------
New York Municipal Bond Fund
(Inception date 12/31/91) -7.36 2.49 5.06 4.82
- ----------------------------------------------------------------------------------------------------------
Connecticut Municipal Bond Fund
(Inception date 12/14/90) -6.50 2.73 5.39 3.89
- ----------------------------------------------------------------------------------------------------------
Massachusetts Municipal Bond Fund
(Inception date 12/31/91) -6.97 2.48 5.09 3.60
- ----------------------------------------------------------------------------------------------------------
Rhode Island Municipal Bond Fund
(Inception date 12/20/94) -6.42 2.71 N/A 5.01
- ----------------------------------------------------------------------------------------------------------
</TABLE>
+ Return figures have been restated to include the effect of the maximum
3.75% front-end sales charge which became effective on December 1, 1995
AVERAGE ANNUAL TOTAL RETURNS -- RETAIL B SHARES**
<TABLE>
<CAPTION>
1 Year 1 Year 3 Year 3 Year Life of Fund Life of Fund
Return Before Return After Return Before Return After Return Before Return After
Contingent Contingent Contingent Contingent Contingent Contingent
Deferred Sales Deferred Sales Deferred Sales Deferred Sales Deferred Sales Deferred Sales
As of October 31, 1999 Charge Deducted Charge Deducted* Charge Deducted Charge Deducted* Charge Deducted Charge Deducted*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tax-Exempt Bond Fund
(Inception date 3/4/96) -4.07% -8.64% 3.10% 2.19% 2.84% 2.35%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* As if shares were redeemed at end of period.
** Retail B Shares are subject to a 5.00% contingent deferred sales charge if
shares are redeemed within the first year. The charge decreases to 4.00%,
3.00%, 3,00%, 2.00% and 1.00% for redemptions made during the second
through sixth years, respectively. Retail B Shares automatically convert
to Retail A Shares after six years. Total returns are from the date of
inception.
Past performance is no guarantee of future results. Investment returns and
principal values will vary with market conditions so that an investor's shares,
when redeemed, may be worth more or less than their original cost. The
Investment Advisor is presently waiving fees and/or reimbursing expenses and may
revise or discontinue such practice at any time. Without such waivers and/or
reimbursements, performance would be lower. Total return figures in this report
include changes in share price, reinvestment of dividends and capital gains
distributions and include the deduction of any sales charges, where applicable,
unless otherwise indicated.
4
<PAGE>
Portfolio Reviews
[PHOTO]
Glenn Migliozzi is the managing director of Fixed Income Investments for Fleet
Investment Advisors Inc. He is also a member of Fleet's Tax-Exempt Investment
Policy Committee, which has managed the Galaxy Tax-Exempt Bond, New York
Municipal Bond, Connecticut Municipal Bond, Massachusetts Municipal Bond and
Rhode Island Municipal Bond Funds since 1996 and the Galaxy New Jersey Municipal
Bond Fund since it commenced operations in April of 1998.
GALAXY TAX-EXEMPT BOND FUND
By Glenn Migliozzi, CFA
Managing Director,
Fixed Income Investments
As municipal bond yields rose in the past year, and prices for bonds with
shorter maturities outperformed, the Galaxy Tax-Exempt Bond Fund benefited from
a neutral duration versus its peer group. We further enhanced returns by
emphasizing holdings with premium coupons, strong credit quality, and good
liquidity.
For the 12 months ended October 31, 1999, the Fund's Trust Shares had a
total return of -3.25%. Over the same time, the Fund's Retail A Shares had a
total return of -3.45% before deducting the maximum 3.75% front-end sales
charge, and its Retail B Shares had a total return of -4.07% before deducting
the maximum 5.00% contingent deferred sales charge. (Please see the charts on
page 4 for total returns after deducting the front-end sales charge and the
contingent deferred sales charge.)
During the reporting period, the average general municipal bond fund
followed by Lipper Analytical Services ("Lipper"), a mutual fund
performance-tracking service, had a total return of -4.18%. The Lehman Brothers
Municipal Bond Index, which has a shorter duration than the Fund or its Lipper
group, had a total return of -1.78%.
On October 31, 1999, the Fund's Trust Shares had a 30-day Securities and
Exchange Commission ("SEC") annualized yield of 4.67%. On the same date, Retail
A Shares had a 30-day SEC annualized yield of 4.35%, and Retail B Shares had a
30-day SEC annualized yield of 3.79%. For shareholders in the 36% federal income
tax bracket, these equaled taxable yields of 7.29%, 6.79%, and 5.92%,
respectively.
Increased Attention to Intermediate Maturities
After emphasizing longer-term municipals when prices were rising earlier
in 1998, we added intermediate-term issues at the start of the reporting period
in the fourth quarter when prices seemed to peak. We continued our focus on
premium coupon issues with strong credit quality and good call protection, which
also helped returns. In the first months of 1999, as a further defense against
falling prices, we raised the Fund's cash position. As interest rates rose we
used these reserves to increase the Fund's yield.
Although intermediate maturities underperformed in the second quarter of
1999, they outperformed in the third quarter. On balance, the Fund continued to
benefit from its neutral duration bias and attention to high credit quality.
Toward the end of the period we increased cash reserves again for added
liquidity.
Neutral Duration to Continue
Given the uncertainty about interest rates, we plan to maintain a duration
that is neutral to that of our peer group. We also expect to continue
emphasizing issuers with strong credit fundamentals, believing the risk/reward
ratio for owning lower-rated securities is not justified in the market at this
time.
Galaxy Tax-Exempt Bond Fund
Distribution of Total Net Assets as of October 31, 1999
[The following information was depicted as a pie chart in the printed material.]
Cash Equivalents & Net Other Assets and Liabilities .... 6%
North Central .......................................... 12%
Pacific ................................................ 8%
East ................................................... 36%
Other Territories ...................................... 3%
South .................................................. 31%
Mountain ............................................... 4%
Galaxy Tax-Exempt Bond Fund
Growth of $10,000 investment*
[The following information was depicted as a line chart in the printed
material.]
12/30/91 10/31/99
Lehman Brothers Municipal Bond Index $10,000 $16,409
Galaxy Tax-Exempt Bond Fund - Retail A Shares $ 9,625 $14,817
Galaxy Tax-Exempt Bond Fund - Trust Shares $10,000 $15,450
Galaxy Tax-Exempt Bond Fund - Retail B Shares $10,000 $10,889
* Since inception on 12/30/91 for Trust and Retail A Shares. Since inception
on 3/4/96 for Retail B Shares. Performance figures for Retail A Shares
include the effect of the maximum 3.75% front-end sales charge.
Performance figures for Retail B Shares reflect the deduction of the 3.00%
contingent deferred sales charge (applicable to shares redeemed during the
fourth year after purchase) as if shares were redeemed on October 31,
1999. The Lehman Brothers Municipal Bond Index is an unmanaged index in
which investors cannot invest. Results for the index do not reflect
investment management fees and other expenses incurred by the Fund.
5
<PAGE>
PORTFOLIO REVIEWS
GALAXY NEW JERSEY MUNICIPAL BOND FUND
By Glenn Migliozzi, CFA
Managing Director,
Fixed Income Investments
As supplies of newly issued municipal bonds declined in the past year,
supplies in New Jersey were occasionally tighter than elsewhere in the country.
The enhanced value that this gave to existing bonds in the state -- combined
with an emphasis on premium coupons, intermediate maturities, and strong credit
quality -- helped the Galaxy New Jersey Municipal Bond Fund outperform other
funds with similar investment objectives.
For the 12 months ended October 31, 1999, the Fund's Trust Shares had a
total return of -3.06%. Over the same time, the Fund's Retail A Shares had a
total return of -3.24% before deducting the maximum 3.75% front-end sales
charge. (Please see the chart on page 4 for total returns after deducting the
front-end sales charge.) By comparison, the average New Jersey municipal bond
fund tracked by Lipper had a total return of -4.13%. The Lehman Brothers
Municipal Bond Index, whose duration is shorter than that of the Fund and its
Lipper group, had a total return of -1.78% for the 12-month period.
On October 31, 1999, the Fund's Trust Shares had a 30-day SEC annualized
yield of 4.12%. On the same date, Retail A Shares had a 30-day SEC annualized
yield of 4.06%. This equaled taxable yields of 6.87% and 6.77%, respectively,
for taxpayers in the 36% federal income tax bracket who live in New Jersey.
Seizing Yield Opportunities
We have focused the Fund's holdings on municipal bonds with premium
coupons, intermediate maturities, and strong credit quality since its inception
in April of 1998. These attributes proved attractive to investors as bond prices
began to fall at the start of the reporting period.
In the first months of 1999, we raised the Fund's cash position as an
additional defense against price declines. After interest rates had moved
higher, we used these reserves to improve the yield of the Fund. We continued to
emphasize intermediate-term issues. While these lagged in 1999's second quarter,
they held up relatively well in the third quarter. As the reporting period
closed, we boosted cash reserves again to improve liquidity.
Positioned for Further Rate Uncertainty
Given the uncertainty about interest rates, we expect to keep the Fund's
duration neutral to that for its peer group and make the most of new yield
opportunities that arise. The Fund's focus on issuers with strong credit
fundamentals should also serve it well in this environment.
Galaxy New Jersey Municipal Bond Fund
Distribution of Total Net Assets as of October 31, 1999
[The following information was depicted as a pie chart in the printed material.]
Cash Equivalents & Net Other Assets and Liabilities ............ 6%
Puerto Rico .................................................... 7%
New Jersey ..................................................... 87%
Galaxy New Jersey Municipal Bond Fund
Growth of $10,000 investment*
[The following information was depicted as a line chart in the printed
material.]
4/3/98 10/31/99
Lehman Brothers Municipal Bond Index $10,000 $10,279
Galaxy New Jersey Municipal Bond Fund - Retail A Shares $ 9,625 $ 9,718
Galaxy New Jersey Municipal Bond Fund - Trust Shares $10,000 $10,128
* Since inception on 4/3/98. Performance figures for Retail A Shares include
the effect of the maximum 3.75% front-end sales charge. The Lehman
Brothers Municipal Bond Index is an unmanaged index in which investors
cannot invest. Results for the index do not reflect investment management
fees and other expenses incurred by the Fund. Results for the index are
calculated since 4/30/98 because the index returns are calculated at
month-end only.
6
<PAGE>
PORTFOLIO REVIEWS
GALAXY NEW YORK MUNICIPAL BOND FUND
By Glenn Migliozzi, CFA
Managing Director,
Fixed Income Investments
In a climate of falling bond prices, the Galaxy New York Municipal Bond
Fund benefited from a duration that was neutral to that of its peer group and an
emphasis on municipals with premium coupons, good liquidity, and strong credit
quality. The Fund also benefited as the supply of new issues in New York versus
other parts of the country was down significantly, which enhanced the value of
existing bonds in the state.
For the 12 months ended October 31, 1999, the Fund's Trust Shares had a
total return of -3.54%. During the same time, the Fund's Retail A Shares had a
total return of -3.72% before deducting the maximum 3.75% front-end sales
charge. (Please see the chart on page 4 for total returns after deducting the
front-end sales charge.)
Over this period the average New York municipal bond fund tracked by
Lipper returned -4.44%. With a duration that was shorter than the Fund and its
peer group, the Lehman Brothers Municipal Bond Index returned -1.78%.
On October 31, 1999, the Fund's Trust Shares had a 30-day SEC annualized
yield of 4.59%. On the same date, Retail A Shares had a 30-day SEC annualized
yield of 4.23%. These are the same as taxable yields of 7.17% and 7.09%,
respectively, for shareholders in the 36% federal income tax bracket who live in
New York.
Managing Price Risk
For a large part of 1998, we held significant investments in municipals
with longer maturities to make the most of falling interest rates and rising
bond prices. In the fourth quarter of 1998, when the reporting period began, it
appeared that interest rates might be bottoming. In this climate, we traded some
longer maturities for intermediate-term issues, which offered better value as
well as a defense against falling bond prices.
For the most part, this strategy continued to serve the Fund well through
the end of the reporting period. The Fund also benefited during the first and
third quarters from an increase in cash reserves. Besides helping to buffer Fund
returns from falling bond prices, the higher reserves gave us the liquidity to
take advantage of opportunities to improve the Fund's yield.
Looking Ahead
We expect to maintain an added level of liquidity in coming months, given
the ongoing uncertainty about interest rates. We also plan to remain neutral in
our duration and committed to municipals with strong credit ratings, while
taking advantage of opportunities to enhance the Fund's return.
Galaxy New York Municipal Bond Fund
Distribution of Total Net Assets as of October 31, 1999
[The following information was depicted as a pie chart in the printed material.]
Cash Equivalents & Net Other Assets and Liabilities .............. 2%
Other Territories ................................................ 2%
New York ......................................................... 96%
Galaxy New York Municipal Bond Fund
Growth of $10,000 investment*
[The following information was depicted as a line chart in the printed
material.]
12/30/91 10/31/99
Lehman Brothers Municipal Bond Index $10,000 $16,409
Galaxy New York Municipal Bond Fund - Retail A Shares $ 9,625 $14,462
Galaxy New York Municipal Bond Fund - Trust Shares $10,000 $15,175
* Since inception on 12/30/91. Performance figures for Retail A Shares
include the effect of the maximum 3.75% front-end sales charge. The Lehman
Brothers Municipal Bond Index is an unmanaged index in which investors
cannot invest. Results for the index do not reflect investment management
fees and other expenses incurred by the Fund.
7
<PAGE>
PORTFOLIO REVIEWS
GALAXY CONNECTICUT MUNICIPAL BOND FUND
By Glenn Migliozzi, CFA
Managing Director,
Fixed Income Investments
When supplies of newly issued municipal bonds declined over the last year,
supplies in Connecticut shrank somewhat more than in other parts of the country.
This enhanced the value of existing bonds in the state. Additions of
intermediate-term issues, which outperformed versus longer-term issues during
the reporting period, also improved returns for the Galaxy Connecticut Municipal
Bond Fund, along with a continued emphasis on municipals with strong credit
quality and liquidity.
For the 12 months ended October 31, 1999, the Fund's Trust Shares had a
total return of -2.68%. Over the same time, the Fund's Retail A Shares had a
total return of -2.87% before deducting the maximum 3.75% front-end sales
charge, (Please see the chart on page 4 for total returns after deducting the
front-end sales charge.) During the same period, the average Connecticut
municipal bond fund tracked by Lipper returned -3.17%. The Lehman Brothers
Municipal Bond Index, whose duration is shorter than that of the Fund and its
peer group, returned -1.78%.
On October 31, 1999, the Fund's Trust Shares had a 30-day SEC annualized
yield of 4.45%. On the same date, Retail A Shares had a 30-day SEC annualized
yield of 4.15%. These equal taxable yields of 7.28% and 6.79%, respectively, for
shareholders in the 36% federal income tax bracket who live in Connecticut.
A Shift to Intermediate Maturities
Before the reporting period began, we had emphasized longer-term
municipals to make the most of rising bond prices. By the start of the period in
the fourth quarter of 1998, however, it appeared that prices were peaking. We
added intermediate-term issues at this time to buffer the value of Fund shares
from a bond price decline.
As a further defense against falling prices, we increased the Fund's cash
reserves in the first quarter of 1999. Once rates had moved higher, we used this
cash to take advantage of attractive yield opportunities that became available.
Because the yield spreads between high- and low-quality credits remained narrow,
we continued to focus on municipals with strong credit fundamentals.
Although intermediate-term issues underperformed in the second quarter of
1999, they outperformed in the third quarter. With the possibility of continued
rate increases later in the period, we raised cash reserves again.
Keeping a Defensive Position
With the future direction of interest rates still unclear, we plan to
maintain higher cash reserves through year-end and a neutral duration in the
months to come. As before, we also expect to emphasize municipals with strong
credit ratings and good liquidity.
Galaxy Connecticut Municipal Bond Fund
Distribution of Total Net Assets as of October 31, 1999
[The following information was depicted as a pie chart in the printed material.]
Puerto Rico ..................................................... 7%
Cash Equivalents & Net Other Assets and Liabilities ............. 6%
Other Territories ............................................... 6%
Connecticut ..................................................... 81%
Galaxy Connecticut Municipal Bond Fund
Growth of $10,000 investment*
[The following information was depicted as a line chart in the printed
material.]
3/16/93 10/31/99
Lehman Brothers Municipal Bond Index $10,000 $15,678
Galaxy Connecticut Municipal Bond Fund - Retail A Shares $ 9,625 $12,880
Galaxy Connecticut Municipal Bond Fund - Trust Shares $10,000 $13,526
* Since inception on 3/16/93. Performance figures for Retail A Shares
include the effect of the maximum 3.75% front-end sales charge. The Lehman
Brothers Municipal Bond Index is an unmanaged index in which investors
cannot invest. Results for the index do not reflect investment management
fees and other expenses incurred by the Fund. Results for the index are
calculated since 3/31/93 because the index returns are calculated at
month-end only.
8
<PAGE>
PORTFOLIO REVIEWS
GALAXY MASSACHUSETTS MUNICIPAL BOND FUND
By Glenn Migliozzi, CFA
Managing Director,
Fixed Income Investments
During the second half of the reporting year for the Galaxy Massachusetts
Municipal Bond Fund, we increased investments in intermediate-term issues, being
somewhat defensive against falling bond prices, and remained focused on
better-quality municipals with premium coupons and good call protection.
These strategies helped the Fund's Trust Shares earn a total return of
- -3.17% for the 12 months ended October 31, 1999. Over the same time, the Fund's
Retail A Shares returned -3.35% before deducting the maximum 3.75% front-end
sales charge. (Please see the chart on page 4 for total returns after deducting
the front-end sales charge.)
During the reporting period the average Massachusetts municipal bond fund
tracked by Lipper had a total return of-4.01%. Benefiting from a duration that
is shorter than that for the Fund and its Lipper group, the Lehman Brothers
Municipal Bond Index had a total return of -1.78%.
On October 31, 1999, the Fund's Trust Shares had a 30-day SEC annualized
yield of 4.63% and Retail A Shares had a 30-day SEC annualized yield of 4.32%.
These equaled taxable yields of 7.69% and 7.17%, respectively, for shareholders
in the 36% federal income tax bracket who live in Massachusetts.
Defending Against a Price Decline
When the reporting period started in the fourth quarter of 1998, we added
intermediate-term issues to the portfolio. Besides offering good relative value,
these issues provided a better defense against falling bond prices than the
longer maturities we'd emphasized for most of 1998.
Early in 1999, with the chance for further declines in bond prices, we
increased the Fund's cash position. This allowed us to take advantage of
opportunities to enhance the Fund's yield as interest rates continued to rise.
Throughout this time, we remained focused on municipals with strong credit
quality and good call protection.
Although intermediate-term issues underperformed in the second quarter of
1999, they outperformed in the third.
Future Strategies
We expect to maintain a slightly higher cash position through year-end as
a buffer against potential withdrawals. The added liquidity would also allow us
to seize additional opportunities to increase the Fund's yield. As before, we
expect to emphasize municipals with strong credit ratings and keep a duration
bias that is neutral to the Fund's peer group.
Galaxy Massachusetts Municipal Bond Fund
Distribution of Total Net Assets as of October 31, 1999
[The following information was depicted as a pie chart in the printed material.]
Other Territories ........................................... 2%
Cash Equivalents & Net Other Assets and Liabilities ......... 2%
Puerto Rico ................................................. 6%
Massachusetts ............................................... 90%
Galaxy Massachusetts Municipal Bond Fund
Growth of $10,000 investment*
[The following information was depicted as a line chart in the printed
material.]
3/12/93 10/31/99
Lehman Brothers Municipal Bond Index $10,000 $15,678
Galaxy Massachusetts Municipal Bond Fund - Retail A Shares $ 9,625 $12,647
Galaxy Massachusetts Municipal Bond Fund - Trust Shares $10,000 $13,257
* Since inception on 3/12/93. Performance figures for Retail A Shares
include the effect of the maximum 3.75% front-end sales charge. The Lehman
Brothers Municipal Bond Index is an unmanaged index in which investors
cannot invest. Results for the index do not reflect investment management
fees and other expenses incurred by the Fund. Results for the index are
calculated since 3/31/93 because the index returns are calculated at
month-end only.
9
<PAGE>
PORTFOLIO REVIEWS
GALAXY RHODE ISLAND MUNICIPAL BOND FUND
By Glenn Migliozzi, CFA
Managing Director,
Fixed Income Investments
In the 12 months ended October 31, 1999, the Galaxy Rhode Island Municipal
Bond Fund benefited from additions of intermediate-term investments that tended
to outperform longer maturities as bond prices fell. Attention to attributes
that investors favor in a weakening market also helped returns. At the same
time, the values of existing municipal bonds in Rhode Island were bolstered by
the lack of supply of new issues.
For the 12-month reporting period the Fund's Retail A Shares had a total
return of -2.73% before deducting the maximum 3.75% front-end sales charge.
(Please see chart on page 4 for total returns after deducting the front-end
sales charge.) Over the same time the average Rhode Island municipal bond fund
tracked by Lipper had a total return of -3.34%. The Lehman Brothers Municipal
Bond Index, whose duration is shorter than that for the Fund and its Lipper
group, had a total return of -1.78%.
On October 31, 1999, the Fund's Retail A Shares had a 30-day SEC
annualized yield of 4.54%. This equaled a taxable yield of 7.59% for taxpayers
in the 36% federal income tax bracket that live in Rhode Island.
A Defensive Strategy
For most of 1998, we had maintained sizable holdings in longer-term
municipals to make the most of a bond price rally. As the reporting period
started in the fourth quarter, however, prices seemed to be peaking. Finding
better relative value in intermediate-term issues, which could also help to
buffer the Fund against a price reversal, we increased investments in that
sector.
In a further defense against falling prices, we increased the Fund's cash
position early in 1999. We then deployed these reserves in the months that
followed as we found investments with more attractive yields. As before, we
emphasized issues with premium coupons, strong credit quality, and good
liquidity -- attributes that investors tend to favor when yields are rising.
Although intermediate-term issues underperformed in the second quarter,
they significantly outperformed in the third quarter.
Remaining Prepared for Higher Rates
We expect to maintain these strategies in the months ahead. If interest
rates edge higher, intermediate-term issues could again outperform, and
investors should continue to favor issues with higher coupons, strong credit
quality, and good liquidity. By keeping larger cash reserves, we should be able
to make the most of any further opportunities to enhance the Fund's yield that
might arise.
Galaxy Rhode Island Municipal Bond Fund
Distribution of Total Net Assets as of October 31, 1999
[The following information was depicted as a pie chart in the printed material.]
Other Territories ............................................ 4%
Cash Equivalents & Net Other Assets and Liabilities .......... 5%
Puerto Rico .................................................. 12%
Rhode Island ................................................. 79%
Galaxy Rhode Island Municipal Bond Fund
Growth of $10,000 investment*
[The following information was depicted as a line chart in the printed
material.]
12/20/94 10/31/99
Lehman Brothers Municipal Bond Index $10,000 $13,271
Galaxy Rhode Island Municipal Bond Fund - Retail A Shares $10,000 $12,683
* Since inception on 12/20/94. Performance figures for Retail A Shares
include the effect of the maximum 3.75% front-end sales charge. The Lehman
Brothers Municipal Bond Index is an unmanaged index in which investors
cannot invest. Results for the index do not reflect investment management
fees and other expenses incurred by the Fund. Results for the index are
calculated since 12/31/94 because the index returns are calculated at
month-end only.
10
<PAGE>
Shareholder Services
"A well-balanced asset allocation plan may help to control your risk while
pursuing your goals."
AUTOMATIC INVESTMENT PROGRAM
The Golden Rule of investing is "pay yourself first." That is easy to do with
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 invest
ment choices can be used in combination to match the needs of nearly everyone.
EXCHANGE PRIVILEGES
As your investment needs change, you can conveniently exchange your shares in
one Fund for shares in another Fund at no cost (as long as you exchange within
the same share class).
CONSOLIDATED STATEMENTS
Timely, comprehensive mutual fund account statements offer detailed information
on your individual account. If you have a FleetOne Gold or a Fleet Private
Banking Account, your Galaxy Fund information can be added to these statements.
24-HOUR ACCESS TO REGISTERED REPRESENTATIVES
24 hours a day, seven days a week, 365 days a year, we are ready and available
to help. Our toll-free telephone lines offer round-the-clock access to Fund
information and service. Call toll-free 1-877-BUY-GALAXY (1-877-289-4252) for
information on initial purchases and current performance.
- --------------------------------------------------------------------------------
Certain shareholder services may not be available to Trust, A Prime and B Prime
Share investors. Please consult your Fund Prospectus.
Shares of the Funds are distributed through Provident Distributors, Inc., member
NASD and SIPC.
11
<PAGE>
Shareholder Information
- --------------------------------------------------------------------------------
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 and
Assistant Treasurer
William Greilich
Vice President
INVESTMENT ADVISOR
Fleet Investment
Advisors Inc.
75 State Street
Boston, MA
02109
DISTRIBUTOR
Provident
Distributors, Inc.
Four Falls Corporate Center
6th Floor
West Conshohocken, PA
19428-2961
ADMINISTRATOR
PFPC Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
AUDITOR
Ernst & Young LLP
200 Clarendon Street
Boston, MA 02116
LEGAL COUNSEL
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, PA 19103
- --------------------------------------------------------------------------------
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 each Fund of The
Galaxy Fund, which contains more information concerning the investment policies
and expenses of the Funds as well as other pertinent information. For complete
information, and before making an investment decision on any of the Funds of The
Galaxy Fund, you should request a prospectus from the Funds' distributor by
calling toll-free 1-877-BUY-GALAXY (1-877-289-4252). Read the prospectus
carefully before you invest.
Shares of the Funds are not bank deposits or obligations of, or guaranteed or
endorsed by, FleetBoston Corporation or any of its affiliates, Fleet Investment
Advisors Inc., or any Fleet Bank. Shares of the Funds are not federally insured
by, guaranteed by, obligations of or otherwise supported by the U.S. Government,
the Federal Deposit Insurance Corporation, the Federal Reserve Board or any
other governmental agency. Investment return and principal value will vary as a
result of market conditions or other factors so that shares of the Funds, when
redeemed, may be worth more or less than their original cost. An investment in
the Funds involves investment risks, including the possible loss of principal
amount invested.
[RECYCLED LOGO]
This report was printed on recycled paper.
12
<PAGE>
Tax-Exempt Bond Fund
Portfolio of Investments
October 31, 1999
Par Value Value
- --------- ---------
MUNICIPAL SECURITIES - 94.58%
Alaska - 0.76%
$ 1,275,000 Anchorage Hospital Revenue
Sisters of Providence Project
6.75%, 10/01/00........................... $ 1,299,799
---------------
California - 6.97%
2,500,000 California Educational
Facilities Authority
Stanford University, Series O
5.13%, 01/01/31........................... 2,187,500
1,915,000 California Rural Home Mortgage
Finance Authority, Single Family
Mortgage, Mortgage-Backed
Securities Program, Series A
6.35%, 12/01/29
Insured: GNMA/FNMA/FHLMC.................. 1,972,450
2,000,000 California State, GO
5.00%, 10/01/19
Insured: FSA.............................. 1,782,500
3,000,000 California State, GO
5.00%, 08/01/24
Insured: MBIA............................. 2,595,000
1,500,000 California State, GO
Veterans Bonds, Series BH
5.40%, 12/01/15
Insured: FSA.............................. 1,438,125
1,000,000 East Bay California
Municipal Utilities District
Water Systems Revenue
5.25%, 06/01/17........................... 942,500
1,000,000 San Diego
Water Utilities Funding
5.38%, 08/01/12
Insured: FGIC............................. 1,000,000
---------------
11,918,075
---------------
Colorado - 0.62%
1,000,000 Colorado Housing Finance Authority
Single Family Program, Series B-3
6.55%, 05/01/25........................... 1,053,750
---------------
Connecticut - 2.17%
1,000,000 Connecticut State
Clean Water Fund
5.13%, 09/01/15........................... 946,250
1,000,000 Connecticut State HEFA
Trinity College, Series F
5.50%, 07/01/21
Insured: MBIA............................. 956,250
645,000 Connecticut State HFA
Housing Mortgage Finance
Program, Series A
6.10%, 05/15/13........................... 658,706
615,000 Connecticut State HFA
Housing Mortgage Finance
Program, SubSeries B-1
6.25%, 05/15/11........................... 629,606
500,000 Connecticut State Special Tax
Obligation, Transportation
Infrastructure, Series B
6.10%, 09/01/07........................... 530,625
---------------
3,721,437
---------------
Florida - 6.31%
2,000,000 Florida State Board of Education
Capital Outlay, Series A
5.50%, 01/01/02........................... 2,047,500
2,500,000 Florida State Board of Education
Lottery Revenue, Series C
4.50%, 07/01/17
Insured: FGIC............................. 2,068,750
2,000,000 Hillsborough County
School Board, Series A
5.50%, 07/01/14
Insured: MBIA............................. 1,972,500
2,835,000 Miami, Dade County, SP OB
Series A
5.22%, 10/01/14 (A)
Insured: MBIA............................. 1,194,244
2,690,000 Tampa Bay Water
Utilities System, Series B
5.13%, 10/01/14
Insured: FGIC............................. 2,521,875
1,000,000 Tampa, Florida Revenue Health
System, Catholic Health East
Series A-1
5.50%, 11/15/14........................... 986,250
---------------
10,791,119
---------------
Georgia - 3.09%
2,000,000 De Kalb County
Water and Sewer Revenue
6.25%, 10/01/06........................... 2,150,000
1,000,000 Fulton County School District, GO
5.60%, 01/01/11........................... 1,047,500
2,000,000 Georgia State, GO
Series B
5.75%, 08/01/10........................... 2,095,000
---------------
5,292,500
---------------
See Notes to Financial Statements.
13
<PAGE>
Tax-Exempt Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
Idaho - 0.96%
$ 500,000 Boise-Kuna Irrigation District
Lucky Peak Hydroelectric Project
6.60%, 07/01/05........................... $ 525,625
1,160,000 Idaho Housing & Finance Association
Single Family Mortgage
Series G-2, AMT
5.70%, 07/01/16........................... 1,117,950
---------------
1,643,575
---------------
Illinois - 3.54%
1,000,000 Cook County, GO
7.25%, 11/01/07
Insured: MBIA............................. 1,136,250
3,000,000 Illinois Educational Facilities
Authority, Wesleyan University
5.65%, 09/01/26
Insured: MBIA............................. 2,857,500
1,000,000 Illinois State, GO
5.80%, 09/01/18
Insured: FGIC............................. 986,250
1,000,000 Regional Transportation Authority
Series A
6.25%, 06/01/15........................... 1,080,000
---------------
6,060,000
---------------
Indiana - 1.18%
2,000,000 Indianapolis Local Public
Improvement Bond Bank
Series A
6.00%, 01/10/18........................... 2,012,500
---------------
Iowa - 0.98%
1,735,000 Iowa Finance Authority
Single Family Mortgage, Series F
5.55%, 01/01/16
Insured: GNMA/FNMA........................ 1,678,613
---------------
Kansas - 0.91%
1,575,000 Kansas State
Department of Highway Transportation
5.50%, 09/01/14........................... 1,563,188
---------------
Kentucky - 1.19%
1,000,000 Kentucky Housing Corp.
Series C-3
5.70%, 01/01/11........................... 1,008,750
1,000,000 Kentucky State Turnpike Authority
Economic Development & Refunding
Revenue, Revitalization Projects
Pre-refunded 05/15/00
7.13%, 05/15/01........................... 1,031,530
---------------
2,040,280
---------------
Maine - 1.63%
1,000,000 Maine Governmental Facilities
Authority, Lease Rent Revenue
5.63%, 10/01/19
Insured: FSA.............................. 951,250
250,000 Maine Municipal Bond Bank
Series B
6.75%, 11/01/12........................... 270,313
500,000 Maine Municipal Bond Bank
Sewer & Water
SRF Program, Series A
6.50%, 11/01/08........................... 532,500
1,000,000 Maine State Housing
Authority, Series C-1
6.50%, 11/15/11........................... 1,031,250
---------------
2,785,313
---------------
Maryland - 3.22%
2,875,000 Maryland State Community
Development Administration
Department of Housing & Community
Development, Series A, AMT
5.70%, 07/01/17........................... 2,788,750
1,500,000 Maryland State Health & Higher
Education Facilities Authority
Johns Hopkins University
6.00%, 07/01/10........................... 1,610,625
1,100,000 Montgomery County Housing
Opportunity Commission
Single Family Mortgage, Series A
5.75%, 07/01/13........................... 1,102,750
---------------
5,502,125
---------------
Massachusetts - 7.38%
3,000,000 Massachusetts State, GO
Consolidated Loan, Series B
5.00%, 05/01/19........................... 2,625,000
2,000,000 Massachusetts State HEFA
Partners Healthcare Systems
Series A
5.38%, 07/01/17
Insured: MBIA............................. 1,875,000
200,000 Massachusetts State HEFA
South Shore Hospital, Series D
6.50%, 07/01/10
Insured: MBIA............................. 211,500
1,000,000 Massachusetts State IFA
Nantucket Electric, Series A, AMT
5.88%, 07/01/17
Insured: AMBAC............................ 987,500
2,000,000 Massachusetts State IFA
Tufts University, Series H
5.50%, 02/15/12
Insured: MBIA............................. 2,012,500
See Notes to Financial Statements.
14
<PAGE>
Tax-Exempt Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
Massachusetts (continued)
$ 2,000,000 Massachusetts State Port
Authority, Series A
5.38%, 07/01/18........................... $ 1,872,500
2,500,000 Massachusetts State Turnpike
Authority, Metropolitan Highway
System, Series A
5.00%, 01/01/39
Insured: AMBAC............................ 2,075,000
1,000,000 Massachusetts State Water
Resource Authority, Series B
5.50%, 08/01/15
Insured: FSA.............................. 970,000
---------------
12,629,000
---------------
Michigan - 0.60%
1,000,000 Central Michigan University
6.00%, 10/01/13
Insured: MBIA............................. 1,018,750
---------------
Minnesota - 0.54%
1,000,000 Rochester Health Care Facilities
Mayo Foundation, Series A
5.50%, 11/15/27
Insured: GO of Mayo Foundation............ 931,250
---------------
Missouri - 1.03%
1,000,000 Missouri State HEFA
St. Louis University
5.50%, 10/01/16........................... 976,250
750,000 Missouri State Housing
Development Commission
Single Family, Series B-2, AMT
6.40%, 03/01/29........................... 782,812
---------------
1,759,062
---------------
Nevada - 1.44%
1,000,000 Clark County, GO & Revenue
Series A
6.00%, 06/01/16
Pre-refunded 06/01/02
Insured: AMBAC............................ 1,037,500
1,500,000 Nevada State, GO
Capital Improvement &
Cultural Affairs, Series A
5.50%, 02/01/18........................... 1,428,750
---------------
2,466,250
---------------
New Jersey - 3.30%
1,000,000 Mercer County Improvement
Authority, Customer Receipts
Justice Complex
6.05%, 01/01/07........................... 1,001,600
1,500,000 New Jersey Health Care
Facilities Financing Authority
AHS Hospital Corp., Series A
6.00%, 07/01/12
Insured: AMBAC............................ 1,576,875
1,700,000 New Jersey Health Care
Facilities Financing Authority
Medical Center at Princeton
5.13%, 07/01/18
Insured: AMBAC............................ 1,527,875
500,000 New Jersey State
Transportation Trust Fund Authority
Transportation System, Series A
5.50%, 06/15/09
Dated 12/01/97............................ 510,625
1,000,000 New Jersey State
Transportation Trust Fund Authority
Transportation System, Series A
5.50%, 06/15/09
Dated 10/01/99............................ 1,021,250
---------------
5,638,225
---------------
New Mexico - 1.13%
750,000 Dona Ana County
Gross Receipt Tax Revenue
5.50%, 06/01/16
Insured: AMBAC............................ 731,250
1,285,000 New Mexico Mortgage Finance
Authority, Single Family
Mortgage, Series B-3
5.50%, 07/01/28
Insured: GNMA/FNMA/FHLMC.................. 1,198,263
---------------
1,929,513
---------------
New York - 10.71%
1,000,000 Battery Park City
Authority, Series A
5.50%, 11/01/10........................... 1,002,500
2,165,000 Metropolitan Transportation Authority
Dedicated Tax Fund, Series C-1
5.25%, 07/01/17
Insured: FGIC............................. 1,997,212
1,000,000 Municipal Assistance Corp. for
New York City, Series O
5.25%, 07/01/07........................... 1,018,750
1,000,000 New York City
Series I, GO
6.00%, 04/15/09........................... 1,047,500
See Notes to Financial Statements.
15
<PAGE>
Tax-Exempt Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
New York (continued)
$ 1,000,000 New York City
Municipal Water Finance
Authority, Water and Sewer
System, Series A
5.50%, 06/15/11........................... $ 1,005,000
1,500,000 New York City
Transitional Finance Authority
Revenue, Series C
5.00%, 05/01/26........................... 1,273,125
250,000 New York State, GO
6.10%, 11/15/09........................... 264,063
1,000,000 New York State, GO
5.50%, 06/15/10........................... 1,007,500
2,000,000 New York State, GO
Series F
5.25%, 09/15/12........................... 1,935,000
4,000,000 New York State Dormitory Authority
Capital Appreciation, State
University of New York, Class B
5.18%, 05/15/10 (A)
Insured: MBIA............................. 2,290,000
2,110,000 New York State Dormitory Authority
Columbia University
5.00%, 07/01/18........................... 1,883,175
1,000,000 New York State Dormitory Authority
Municipal Health Facilities
Improvement Program, Series 1
5.00%, 01/15/09
Insured: FSA.............................. 985,000
30,000 New York State Dormitory Authority
University of Rochester
Unrefunded Balance
6.50%, 07/01/09........................... 30,402
1,000,000 Port Authority of New York and
New Jersey, JFK International Air
Terminal, Series 6, SP OB, AMT
6.00%, 12/01/07
Insured: MBIA............................. 1,065,000
1,500,000 Triborough Bridge & Tunnel
Authority, Series A
5.00%, 01/01/01........................... 1,511,250
---------------
18,315,477
---------------
North Carolina - 1.45%
1,500,000 Charlotte Certificates of Participation
Convention Facility Project
6.35%, 12/01/00
Insured: AMBAC............................ 1,537,080
925,000 North Carolina Housing Finance
Agency, Single Family Revenue,
Series Y
6.30%, 09/01/15........................... 945,813
---------------
2,482,893
---------------
Ohio - 3.69%
955,000 Cleveland Waterworks
6.25%, 01/01/15
Pre-refunded 01/01/02
Insured: AMBAC............................ 1,007,525
45,000 Cleveland Waterworks
6.25%, 01/01/15
Unrefunded Balance
Insured: AMBAC............................ 46,800
1,000,000 Cleveland Waterworks
Refunding & Improvement
First Mortgage
5.50%, 01/01/10
Insured: MBIA............................. 1,020,000
1,460,000 Forest Hills School District, GO
6.00%, 12/01/10
Insured: MBIA............................. 1,547,600
1,000,000 Ohio State Building Authority
Adult Correctional Facilities
Series A
6.00%, 04/01/06
Insured: AMBAC............................ 1,063,750
1,785,000 Ohio State Water
Development Authority, PCR
Water Control Loan Fund
Water Quality Series
5.00%, 12/01/15
Insured: MBIA............................. 1,631,044
---------------
6,316,719
---------------
Pennsylvania - 4.44%
2,000,000 Delaware Valley Regional
Finance Authority, Local
Government Revenue, Series B
5.60%, 07/01/17
Insured: AMBAC............................ 1,960,000
2,210,000 Elizabeth Forward School District
Capital Appreciation, Series B, GO
5.52%, 09/01/21 (A)
Insured: MBIA............................. 613,275
2,210,000 Elizabeth Forward School District
Capital Appreciation, Series B, GO
5.52%, 09/01/22 (A)
Insured: MBIA............................. 580,125
1,000,000 Luzerne County, Series B, GO
6.00%, 09/15/11
Insured: FGIC............................. 1,009,410
1,500,000 Pennsylvania Housing Finance
Agency, Single Family Mortgage
Series 59-A, AMT
5.75%, 10/01/23........................... 1,432,500
1,000,000 Pennsylvania State Higher
Education Facilities Authority
Temple University, First Series
5.25%, 04/01/14
Insured: MBIA............................. 946,250
See Notes to Financial Statements.
16
<PAGE>
Tax-Exempt Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
Pennsylvania (continued)
$ 1,000,000 Pennsylvania State
Second Series A, GO
6.50%, 11/01/04
Pre-refunded 11/01/01
Insured: MBIA............................. $ 1,057,500
---------------
7,599,060
---------------
Puerto Rico - 1.86%
3,000,000 Puerto Rico Electric Power Authority
Series BB
6.00%, 07/01/12
Insured: MBIA............................. 3,183,750
---------------
Rhode Island - 3.25%
190,000 Rhode Island Clean Water
Protection Finance Agency
Series A, PCR
6.75%, 10/01/13
Pre-refunded 10/01/02
Insured: MBIA............................. 204,962
10,000 Rhode Island Clean Water
Protection Finance Agency
Series A, PCR
6.75%, 10/01/13
Unrefunded Balance
Insured: MBIA............................. 10,662
700,000 Rhode Island Housing & Mortgage
Finance Corp., Homeownership
Opportunity, Series 13
6.70%, 10/01/15........................... 720,125
1,000,000 Rhode Island Housing & Mortgage
Finance Corp., Homeownership
Opportunity, Series 19-A
5.70%, 04/01/15........................... 976,250
1,500,000 Rhode Island State HEBC
Higher Education Facilities
Johnson & Wales University
6.38%, 04/01/12
Insured: Connie Lee....................... 1,586,250
1,500,000 Rhode Island State HEBC
Higher Education Facilities
Johnson & Wales University
Series A
5.75%, 04/01/12
Insured: Connie Lee....................... 1,530,000
500,000 Rhode Island State HEBC
Miriam Hospital, Series B
Pre-refunded 04/01/03
6.50%, 04/01/13........................... 537,500
---------------
5,565,749
---------------
South Carolina - 2.83%
1,500,000 Greenville Waterworks, Revenue
5.50%, 02/01/22........................... 1,428,750
2,100,000 Oconee County, PCR
Duke Power Co. Project
5.80%, 04/01/14........................... 2,105,250
500,000 Piedmont Municipal
Power Agency
6.10%, 01/01/06
Insured: MBIA............................. 532,500
750,000 Richland County
Certificates of Participation
6.90%, 02/01/01
Insured: FGIC............................. 774,375
---------------
4,840,875
---------------
South Dakota - 0.61%
1,000,000 Rapid City Sales Tax
Series B
6.20%, 06/01/12
Insured: FGIC............................. 1,043,750
---------------
Tennessee - 2.08%
500,000 Memphis Water Revenue
Series A
6.00%, 01/01/07........................... 521,250
2,000,000 Metropolitan Government
Nashville & Davidson County, GO
5.88%, 05/15/26........................... 1,980,000
1,000,000 Metropolitan Government
Nashville & Davidson County
Health & Education Facilities Board
Vanderbilt University, Series B
6.30%, 10/01/14........................... 1,055,000
---------------
3,556,250
---------------
Texas - 10.90%
1,000,000 Amarillo Health Facilities Corp.
Baptist St. Anthony Hospital Corp.
5.50%, 01/01/14
Insured: FSA.............................. 985,000
5,000,000 Harris County Capital Appreciation
Series A, GO & Revenue
5.18%, 08/15/07 (A)
Insured: FGIC............................. 3,362,500
2,000,000 Harris County Health Facilities
Development Corp., Baylor College
Medical Project, Series A
5.00%, 11/15/28
Insured: AMBAC............................ 1,677,500
2,170,000 Harris County Health Facilities
Development Corp., Memorial Hospital
System Project, Series A
6.00%, 06/01/13
Insured: MBIA............................. 2,248,662
See Notes to Financial Statements.
17
<PAGE>
Tax-Exempt Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
Texas (continued)
$ 4,000,000 Houston Water & Sewer System
Junior Lien, Series C
5.35%, 12/01/11 (A)
Insured: AMBAC............................ $ 2,055,000
1,775,000 Katy Independent School District
Capital Appreciation
3.56%, 08/15/11 (A)....................... 929,656
1,750,000 Lower Colorado River Authority
Capital Appreciation, Junior Lien
4th Supplement
5.45%, 01/01/13 (A)
Insured: FGIC............................. 822,500
2,000,000 Lower Neches Valley Authority IDC
Mobil Oil Refining Project
5.80%, 05/01/22........................... 1,945,000
2,000,000 New Braunfels Independent School
District, Capital Appreciation, GO
5.23%, 02/01/07 (A)....................... 1,382,500
1,000,000 North Central Health
Facilities Development Corp.
Presbyterian Healthcare
Pre-refunded 06/01/05
5.90%, 06/01/21........................... 1,052,500
2,000,000 San Antonio Airport System
7.13%, 07/01/05
Insured: AMBAC............................ 2,195,000
---------------
18,655,818
---------------
Virginia - 1.22%
1,000,000 Norfolk Industrial Development
Authority, Childrens Hospital
Kings Group
6.50%, 06/01/21
Insured: AMBAC............................ 1,036,250
1,025,000 Virginia State, GO
5.38%, 06/01/04........................... 1,059,594
---------------
2,095,844
---------------
Washington - 1.41%
1,370,000 Seattle, GO
Series A
5.50%, 03/01/11........................... 1,388,837
1,000,000 Washington State Public Power
Supply System, Nuclear Project
No. 2, Series C
7.30%, 07/01/00........................... 1,021,840
---------------
2,410,677
---------------
West Virginia - 1.18%
2,000,000 West Virginia School Building
Authority, Capital Improvement
5.50%, 07/01/11
Insured: AMBAC............................ 2,020,000
---------------
Total Municipal Securities................ 161,821,186
(Cost $166,734,581) ---------------
Shares
- ------
INVESTMENT COMPANY - 3.08%
5,263,392 Federated Tax-Free Obligations Fund....... 5,263,392
---------------
Total Investment Company.................. 5,263,392
(Cost $5,263,392) ---------------
Total Investments - 97.66%.................................. 167,084,578
(Cost $171,997,973) ---------------
Net Other Assets and Liabilities - 2.34%.................... 4,000,918
---------------
Net Assets - 100.00%........................................ $ 171,085,496
===============
- ------------------------------------------
(A) Zero Coupon Bond. Rate shown reflects effective yield to maturity
at time of purchase.
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax. Private activity obligations whose
interest is subject to the federal AMT for individuals.
Connie Lee College Construction Loan Association
FGIC Federal Guaranty Insurance Corp.
FHLMC Federal Home Loan Mortgage Corp.
FNMA Federal National Mortgage Association
FSA Financial Security Assurance Company
GNMA Government National Mortgage Association
GO General Obligation
HEBC Health and Educational Building Corp.
HEFA Health and Educational Facilities Authority
HFA Housing Finance Authority
IDC Industrial Development Corp.
IFA Industrial Finance Agency
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SP OB Special Obligation
See Notes to Financial Statements.
18
<PAGE>
New Jersey Municipal Bond Fund
Portfolio of Investments
October 31, 1999
Par Value Value
- --------- ---------
MUNICIPAL SECURITIES - 93.83%
New Jersey - 86.69%
$ 235,000 Freehold Board of Education, GO
5.38%, 07/15/10
Insured: FSA.............................. $ 237,938
125,000 Hunterdon County, GO
Series A
4.20%, 12/15/02........................... 123,732
250,000 Lacey Municipal Utilities Authority
New Jersey Water Revenue
5.10%, 12/01/16
Insured: MBIA............................. 228,125
250,000 Lenape Regional High School
District, GO
5.00%, 04/01/08
Insured: FGIC............................. 249,687
50,000 Lenape Regional High School
District, GO
5.00%, 04/01/12
Insured: FGIC............................. 48,562
500,000 Lindenwold Borough
School District, GO
5.20%, 06/01/25
Insured: FSA.............................. 453,750
250,000 Mercer County Improvement
Authority Revenue Youth Center
Series B
5.00%, 02/15/14
Insured: FGIC............................. 233,125
250,000 Metuchen School District, GO
5.13%, 09/15/12
Insured: FGIC............................. 245,000
250,000 Middlesex County
Certificate of Participation
4.63%, 02/15/11
Insured: MBIA............................. 234,063
50,000 Monmouth County Improvement
Authority Revenue Governmental Loan
5.50%, 12/01/07
Insured: AMBAC............................ 51,750
100,000 Morristown, GO
5.15%, 02/01/09
Insured: FSA.............................. 100,250
250,000 New Brunswick, GO
4.80%, 09/15/13
Insured: MBIA............................. 233,750
250,000 New Jersey Economic
Development Authority, Educational
Testing Service, Series A
4.00%, 05/15/06
Insured: MBIA............................. 233,438
75,000 New Jersey
Environmental Infrastructure
Wastewater Treatment, Series F
5.00%, 04/01/14
Insured: MBIA............................. 69,938
500,000 New Jersey
Environmental Infrastructure
Wastewater Treatment, Series G
5.00%, 04/01/12
Insured: FGIC............................. 478,750
300,000 New Jersey Health Care Facilities
Financing Authority Revenue
Medical Center at Princeton
5.13%, 07/01/18
Insured: AMBAC............................ 269,625
50,000 New Jersey Health Care Facilities
Kennedy Healthcare Sytems, Series B
5.00%, 07/01/09
Insured: MBIA............................. 49,312
190,000 New Jersey Sports & Exposition
Authority Convention Center
Luxury Tax Revenue, Series A
6.00%, 07/01/13
Insured: MBIA............................. 200,925
50,000 New Jersey State, GO
7.00%, 04/01/07
Pre-refunded 04/01/01..................... 52,562
750,000 New Jersey State, GO
5.00%, 03/01/11........................... 729,375
75,000 New Jersey State, GO
Series D
5.40%, 02/15/03........................... 77,156
250,000 New Jersey State Building Authority
6.00%, 06/15/07........................... 265,938
250,000 New Jersey State
Educational Facilities Authority
Richard Stockton College, Series C
5.10%, 07/01/23
Insured: AMBAC............................ 219,687
250,000 New Jersey State Higher Education
Assistance Authority
Student Loan Revenue, Series A
5.30%, 06/01/17
Insured: AMBAC............................ 230,000
370,000 New Jersey State
Housing and Mortgage
Finance Authority
Home Buyer, Series G
4.63%, 04/01/15
Insured: MBIA............................. 364,450
400,000 New Jersey State
Transportation Trust Fund Authority
Transportation System, Series A
5.00%, 06/15/06........................... 401,500
250,000 New Jersey State
Transportation Trust Fund Authority
Transportation System, Series A
5.50%, 06/15/09........................... 255,313
400,000 New Jersey State
Transportation Trust Fund Authority
Transportation System, Series A
5.63%, 06/15/12........................... 405,500
See Notes to Financial Statements.
19
<PAGE>
New Jersey Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
New Jersey (continued)
$ 50,000 Old Tappan Board of Education, GO
5.10%, 04/01/15
Insured: FGIC............................. $ 46,875
50,000 Plumstead Board of Education, GO
5.00%, 03/01/14
Insured: FGIC............................. 47,438
250,000 Somerset Raritan Valley
Sewer Revenue, Series A
5.25%, 07/01/12
Insured: MBIA............................. 246,562
250,000 Union City, GO
5.13%, 02/01/16........................... 233,125
250,000 Wall Township
School District, GO
4.35%, 07/15/05
Insured: FSA.............................. 245,938
---------------
7,563,139
---------------
Puerto Rico - 7.14%
60,000 Puerto Rico Commonwealth, GO
7.63%, 07/01/10
Pre-refunded 07/01/00..................... 62,711
250,000 Puerto Rico Commonwealth, GO
6.00%, 07/01/16
Insured: MBIA............................. 260,000
250,000 Puerto Rico Commonwealth
Infrastructure, Series A
Financing Authority Special Tax
5.13%, 07/01/09
Insured: AMBAC............................ 252,500
50,000 Puerto Rico
Electric Power Authority, Series AA
5.25%, 07/01/17
Insured: MBIA............................. 47,375
---------------
622,586
---------------
Total Municipal Securities................ 8,185,725
(Cost $8,592,223) ---------------
Shares Value
- ------ -----
INVESTMENT COMPANIES - 5.29%
27,667 Dreyfus Tax-Exempt Cash
Management Trust.......................... $ 27,667
434,124 Federated Tax-Free Obligations Fund....... 434,124
---------------
Total Investment Companies................ 461,791
(Cost $461,791) ---------------
Total Investments - 99.12%.................................. 8,647,516
(Cost $9,054,014) ---------------
Net Other Assets and Liabilities - 0.88%.................... 76,390
---------------
Net Assets - 100.00%........................................ $ 8,723,906
===============
- -----------------------------------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
MBIA Municipal Bond Insurance Association
See Notes to Financial Statements.
20
<PAGE>
New York Municipal Bond Fund
Portfolio of Investments
October 31, 1999
Par Value Value
- --------- ---------
MUNICIPAL SECURITIES - 98.56%
New York - 96.37%
$ 1,000,000 Albany County, GO
5.50%, 06/01/08
Insured: FGIC............................. $ 1,023,750
1,000,000 Albany County Airport Authority
5.38%, 12/15/17
Insured: FSA.............................. 928,750
100,000 Canandaigua City
School District, GO
6.50%, 06/01/10
Insured: AMBAC............................ 109,875
2,000,000 Long Island Power Authority
New York Electric System
Revenue, Series A
5.50%, 12/01/12
Insured: FSA.............................. 1,990,000
1,000,000 Metropolitan Transportation Authority
Dedicated Tax Fund, Series A
5.50%, 04/01/16
Insured: MBIA............................. 966,250
1,000,000 Metropolitan Transportation Authority
Dedicated Tax Fund, Series C-1
5.25%, 07/01/17
Insured: FGIC............................. 922,500
2,000,000 Metropolitan Transportation Authority
Transportation Facilities Revenue
Series A
6.00%, 07/01/19........................... 1,970,320
600,000 Monroe County
Public Improvement, GO
6.10%, 03/01/09
Pre-refunded 03/01/01
Insured: MBIA............................. 626,250
25,000 Monroe County
Public Improvement, GO
6.10%, 03/01/09
Unrefunded Balance
Insured: MBIA............................. 25,844
900,000 Monroe County
Public Improvement, GO
6.10%, 06/01/14
Pre-refunded 06/01/04
Insured: AMBAC............................ 968,625
1,000,000 Monroe County Water Authority
Series A
6.25%, 08/01/11........................... 1,043,750
1,000,000 Monroe Woodbury
Central School District, GO
5.63%, 05/15/18
Insured: MBIA............................. 970,000
1,500,000 Municipal Assistance Corporation
for New York City, Series L
6.00%, 07/01/08........................... 1,593,750
1,000,000 Municipal Assistance Corporation
for New York City, Series O
5.25%, 07/01/07........................... 1,018,750
500,000 New Castle Public Improvement, GO
5.88%, 09/15/09........................... 520,000
2,060,000 New York City
Series F, Capital Appreciation, GO
4.59%, 08/01/08 (A)
Insured: MBIA............................. 1,313,250
3,500,000 New York City
Series G, Capital Appreciation, GO
4.65%, 08/01/08 (A)
Insured: MBIA............................. 2,226,875
1,000,000 New York City
Series I, GO
6.00%, 04/15/09........................... 1,047,500
1,000,000 New York City Industrial
Development Agency, Civic Facility
Trinity Episcopal School Corp. Project
5.25%, 06/15/17
Insured: MBIA............................. 923,750
500,000 New York City MWFA
Water & Sewer System, Series A
6.10%, 06/15/06........................... 521,875
2,000,000 New York City MWFA
Water & Sewer System, Series A
5.13%, 06/15/15........................... 1,817,500
1,000,000 New York City MWFA
Water & Sewer System, Series A
6.00%, 06/15/17........................... 1,015,000
1,000,000 New York City MWFA
Water & Sewer System, Series A
5.75%, 06/15/18
Insured: AMBAC............................ 985,000
750,000 New York City MWFA
Water & Sewer System, Series B
5.75%, 06/15/13
Insured: MBIA............................. 757,088
1,000,000 New York City MWFA
Water & Sewer System, Series B
5.75%, 06/15/26
Insured: MBIA............................. 976,250
1,000,000 New York City MWFA
Water & Sewer System, Series B
5.25%, 06/15/29
Insured: FSA.............................. 880,000
2,750,000 New York City
Transitional Finance Authority
Revenue, Series C
5.00%, 05/01/26........................... 2,334,062
2,000,000 New York City Trust
Cultural Resources Revenue
American Museum of
Natural History, Series A
5.60%, 04/01/18
Insured: MBIA............................. 1,937,500
1,000,000 New York State, GO
6.13%, 11/15/10........................... 1,056,250
2,500,000 New York State, GO
5.25%, 09/15/13........................... 2,387,500
See Notes to Financial Statements.
21
<PAGE>
New York Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
New York (continued)
$ 3,000,000 New York State, GO
5.25%, 03/01/15........................... $ 2,790,000
2,000,000 New York State Dormitory Authority
Columbia University
5.00%, 07/01/18........................... 1,785,000
1,675,000 New York State Dormitory Authority
Fordham University
5.00%, 07/01/28
Insured: MBIA............................. 1,430,031
1,000,000 New York State Dormitory Authority
Ithaca College
5.00%, 07/01/21........................... 877,500
1,000,000 New York State Dormitory Authority
Lease Revenue Municipal Health
Facilities Improvement, Series 1
5.13%, 01/15/14
Insured: FSA.............................. 930,000
1,175,000 New York State Dormitory Authority
Mt. Sinai School of Medicine, Series B
5.70%, 07/01/11
Insured: MBIA............................. 1,208,781
500,000 New York State Dormitory Authority
New York University
6.25%, 07/01/09
Insured: FGIC............................. 520,625
1,000,000 New York State Dormitory Authority
New York University, Series A
6.00%, 07/01/17
Insured: MBIA............................. 1,032,500
1,000,000 New York State Dormitory Authority
Revenues Service Contract
Community Enhancement
4.00%, 04/01/00........................... 999,250
2,225,000 New York State Dormitory Authority
Rochester Institute of Technology
5.30%, 07/01/17
Insured: MBIA............................. 2,074,813
1,500,000 New York State Dormitory Authority
Rockefeller University
5.00%, 07/01/28........................... 1,280,625
1,000,000 New York State Dormitory Authority
State University Educational Facilities
Series B
5.25%, 05/15/12........................... 956,250
15,000 New York State Dormitory Authority
University of Rochester
6.50%, 07/01/09........................... 15,201
1,125,000 New York State Dormitory Authority
University of Rochester, Series A
5.00%, 07/01/27
Insured: MBIA............................. 964,687
100,000 New York State EFC, PCR
State Water, Series A
6.40%, 09/15/06........................... 106,625
500,000 New York State EFC, PCR
State Water, Series B
6.50%, 09/15/08........................... 531,875
100,000 New York State EFC, PCR
State Water, Series E
6.88%, 06/15/10
Pre-refunded 06/15/01..................... 106,000
1,000,000 New York State EFC, PCR
State Water, Series E
5.00%, 06/15/13
Insured: MBIA............................. 931,250
1,000,000 New York State EFC, PCR
State Water, Series F
5.25%, 06/15/12........................... 977,500
500,000 New York State Housing Finance
Agency, Multifamily Mortgage
Housing, Series A
6.95%, 08/15/12........................... 527,500
300,000 New York State Local
Assistance Corp., Series A
6.88%, 04/01/06
Pre-refunded 04/01/02..................... 322,500
1,500,000 New York State Local
Assistance Corp., Series E
6.00%, 04/01/14
Insured: GO of New York State
Local Assistance Corp..................... 1,535,625
800,000 New York State Medical Care
Facilities Finance Agency
Second Mortgage Program
Health Care Projects, Series B
6.35%, 11/01/14........................... 827,000
500,000 New York State Mortgage Agency
Homeowner Mortgage, Series 27
6.90%, 04/01/15........................... 523,125
3,000,000 New York State Mortgage Agency
Homeowner Mortgage, Series 67
5.70%, 10/01/17........................... 2,895,000
145,000 New York State Mortgage Agency
Revenue, 8th Series
6.88%, 04/01/17........................... 144,094
1,000,000 New York State Power Authority
Revenue, General Purpose, Series AA
6.38%, 01/01/12........................... 1,058,750
500,000 New York State Power Authority
Revenue, General Purpose, Series Z
6.63%, 01/01/12........................... 531,250
1,250,000 New York State Thruway Authority
Revenue, Series A
5.88%, 01/01/07........................... 1,307,812
500,000 Onondaga County, GO
5.88%, 02/15/10........................... 523,750
100,000 Orleans County, GO
6.50%, 09/15/08........................... 109,875
200,000 Port Authority of New York
and New Jersey
Consolidated Loan, Series 71
6.90%, 07/15/09........................... 207,000
500,000 Port Authority of New York
and New Jersey
Consolidated Loan, Series 78
6.50%, 04/15/11........................... 520,000
See Notes to Financial Statements.
22
<PAGE>
New York Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
New York (continued)
$ 1,000,000 Port Authority of New York
and New Jersey, JFK International
Air Terminal, Series 6, SP OB, AMT
6.00%, 12/01/07
Insured: MBIA............................. $ 1,065,000
545,000 Rensselaer County, GO
5.25%, 06/01/11
Insured: AMBAC............................ 538,188
1,315,000 Triborough Bridge and
Tunnel Authority, Revenue
General Purpose, Series A
5.13%, 01/02/22........................... 1,150,625
2,000,000 Triborough Bridge and
Tunnel Authority, Revenue
General Purpose, Series B
5.50%, 01/01/30........................... 1,842,500
500,000 Triborough Bridge and
Tunnel Authority, Revenue
General Purpose, Series X
6.00%, 01/01/06........................... 512,500
500,000 Triborough Bridge and
Tunnel Authority, Revenue
General Purpose, Series X
6.00%, 01/01/07........................... 511,875
750,000 Triborough Bridge and
Tunnel Authority, Revenue
General Purpose, Series X
6.00%, 01/01/08........................... 767,812
300,000 Triborough Bridge and
Tunnel Authority, Revenue
General Purpose, Series X
6.63%, 01/01/12........................... 329,250
750,000 Triborough Bridge and
Tunnel Authority, Revenue
General Purpose, Series Y
6.00%, 01/01/12........................... 782,813
80,000 Triborough Bridge and
Tunnel Authority, Revenue, SP OB
6.10%, 01/01/05
Pre-refunded 01/01/02
Insured: FGIC............................. 83,900
20,000 Triborough Bridge and
Tunnel Authority, Revenue, SP OB
6.10%, 01/01/05
Unrefunded Balance
Insured: FGIC............................. 20,925
50,000 Triborough Bridge and
Tunnel Authority, Revenue, SP OB
6.15%, 01/01/06
Insured: FGIC............................. 52,313
500,000 United Nations Development Corp.
Senior Lien, Series A
6.00%, 07/01/06
Pre-refunded 07/01/03..................... 533,750
1,000,000 United Nations Development Corp.
Senior Lien, Series A
6.00%, 07/01/12
Pre-refunded 07/01/03..................... 1,067,500
500,000 United Nations Development Corp.
Subordinated Lien, Series B
6.20%, 07/01/11
Pre-refunded 07/01/03..................... 536,875
---------------
75,205,434
---------------
Pennsylvania - 0.83%
2,210,000 Elizabeth Forward School District
Capital Appreciation, Series B, GO
5.68%, 09/01/20 (A)....................... 646,425
---------------
Puerto Rico - 1.36%
1,000,000 Puerto Rico Electric Power Authority
Series BB
6.00%, 07/01/12
Insured: MBIA............................. 1,061,250
---------------
Total Municipal Securities................ 76,913,109
(Cost $79,422,919) ---------------
Shares
- ------
INVESTMENT COMPANY - 1.37%
1,067,256 New York Federated
Municipal Cash Trust...................... 1,067,256
---------------
Total Investment Company.................. 1,067,256
(Cost $1,067,256) ---------------
Total Investments - 99.93%.................................. 77,980,365
(Cost $80,490,175) ---------------
Net Other Assets and Liabilities - 0.07%.................... 58,406
---------------
Net Assets - 100.00%........................................ $ 78,038,771
===============
- -----------------------------------------------------
(A) Zero Coupon Bond. Rate shown reflects effective yield to maturity at time
of purchase.
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax. Private activity obligations whose interest is
subject to Federal AMT for individuals.
EFC Environmental Facilities Corp.
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
MWFA Municipal Water Finance Authority
PCR Pollution Control Revenue
SP OB Special Obligation
See Notes to Financial Statements.
23
<PAGE>
Connecticut Municipal Bond Fund
Portfolio of Investments
October 31, 1999
Par Value Value
- --------- ---------
MUNICIPAL SECURITIES - 94.32%
California - 4.03%
$ 2,000,000 California State, GO
5.00%, 08/01/18........................... $ 1,797,500
---------------
Connecticut - 81.22%
250,000 Cheshire, GO
5.10%, 08/15/07........................... 252,500
885,000 Colchester, GO, Lot A
5.40%, 08/15/10
Insured: AMBAC............................ 898,275
250,000 Connecticut State, GO, Series A
5.10%, 11/15/04........................... 256,250
1,000,000 Connecticut State, GO, Series A
5.13%, 03/01/10........................... 995,000
400,000 Connecticut State, GO, Series B
5.40%, 03/15/08........................... 411,000
1,000,000 Connecticut State, GO, Series B
5.38%, 10/01/11........................... 1,007,500
500,000 Connecticut State, GO, Series C
5.50%, 08/15/05........................... 520,625
500,000 Connecticut State, GO, Series E
6.00%, 03/15/12........................... 528,125
400,000 Connecticut State Airport Revenue
Bradley International Airport
7.40%, 10/01/04
Insured: FGIC............................. 440,000
500,000 Connecticut State Airport Revenue
Bradley International Airport
7.65%, 10/01/12
Insured: FGIC............................. 556,875
500,000 Connecticut State Clean Water Fund
7.00%, 01/01/11........................... 525,000
200,000 Connecticut State Clean Water Fund
6.00%, 10/01/12........................... 210,750
500,000 Connecticut State HEFA
Backus (William W.) Hospital Issue
Series D
5.63%, 07/01/17
Insured: AMBAC............................ 489,375
750,000 Connecticut State HEFA
Greenwich Hospital Issue, Series A
5.30%, 07/01/08
Insured: MBIA............................. 759,375
250,000 Connecticut State HEFA
Hospital for Special Care Issue
Series B
5.38%, 07/01/17........................... 219,375
1,060,000 Connecticut State HEFA
Middlesex Hospital, Series H
5.00%, 07/01/12
Insured: MBIA............................. 1,009,650
375,000 Connecticut State HEFA
Newington Childrens Hospital
Series A
5.65%, 07/01/05
Insured: MBIA............................. 390,000
500,000 Connecticut State HEFA
Trinity College, Series F
5.50%, 07/01/21
Insured: MBIA............................. 478,125
1,000,000 Connecticut State HEFA
Yale-New Haven Hospital
Series F
7.10%, 07/01/25
Insured: MBIA............................. 1,040,440
200,000 Connecticut State HFA
Housing Mortgage Finance Program
Series A
5.40%, 05/15/04........................... 204,250
105,000 Connecticut State HFA
Housing Mortgage Finance Program
Series A
5.60%, 05/15/05........................... 107,494
125,000 Connecticut State HFA
Housing Mortgage Finance Program
Series A-1
5.85%, 11/15/16........................... 125,625
400,000 Connecticut State HFA
Housing Mortgage Finance Program
Series B
6.25%, 11/15/05........................... 421,500
100,000 Connecticut State HFA
Housing Mortgage Finance Program
Series B
6.20%, 05/15/12........................... 103,000
1,500,000 Connecticut State HFA
Housing Mortgage Finance Program
Series D-2
5.45%, 11/15/24........................... 1,380,000
415,000 Connecticut State HFA
Housing Mortgage Finance Program
Series F-1
5.60%, 05/15/14........................... 411,887
350,000 Connecticut State HFA
Housing Mortgage Finance Program
Series F-2
4.50%, 05/15/00........................... 350,616
775,000 Connecticut State Higher Education
Supplemental Loan Authority
Family Education Loan Program
Series A
5.63%, 11/15/07........................... 777,906
1,000,000 Connecticut State Resource
Recovery Authority
Series A
5.75%, 11/15/07........................... 1,045,000
150,000 Connecticut State, SP OB
Transportation Infrastructure, Series A
5.10%, 09/01/04........................... 153,000
950,000 Connecticut State, SP OB
Transportation Infrastructure, Series A
5.13%, 09/01/05........................... 965,437
700,000 Connecticut State, SP OB
Transportation Infrastructure, Series A
5.40%, 04/01/07........................... 715,750
See Notes to Financial Statements.
24
<PAGE>
Connecticut Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
Connecticut (continued)
$ 1,250,000 Connecticut State, SP OB
Transportation Infrastructure, Series A
5.25%, 09/01/07........................... $ 1,271,875
1,500,000 Connecticut State, SP OB
Transportation Infrastructure, Series A
5.38%, 09/01/08........................... 1,531,875
1,750,000 Connecticut State, SP OB
Transportation Infrastructure, Series A
5.50%, 10/01/12........................... 1,769,687
400,000 Connecticut State, SP OB
Transportation Infrastructure, Series B
6.13%, 09/01/12........................... 422,500
200,000 Danbury, GO
5.63%, 02/01/13........................... 203,250
250,000 East Hampton, GO
5.10%, 06/15/05
Insured: MBIA............................. 252,812
1,100,000 Fairfield, GO
5.00%, 01/01/18........................... 990,000
500,000 Hamden, GO
5.50%, 08/15/14
Insured: MBIA............................. 502,500
250,000 Hartford County
Metropolitan District, GO
6.70%, 10/01/09........................... 281,875
300,000 Meriden, GO
5.75%, 10/15/04
Insured: AMBAC............................ 315,375
580,000 Monroe, GO
5.63%, 04/15/14
Insured: FGIC............................. 586,525
370,000 Montville, GO
5.30%, 12/01/09........................... 374,625
500,000 New Canaan, GO
4.75%, 02/01/18........................... 433,125
1,500,000 New Haven, GO
5.38%, 02/15/11
Insured: FGIC............................. 1,503,750
1,000,000 New Milford, GO
5.00%, 05/15/15........................... 921,250
250,000 New Milford, GO
5.50%, 08/01/08........................... 257,812
100,000 New Milford, GO
5.80%, 10/01/01........................... 103,000
350,000 Norwalk, GO
5.00%, 01/15/05........................... 353,938
200,000 Norwalk, GO
5.00%, 01/15/06........................... 201,500
500,000 Norwich, GO
5.63%, 09/15/07........................... 519,375
330,000 Regional School District No. 5, GO
5.05%, 05/15/04........................... 333,300
135,000 Regional School District No. 5, GO
5.15%, 05/15/05........................... 136,181
225,000 South Central Regional
Water Authority
Water System, Series 11
5.75%, 08/01/12
Insured: FGIC............................. 230,344
175,000 South Central Regional
Water Authority
Water System, Series 12
5.13%, 08/01/07
Insured: FGIC............................. 176,313
1,300,000 Torrington, GO
5.13%, 09/15/12
Insured: FGIC............................. 1,278,875
100,000 Trumbull, GO
6.00%, 05/15/04........................... 105,750
500,000 University of Connecticut, GO
Series A
5.25%, 06/01/15
Insured: MBIA............................. 475,625
100,000 West Hartford, GO
6.00%, 05/01/07........................... 107,125
250,000 West Haven, GO, Series B
5.40%, 06/01/09........................... 253,438
1,890,000 Westport, GO
5.00%, 07/15/18........................... 1,703,363
855,000 Wilton, GO
4.85%, 07/15/08........................... 846,450
---------------
36,193,118
---------------
Nevada - 2.27%
1,000,000 Clark County, School District
Series A
5.00%, 06/15/04
Insured: FGIC............................. 1,011,250
---------------
Puerto Rico - 6.80%
1,000,000 Puerto Rico Commonwealth, GO
6.00%, 07/01/16
Insured: MBIA............................. 1,040,000
1,000,000 Puerto Rico Commonwealth, GO
Public Improvement
5.00%, 07/01/05........................... 1,010,000
1,000,000 Puerto Rico Municipal
Finance Agency, Series A
5.50%, 07/01/17
Insured: FSA.............................. 977,500
---------------
3,027,500
---------------
Total Municipal Securities................ 42,029,368
(Cost $42,839,957) ---------------
See Notes to Financial Statements.
25
<PAGE>
Connecticut Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Shares Value
- ------ -----
INVESTMENT COMPANIES - 4.98%
973,043 Connecticut Federated
Municipal Cash Trust...................... $ 973,043
1,247,100 Dreyfus Tax-Exempt Cash
Management Fund........................... 1,247,100
---------------
Total Investment Companies................ 2,220,143
(Cost $2,220,143) ---------------
Total Investments - 99.30%.................................. 44,249,511
(Cost $45,060,100) ---------------
Net Other Assets and Liabilities - 0.70%.................... 312,964
---------------
Net Assets - 100.00%........................................ $ 44,562,475
===============
- -----------------------------------------
AMBAC American Municipal Bond Assurance Corp.
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
HEFA Health and Educational Facilities Authority
HFA Housing Finance Authority
MBIA Municipal Bond Insurance Association
SP OB Special Obligation
See Notes to Financial Statements.
26
<PAGE>
Massachusetts Municipal Bond Fund
Portfolio of Investments
October 31, 1999
Par Value Value
- --------- ---------
MUNICIPAL SECURITIES - 97.78%
Indiana - 1.36%
$ 1,000,000 Princeton, PCR
PSI Energy, Inc. Project
3.50%, 03/01/19 (A)
LOC: Canadian Imperial Bank............... $ 1,000,000
---------------
Massachusetts - 90.06%
700,000 Andover, GO
5.00%, 12/01/10........................... 688,625
300,000 Attleboro, GO
5.20%, 07/01/02
Insured: AMBAC............................ 305,625
250,000 Boston, GO
5.25%, 10/01/05
Insured: MBIA............................. 255,625
360,000 Boston, GO, Series A
5.45%, 02/01/07
Insured: AMBAC............................ 367,650
225,000 Boston, GO, Series A
5.55%, 02/01/08
Insured: AMBAC............................ 229,781
200,000 Boston Water and Sewer Commission
General Purpose, Senior Series A
5.50%, 11/01/01
Insured: FSA.............................. 204,750
230,000 Boston Water and Sewer Commission
General Purpose, Senior Series A
7.00%, 11/01/18
Pre-refunded 11/01/01
Insured: FGIC............................. 246,675
100,000 Brookline, GO
5.60%, 09/01/10........................... 102,625
250,000 Deerfield, GO
5.60%, 06/15/02........................... 256,875
250,000 Franklin, GO
5.50%, 11/15/02
Insured: MBIA............................. 257,500
100,000 Kingston, GO
5.70%, 08/01/07........................... 103,625
250,000 Lowell, GO
6.05%, 04/01/11
Insured: FSA.............................. 262,812
100,000 Lynn Water and Sewer Commission
5.30%, 12/01/06
Insured: FGIC............................. 102,000
2,000,000 Massachusetts Bay Transportation
Authority, Series A
5.40%, 03/01/08........................... 2,040,000
130,000 Massachusetts Bay Transportation
Authority, Series A
6.00%, 03/01/12........................... 136,988
200,000 Massachusetts Bay Transportation
Authority, Series A
5.75%, 03/01/22........................... 206,000
1,000,000 Massachusetts Bay Transportation
Authority, Series D
5.00%, 03/01/11........................... 1,011,250
750,000 Massachusetts Educational
Financing Authority
Issue G, Series A
5.15%, 12/01/15
Insured: MBIA............................. 690,938
370,000 Massachusetts State, GO
Federal Assisted Housing
6.00%, 02/01/08........................... 384,800
250,000 Massachusetts State, GO, Series A
6.25%, 07/01/02........................... 261,563
250,000 Massachusetts State, GO, Series A
6.25%, 07/01/04........................... 266,563
1,000,000 Massachusetts State, GO, Series A
5.50%, 11/01/06........................... 1,026,250
750,000 Massachusetts State, GO, Series A
5.25%, 02/01/08........................... 754,688
200,000 Massachusetts State, GO, Series B
5.30%, 11/01/05........................... 205,250
100,000 Massachusetts State, GO, Series B
5.50%, 11/01/07........................... 103,375
4,000,000 Massachusetts State Capital
Appreciation, Series A
Federal Highway Note
5.15%, 06/15/15 (B)....................... 1,590,000
250,000 Massachusetts State
Consolidated Loan, GO, Series A
5.75%, 02/01/15
Insured: MBIA............................. 263,750
250,000 Massachusetts State
Consolidated Loan, GO, Series B
5.10%, 07/01/03........................... 254,688
1,300,000 Massachusetts State
Consolidated Loan, GO, Series C
5.63%, 08/01/14
Insured: MBIA............................. 1,368,250
1,000,000 Massachusetts State
Consolidated Loan, GO, Series C
5.02%, 08/01/18 (B)....................... 323,750
100,000 Massachusetts State
Convention Center Authority
Boston Common Parking Garage
Series A
5.35%, 09/01/06........................... 102,250
100,000 Massachusetts State
Convention Center Authority
Boston Common Parking Garage
Series A
5.40%, 09/01/07........................... 102,000
800,000 Massachusetts State
Development Finance Agency
Regis College
5.00%, 10/01/08........................... 762,000
1,000,000 Massachusetts State Grant
Anticipation Notes, Series A
5.25%, 12/15/12........................... 975,000
See Notes to Financial Statements.
27
<PAGE>
Massachusetts Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
Massachusetts (continued)
$ 1,000,000 Massachusetts State Grant
Anticipation Notes, Series A
5.50%, 06/15/14........................... $ 978,750
1,000,000 Massachusetts State HEFA
Amherst College, Series G
5.00%, 11/01/18........................... 878,750
2,000,000 Massachusetts State HEFA
Amherst College, Series G
5.38%, 11/01/20........................... 1,867,500
400,000 Massachusetts State HEFA
Beth Israel Hospital, Series G
5.70%, 07/01/05
Insured: AMBAC............................ 414,500
2,000,000 Massachusetts State HEFA
Boston College, Series L
5.00%, 06/01/26........................... 1,687,500
1,000,000 Massachusetts State HEFA
Caregroup, Series A
5.50%, 07/01/08........................... 1,023,750
1,000,000 Massachusetts State HEFA
Harvard University, Series P
5.63%, 11/01/26........................... 965,000
1,000,000 Massachusetts State HEFA
Harvard University, Series P
5.38%, 11/01/32........................... 912,500
100,000 Massachusetts State HEFA
McLean Hospital Issue, Series C
6.63%, 07/01/15
Insured: FGIC............................. 107,375
250,000 Massachusetts State HEFA
Medical Center of Central
Massachusetts, Series B
6.00%, 07/01/02
Insured: AMBAC............................ 259,375
1,435,000 Massachusetts State HEFA
Partners Healthcare System
Series A
5.38%, 07/01/17
Insured: MBIA............................. 1,345,312
100,000 Massachusetts State HEFA
South Shore Hospital, Series E
5.40%, 07/01/07
Insured: MBIA............................. 101,375
325,000 Massachusetts State HEFA
South Shore Hospital, Series E
5.50%, 07/01/13
Insured: MBIA............................. 321,750
500,000 Massachusetts State HEFA
Williams College, Series D
5.40%, 07/01/05........................... 520,625
1,750,000 Massachusetts State HEFA
Williams College, Series F
5.50%, 07/01/26........................... 1,638,437
150,000 Massachusetts State
Housing Finance Agency
Single Family, Series 41
5.25%, 06/01/01........................... 151,875
1,250,000 Massachusetts State IFA
Belmont Hill School
5.63%, 09/01/20........................... 1,171,875
400,000 Massachusetts State IFA
Brooks School
5.95%, 07/01/23........................... 425,500
1,000,000 Massachusetts State IFA
Combined Jewish Philanthropies
Series A
6.38%, 02/01/15
Insured: AMBAC............................ 1,042,500
1,000,000 Massachusetts State IFA
Concord Academy
5.50%, 09/01/27........................... 882,500
1,000,000 Massachusetts State IFA
Groton School, Series A
5.00%, 03/01/28........................... 847,500
250,000 Massachusetts State IFA
Lesley College Project, Series A
6.00%, 07/01/10
Insured: Connie Lee....................... 262,500
300,000 Massachusetts State IFA
Milton Academy, Series B
5.30%, 09/01/08
Insured: MBIA............................. 302,625
950,000 Massachusetts State IFA
Nantucket Electric Company
Series A, AMT
5.88%, 07/01/17
Insured: AMBAC............................ 938,125
500,000 Massachusetts State IFA
Park School
5.90%, 09/01/26........................... 482,500
2,000,000 Massachusetts State IFA
Phillips Academy Issue
5.38%, 09/01/23........................... 1,860,000
1,210,000 Massachusetts State IFA
Trustees Deerfield Academy
5.00%, 10/01/23........................... 1,051,187
1,830,000 Massachusetts State IFA
Tufts University, Series H
5.50%, 02/15/13
Insured: MBIA............................. 1,825,425
1,200,000 Massachusetts State IFA
Wentworth Institute of Technology
5.65%, 10/01/18........................... 1,104,000
1,300,000 Massachusetts State IFA
Worcester Polytechnic Institute
Series 2
5.25%, 09/01/14
Insured: MBIA............................. 1,238,250
610,000 Massachusetts State Port Authority
5.63%, 07/01/12........................... 616,100
1,000,000 Massachusetts State Port Authority
Series A
5.75%, 07/01/12........................... 1,017,500
See Notes to Financial Statements.
28
<PAGE>
Massachusetts Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
Massachusetts (continued)
$ 250,000 Massachusetts State Port Authority
Series B
5.30%, 07/01/01........................... $ 253,750
1,000,000 Massachusetts State Port Authority
Series C
5.13%, 07/01/16........................... 915,000
350,000 Massachusetts State, SP OB
and Revenue, Series A
5.80%, 06/01/00
Insured: AMBAC............................ 353,850
300,000 Massachusetts State, SP OB
and Revenue, Series A
7.00%, 06/01/02........................... 318,375
1,000,000 Massachusetts State, SP OB
and Revenue, Series A
5.50%, 06/01/13........................... 1,001,250
200,000 Massachusetts State, SP OB
and Revenue, Series A
6.00%, 06/01/13
Insured: AMBAC............................ 207,500
250,000 Massachusetts State, SP OB
and Revenue, Series A
5.80%, 06/01/14
Pre-refunded 06/01/04..................... 263,438
250,000 Massachusetts State
Turnpike Authority, Series A
5.00%, 01/01/13........................... 240,625
2,500,000 Massachusetts State
Turnpike Authority, Series A
Metropolitan Highway Systems
4.50%, 01/01/04
Insured: AMBAC............................ 2,478,125
1,000,000 Massachusetts State
Turnpike Authority, Series A
Metropolitan Highway Systems
5.13%, 01/01/09
Insured: AMBAC............................ 995,000
1,500,000 Massachusetts State
Turnpike Authority, Series A
Metropolitan Highway Systems
5.00%, 01/01/39
Insured: AMBAC............................ 1,245,000
250,000 Massachusetts State
Water Pollution Abatement Trust
MWRA Loan Program, Series A
5.40%, 08/01/11........................... 250,312
250,000 Massachusetts State
Water Pollution Abatement Trust
Pooled Loan Program, Series 1
5.00%, 02/01/02........................... 254,063
2,000,000 Massachusetts State
Water Pollution Abatement Trust
Pooled Loan Program, Series 5
5.75%, 08/01/16........................... 2,002,500
300,000 Massachusetts State WRA
Series A
6.30%, 12/01/01........................... 312,000
100,000 Massachusetts State WRA
Series A
6.00%, 04/01/20........................... 100,862
190,000 Massachusetts State WRA
Series A
6.50%, 07/15/21
Pre-refunded 07/15/02..................... 203,537
300,000 Massachusetts State WRA
Series B
5.88%, 11/01/04........................... 314,625
1,165,000 Massachusetts State WRA
Series B
5.50%, 08/01/15
Insured: FSA.............................. 1,130,050
1,000,000 Massachusetts State WRA
Series C
5.25%, 12/01/06
Insured: FGIC............................. 1,020,000
1,000,000 Methuen, GO
5.63%, 11/15/14
Insured: FSA.............................. 1,005,000
220,000 Nantucket Island Land Bank
GO and Revenue, Series E
7.25%, 07/01/19........................... 234,575
450,000 New England Education
Loan Marketing Corp.
Massachusetts Student
Loan Revenue, Issue A
5.80%, 03/01/02........................... 461,813
200,000 Northampton, GO
5.30%, 09/01/10
Insured: AMBAC............................ 200,500
1,500,000 Plymouth County
Certificates of Participation
Correctional Facility Project
5.00%, 04/01/22
Insured: AMBAC............................ 1,293,750
150,000 Salem, GO
5.80%, 07/15/06
Insured: AMBAC............................ 155,812
100,000 Salem, GO
5.90%, 07/15/07
Insured: AMBAC............................ 104,000
200,000 Sandwich, GO
5.40%, 11/01/07
Insured: AMBAC............................ 203,750
1,000,000 Southeastern Massachusetts
University Building Authority
Project , Series A
5.75%, 05/01/16
Insured: AMBAC............................ 990,000
1,500,000 Springfield Municipal
Purpose Loan, GO
5.00%, 09/01/15........................... 1,380,000
400,000 Taunton, GO
8.00%, 02/01/01........................... 417,500
See Notes to Financial Statements.
29
<PAGE>
Massachusetts Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
Massachusetts (continued)
$ 250,000 University of Lowell
Building Authority
Fifth Series A
6.75%, 11/01/03
Insured: AMBAC............................ $ 269,687
200,000 University of Massachusetts
Building Authority, Series A
5.50%, 05/01/03
Insured: MBIA............................. 206,000
100,000 Woods Hole, Martha's
Vineyard and Nantucket
Steamship Bonds, Series B
6.00%, 03/01/02........................... 103,625
1,000,000 Worcester, Series A
5.00%, 07/01/14
Insured: FSA.............................. 932,500
---------------
66,274,356
---------------
Puerto Rico - 5.53%
500,000 Puerto Rico Commonwealth
Aqueduct and Sewer Authority
6.00%, 07/01/09
Insured: Commonwealth Guaranteed.......... 528,750
500,000 Puerto Rico Commonwealth
Infrastructure Financing Authority
Special Tax Revenue, Series A
5.13%, 07/01/09........................... 505,000
1,000,000 Puerto Rico Commonwealth
Public Improvement, GO
5.50%, 07/01/13........................... 1,000,000
1,000,000 Puerto Rico Electric Power
Authority, Series BB
6.00%, 07/01/12
Insured: MBIA............................. 1,061,250
1,000,000 Puerto Rico Municipal
Finance Agency, Series A
5.50%, 07/01/17
Insured: FSA.............................. 977,500
---------------
4,072,500
---------------
Texas - 0.83%
1,000,000 Lubbock Independent School
District, GO, Capital Appreciation
6.01%, 02/15/09 (B)....................... 611,250
---------------
Total Municipal Securities................ 71,958,106
(Cost $75,072,832) ---------------
Shares Value
- ------ -----
INVESTMENT COMPANIES - 0.87%
46,024 Dreyfus Tax-Exempt Cash
Management Fund........................... 46,024
598,723 Massachusetts Federated
Municipal Cash Trust...................... 598,723
---------------
Total Investment Companies................ 644,747
(Cost $644,747) ---------------
Total Investments - 98.65%.................................. 72,602,853
(Cost $75,717,579) ---------------
Net Other Assets and Liabilities - 1.35%.................... 990,250
---------------
Net Assets - 100.00%........................................ $ 73,593,103
===============
- -----------------------------------------------
(A) Variable rate bond. Rate shown reflects rate in effect at October
31, 1999.
(B) Zero Coupon Bond. Rate shown reflects effective yield to maturity at
time of purchase.
AMBAC American Municipal Bond Assurance Corp.
AMT Alternative Minimum Tax. Private activity obligations whose interest
is subject to Federal AMT for individuals.
Connie Lee College Construction Loan Association
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
HEFA Health and Educational Facilities Authority
IFA Industrial Finance Agency
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SP OB Special Obligation
WRA Water Resource Authority
See Notes to Financial Statements.
30
<PAGE>
Rhode Island Municipal Bond Fund
Portfolio of Investments
October 31, 1999
Par Value Value
- --------- ---------
MUNICIPAL SECURITIES - 95.20%
Puerto Rico - 12.26%
$ 250,000 Puerto Rico Commonwealth, GO
6.00%, 07/01/16
Insured: MBIA............................. $ 260,000
500,000 Puerto Rico Commonwealth, GO
Public Improvement
5.50%, 07/01/12........................... 505,000
500,000 Puerto Rico Commonwealth
Special Tax Revenue, Series A
Infrastructure Finance Authority
5.00%, 07/01/16
Insured: AMBAC............................ 461,250
500,000 Puerto Rico Electric Power Authority
Revenue, Series EE
5.25%, 07/01/15
Insured: MBIA............................. 480,625
400,000 Puerto Rico Municipal
Finance Agency, Series A
6.00%, 07/01/14
Insured: FSA.............................. 416,000
315,000 Puerto Rico Municipal
Finance Agency, Series A
5.50%, 07/01/17
Insured: FSA.............................. 307,912
---------------
2,430,787
---------------
Rhode Island - 79.14%
500,000 Bristol County Water Authority
Revenue, General, Series A
5.00%, 07/01/16
Insured: MBIA............................. 447,500
200,000 Burrillville, GO
5.85%, 05/01/14
Insured: FGIC............................. 207,750
500,000 Convention Center Authority, Series A
6.38%, 05/15/23
Insured: MBIA............................. 525,000
500,000 Lincoln, GO
5.50%, 08/15/10
Insured: MBIA............................. 507,500
300,000 Pawtucket, GO
5.63%, 04/15/07
Insured: FGIC............................. 310,875
400,000 Pawtucket, GO
5.75%, 04/15/11
Insured: FGIC............................. 411,000
500,000 Providence, GO
5.70%, 01/15/06
Insured: MBIA............................. 517,500
500,000 Providence, GO
5.45%, 01/15/10
Insured: FSA.............................. 503,750
500,000 Rhode Island Clean Water
Protection Finance Agency
PCR, Series A
5.25%, 10/01/16
Insured: AMBAC............................ 463,125
150,000 Rhode Island Clean Water
Protection Finance Agency
Safe Drinking Water
Providence, Series A
6.20%, 01/01/06
Insured: AMBAC............................ 159,000
100,000 Rhode Island Clean Water
Protection Finance Agency
Safe Drinking Water
Providence, Series A
6.70%, 01/01/15
Insured: AMBAC............................ 106,875
250,000 Rhode Island Clean Water
Protection Finance Agency
Wastewater Treatment
System, Cranston
5.80%, 09/01/22
Insured: MBIA............................. 242,187
500,000 Rhode Island Depositors
Economic Protection Corp.
SP OB, Series A
5.75%, 08/01/21........................... 496,875
250,000 Rhode Island Depositors
Economic Protection Corp.
SP OB, Series B
5.25%, 08/01/21
Insured: MBIA............................. 247,187
200,000 Rhode Island State, GO, Series A
6.10%, 06/15/03
Insured: FGIC............................. 210,250
150,000 Rhode Island State, GO, Series A
6.25%, 06/15/07
Unrefunded
Insured: FGIC............................. 158,063
250,000 Rhode Island State EDC
Airport, Series B
5.25%, 07/01/11
Insured: FSA.............................. 245,625
500,000 Rhode Island State EDC
Airport, Series B
5.00%, 07/01/18
Insured: FSA.............................. 436,250
250,000 Rhode Island State EDC
Airport, Series B
5.00%, 07/01/23
Insured: FSA.............................. 214,063
750,000 Rhode Island State EDC
University of Rhode Island
Steam Generation Facility Project
5.00%, 11/01/19
Insured: FSA.............................. 653,438
See Notes to Financial Statements.
31
<PAGE>
Rhode Island Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Par Value Value
- --------- ---------
Rhode Island (continued)
$ 500,000 Rhode Island State HEBC
Higher Education Facility
Brown University
6.00%, 09/01/20........................... $ 507,500
1,000,000 Rhode Island State HEBC
Higher Education Facility
Brown University
5.00%, 09/01/23........................... 858,750
275,000 Rhode Island State HEBC
Higher Education Facility
Bryant College, SP OB
6.50%, 06/01/05
Insured: MBIA............................. 290,813
475,000 Rhode Island State HEBC
Higher Education Facility
New England Institute
6.00%, 03/01/15
Insured: Connie Lee....................... 482,719
300,000 Rhode Island State HEBC
Higher Education Facility
Providence College
5.60%, 11/01/09
Insured: MBIA............................. 304,500
500,000 Rhode Island State HEBC
Higher Education Facility
Rhode Island School of Design
5.63%, 06/01/16
Insured: MBIA............................. 490,625
325,000 Rhode Island State HEBC
Higher Education Facility
Roger Williams
6.50%, 11/15/24
Insured: Connie Lee....................... 349,375
260,000 Rhode Island State HEBC
Higher Education Facility
Salve Regina
6.25%, 03/15/13
Insured: Connie Lee....................... 270,725
175,000 Rhode Island State HEBC
Higher Education Facility
Unrefunded
6.50%, 11/15/24
Insured: Connie Lee....................... 185,063
500,000 Rhode Island State HEBC
Miriam Hospital
Series B
6.60%, 04/01/19........................... 539,375
300,000 Rhode Island State HEBC
Saint Antoine
6.75%, 11/15/18
LOC: Allied Irish Banks NY................ 328,500
300,000 Rhode Island State HMFC
Homeownership Opportunity
Series 17-A
6.25%, 04/01/17........................... 303,375
500,000 Rhode Island State HMFC
Homeownership Opportunity
Series 19-A
5.70%, 04/01/15........................... 488,125
500,000 Rhode Island State HMFC
Homeownership Opportunity
Series 22-A
5.55%, 04/01/17........................... 476,875
500,000 Rhode Island State HMFC
Homeownership Opportunity
Series 29-A
5.05%, 10/01/15
Insured: FHA.............................. 452,500
500,000 Rhode Island State HMFC
Multifamily Housing
Series A
5.60%, 07/01/10
Insured: AMBAC............................ 505,000
500,000 Rhode Island State HMFC
Multifamily Housing
Series A
6.15%, 07/01/17
Insured: AMBAC............................ 509,375
250,000 Rhode Island State HMFC
Rental Housing Program
Series A
5.65%, 10/01/07........................... 251,562
500,000 Rhode Island State
Industrial Facilities Corp., Revenue
Marine Terminal, Mobil Oil Refining
6.00%, 11/01/14........................... 527,500
100,000 South Kingstown, GO, Series B
5.50%, 06/15/10
Insured: FSA.............................. 101,625
140,000 Westerly, GO
6.00%, 09/15/14
Insured: AMBAC............................ 146,650
300,000 Woonsocket, GO
4.75%, 12/15/16
Insured: FGIC............................. 262,125
---------------
15,696,470
---------------
Texas - 1.39%
450,000 Lubbock Independent
School District, GO
Capital Appreciation
6.10%, 02/15/09 (A)....................... 275,062
---------------
Washington - 2.41%
1,000,000 Seattle, GO, Series E
4.85%, 12/15/12 (A)....................... 478,750
---------------
Total Municipal Securities................ 18,881,069
(Cost $19,344,320) ---------------
See Notes to Financial Statements.
32
<PAGE>
Rhode Island Municipal Bond Fund
Portfolio of Investments (continued)
October 31, 1999
Shares Value
- ------ -----
INVESTMENT COMPANY - 1.36%
270,234 Federated Tax-Free Obligations Fund....... $ 270,234
---------------
Total Investment Company.................. 270,234
(Cost $270,234) ---------------
Total Investments - 96.56%.................................. 19,151,303
(Cost $19,614,554) ---------------
Net Other Assets and Liabilities - 3.44%.................... 681,961
---------------
Net Assets - 100.00%........................................ $ 19,833,264
===============
- ------------------------------------------
(A) Zero Coupon Bond. Rate shown reflects effective yield to maturity at
time of purchase.
AMBAC American Municipal Bond Assurance Corp.
Connie Lee College Construction Loan Association
EDC Economic Development Corp.
FGIC Federal Guaranty Insurance Corp.
FHA Federal Housing Authority
FSA Financial Security Assurance Company
GO General Obligation
HEBC Health and Educational Building Corp.
HMFC Housing and Mortgage Finance Corp.
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Pollution Control Revenue
SP OB Special Obligation
See Notes to Financial Statements.
33
<PAGE>
Galaxy Tax-Exempt Bond Funds
Statements of Assets and Liabilities
October 31, 1999
<TABLE>
<CAPTION>
New Jersey New York
Tax-Exempt Municipal Municipal
Bond Fund Bond Fund Bond Fund
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at cost ................................................. $ 171,997,973 $ 9,054,014 $ 80,490,175
Net unrealized (depreciation) ....................................... (4,913,395) (406,498) (2,509,810)
------------- ------------- -------------
Total investments at value .......................................... 167,084,578 8,647,516 77,980,365
Cash ................................................................. -- -- --
Receivable for investments sold ...................................... -- -- 1,023,830
Receivable for shares sold ........................................... 2,231,443 2,746 172,569
Interest and dividend receivables .................................... 2,641,911 116,249 1,194,980
Deferred organizational expense (Note 2) ............................. -- 11,628 --
------------- ------------- -------------
Total Assets ........................................................ 171,957,932 8,778,139 80,371,744
------------- ------------- -------------
LIABILITIES:
Dividends payable .................................................... 649,241 29,808 299,836
Payable for investments purchased .................................... -- -- 1,957,740
Payable to Custodian ................................................. -- 6,524 --
Payable for shares repurchased ....................................... 86,047 -- --
Advisory fee payable (Note 3) ........................................ 78,696 1,831 37,083
Payable to Fleet affiliates (Note 3) ................................. 4,945 113 7,870
Payable to Administrator (Note 3) .................................... 26,187 3,654 14,206
Trustees' fees and expenses payable (Note 3) ......................... 5,304 137 2,612
Accrued expenses and other payables .................................. 22,016 12,166 13,626
------------- ------------- -------------
Total Liabilities ................................................... 872,436 54,233 2,332,973
------------- ------------- -------------
NET ASSETS ............................................................. $ 171,085,496 $ 8,723,906 $ 78,038,771
============= ============= =============
NET ASSETS consist of:
Par value (Note 5) ................................................... $ 16,558 $ 912 $ 7,381
Paid-in capital in excess of par value ............................... 176,087,004 9,169,158 80,664,747
Undistributed (overdistributed) net investment income (loss) ......... (26,014) 5,370 162,527
Accumulated net realized (loss) on
investments sold .................................................... (78,657) (45,036) (286,074)
Net unrealized (depreciation) of investments ......................... (4,913,395) (406,498) (2,509,810)
------------- ------------- -------------
TOTAL NET ASSETS ....................................................... $ 171,085,496 $ 8,723,906 $ 78,038,771
============= ============= =============
Retail A Shares:
Net Assets ........................................................... $ 25,704,197 $ 1,301,526 $ 41,343,124
Shares of beneficial interest outstanding ............................ 2,487,639 136,115 3,910,140
NET ASSET VALUE and redemption price per share ...................... $ 10.33 $ 9.56 $ 10.57
Sales charge - 3.75% of offering price ............................... 0.40 0.37 0.41
------------- ------------- -------------
Maximum offering price per share ..................................... $ 10.73 $ 9.93 $ 10.98
============= ============= =============
Retail B Shares:
Net Assets ........................................................... $ 3,382,122 N/A N/A
Shares of beneficial interest outstanding ............................ 327,344 N/A N/A
------------- ------------- -------------
NET ASSET VALUE and offering price per share* ........................ $ 10.33 N/A N/A
============= ============= =============
Trust Shares:
Net Assets ........................................................... $ 141,999,177 $ 7,422,380 $ 36,695,647
Shares of beneficial interest outstanding ............................ 13,742,567 776,228 3,470,624
------------- ------------- -------------
NET ASSET VALUE, offering and
redemption price per share .......................................... $ 10.33 $ 9.56 $ 10.57
============= ============= =============
</TABLE>
- ---------------------------------------
* Redemption price per share is equal to the Net Asset Value per share less
any applicable contingent deferred sales charge.
(1) As of October 31, 1999, the Rhode Island Municipal Bond Fund had not
issued Trust shares.
See Notes to Financial Statements.
34
<PAGE>
Connecticut Massachusetts Rhode Island
Municipal Municipal Municipal
Bond Fund Bond Fund Bond Fund(1)
- ------------ ------------ ------------
$ 45,060,100 $ 75,717,579 $ 19,614,554
(810,589) (3,114,726) (463,251)
- ------------ ------------ ------------
44,249,511 72,602,853 19,151,303
-- 11,664 5,418
-- -- 446,626
102,479 415,535 34,486
627,038 1,151,543 297,353
-- -- --
- ------------ ------------ ------------
44,979,028 74,181,595 19,935,186
- ------------ ------------ ------------
164,069 274,533 76,995
-- -- --
50 -- --
204,683 246,849 --
13,107 22,243 6,258
3,383 4,935 --
13,764 21,973 4,649
1,695 2,811 976
15,802 15,148 13,044
- ------------ ------------ ------------
416,553 588,492 101,922
- ------------ ------------ ------------
$ 44,562,475 $ 73,593,103 $ 19,833,264
============ ============ ============
$ 4,416 $ 7,539 $ 1,914
46,205,352 77,159,655 20,381,868
(14,614) (21,727) (11,177)
(822,090) (437,638) (76,090)
(810,589) (3,114,726) (463,251)
- ------------ ------------ ------------
$ 44,562,475 $ 73,593,103 $ 19,833,264
============ ============ ============
$ 26,714,579 $ 39,696,320 $ 19,833,264
2,647,709 4,066,820 1,914,494
$ 10.09 $ 9.76 $ 10.36
0.39 0.38 0.40
- ------------ ------------ ------------
$ 10.48 $ 10.14 $ 10.76
============ ============ ============
N/A N/A N/A
N/A N/A N/A
- ------------ ------------ ------------
N/A N/A N/A
============ ============ ============
$ 17,847,896 $ 33,896,783 $ --
1,768,782 3,472,545 --
- ------------ ------------ ------------
$ 10.09 $ 9.76 $ --
============ ============ ============
35
<PAGE>
Galaxy Tax-Exempt Bond Funds
Statements of Operations
For the year ended October 31, 1999
<TABLE>
<CAPTION>
New Jersey New York
Tax-Exempt Municipal Municipal
Bond Fund Bond Fund Bond Fund
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2) ................................................ $ 8,676,046 $ 414,608 $ 4,406,123
Dividends (Note 2) ............................................... 60,743 10,070 23,574
------------ ------------ ------------
Total investment income ......................................... 8,736,789 424,678 4,429,697
------------ ------------ ------------
EXPENSES:
Investment advisory fee (Note 3) ................................. 1,268,793 68,147 631,274
Administration fee (Note 3) ...................................... 127,246 6,887 63,326
Custodian fee .................................................... 13,268 13,613 9,437
Fund accounting fee (Note 3) ..................................... 59,955 40,268 53,937
Professional fees (Note 3) ....................................... 20,495 12,053 16,866
Transfer agent fee (Note 3) ...................................... 22,366 5,286 23,442
Shareholder servicing and 12b-1 fees (Note 3) .................... 59,091 960 66,562
Trustees' fees and expenses (Note 3) ............................. 3,461 180 2,357
Amortization of organization costs (Note 2) ...................... -- 3,398 --
Reports to shareholders .......................................... 10,609 2,481 14,836
Miscellaneous .................................................... 27,713 1,216 20,287
------------ ------------ ------------
Total expenses before reimbursement/waiver ...................... 1,612,997 154,489 902,324
------------ ------------ ------------
Less: reimbursement/waiver (Note 4) ............................. (338,345) (68,720) (168,721)
------------ ------------ ------------
Total expenses net of reimbursement/waiver ...................... 1,274,652 85,769 733,603
------------ ------------ ------------
NET INVESTMENT INCOME .............................................. 7,462,137 338,909 3,696,094
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (Note 2 & 6):
Net realized gain (loss) on investments sold ..................... (78,657) (44,349) 227,275
Net change in unrealized (depreciation) of investments ........... (13,091,406) (589,590) (6,932,960)
------------ ------------ ------------
NET REALIZED AND UNREALIZED
(LOSS)ON INVESTMENTS ............................................. (13,170,063) (633,939) (6,705,685)
------------ ------------ ------------
NET (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ........................................ $ (5,707,926) $ (295,030) $ (3,009,591)
============ ============ ============
</TABLE>
See Notes to Financial Statements.
36
<PAGE>
Connecticut Massachusetts Rhode Island
Municipal Municipal Municipal
Bond Fund Bond Fund Bond Fund
- ----------- ----------- ------------
$ 2,070,181 $ 3,581,570 $ 1,121,025
27,797 33,276 10,674
- ----------- ----------- -----------
2,097,978 3,614,846 1,131,699
- ----------- ----------- -----------
320,043 544,719 162,771
32,081 54,619 16,327
7,815 10,581 10,832
42,656 60,466 32,039
16,423 17,102 13,776
12,564 16,698 5,100
39,136 63,058 --
809 1,421 403
-- -- 3,439
9,621 13,939 2,977
19,035 32,450 12,600
- ----------- ----------- -----------
500,183 815,053 260,264
- ----------- ----------- -----------
(170,690) (290,517) (86,559)
- ----------- ----------- -----------
329,493 524,536 173,705
- ----------- ----------- -----------
1,768,485 3,090,310 957,994
- ----------- ----------- -----------
(23,141) (65,783) (76,090)
(2,972,756) (5,600,385) (1,483,777)
- ----------- ----------- -----------
(2,995,897) (5,666,168) (1,559,867)
- ----------- ----------- -----------
$(1,227,412) $(2,575,858) $ (601,873)
=========== =========== ===========
37
<PAGE>
Galaxy Tax-Exempt Bond Funds
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
New York
Tax-Exempt Bond Fund New Jersey Municipal Bond Fund
-------------------------- Municipal Bond Fund --------------------------
Years ended -------------------------- Years ended
October 31, Year ended Period ended October 31,
-------------------------- October 31, October 31, --------------------------
1999 1998 1999 1998* 1999 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSETS at beginning of period .......... $163,142,500 $149,372,871 $ 8,516,218 $ 20(a) $ 83,019,676 $ 65,995,842
------------ ------------ ------------ ------------ ------------ ------------
Increase (decrease) in Net Assets
resulting from operations:
Net investment income .................... 7,462,137 7,177,099 338,909 152,168 3,696,094 3,217,725
Net realized gain (loss) on
investments sold ....................... (78,657) 1,998,815 (44,349) (687) 227,275 822,875
Net change in unrealized appreciation
(depreciation) of investments .......... (13,091,406) 2,771,283 (589,590) 183,092 (6,932,960) 1,441,749
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations .............. (5,707,926) 11,947,197 (295,030) 334,573 (3,009,591) 5,482,349
------------ ------------ ------------ ------------ ------------ ------------
Dividends to shareholders from:
Retail A Shares:
Net investment income .................. (1,025,504) (1,112,636) (46,232) (8,997) (1,903,474) (1,819,081)
Net realized gain on investments ....... (306,201) (209,493) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total Dividends ...................... (1,331,705) (1,322,129) (46,232) (8,997) (1,903,474) (1,819,081)
------------ ------------ ------------ ------------ ------------ ------------
Retail B Shares:
Net investment income .................. (118,934) (87,830) N/A N/A N/A N/A
Net realized gain on investments ....... (32,760) (14,276) N/A N/A N/A N/A
------------ ------------ ------------ ------------ ------------ ------------
Total Dividends ...................... (151,694) (102,106) N/A N/A N/A N/A
------------ ------------ ------------ ------------ ------------ ------------
Trust Shares:
Net investment income .................. (6,325,088) (6,048,821) (292,677) (143,173) (1,629,254) (1,398,277)
Net realized gain on investments ....... (1,646,317) (1,016,251) -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------
Total Dividends ...................... (7,971,405) (7,065,072) (292,677) (143,173) (1,629,254) (1,398,277)
------------ ------------ ------------ ------------ ------------ ------------
Total Dividends to shareholders ...... (9,454,804) (8,489,307) (338,909) (152,170) (3,532,728) (3,217,358)
------------ ------------ ------------ ------------ ------------ ------------
Net increase from share transactions(1) .... 23,105,726 10,311,739 841,627 8,333,795 1,561,414 14,758,843
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets .... 7,942,996 13,769,629 207,688 8,516,198 (4,980,905) 17,023,834
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS at end of period
(including line A) ..................... $171,085,496 $163,142,500 $ 8,723,906 $ 8,516,218 $ 78,038,771 $ 83,019,676
============ ============ ============ ============ ============ ============
(A) Undistributed (overdistributed) net
investment income ...................... $ (26,014) $ (18,625) $ 5,370 $ 1,972 $ 162,527 $ (839)
============ ============ ============ ============ ============ ============
</TABLE>
- ---------------------------------------
* The New Jersey Municipal Bond Fund commenced operations on April 3, 1998.
(1) For detail on share transactions by series, see Statements of Changes in
Net Assets - Capital Stock Activity on pages 40 and 41.
(a) Represents initial seed money.
See Notes to Financial Statements.
38
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal Rhode Island Municipal
Bond Fund Bond Fund Bond Fund
- --------------------------- --------------------------- ---------------------------
Years ended Years ended Years ended
October 31, October 31, October 31,
- --------------------------- --------------------------- ---------------------------
1999 1998 1999 1998 1999 1998
- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 38,768,085 $ 33,221,284 $ 67,559,730 $ 47,304,792 $ 20,209,657 $ 17,134,415
- ------------ ------------ ------------ ------------ ------------ ------------
1,768,485 1,522,760 3,090,310 2,503,603 957,994 851,987
(23,141) 229,881 (65,783) 342,455 (76,090) 87,401
(2,972,756) 949,373 (5,600,385) 1,189,694 (1,483,777) 376,671
- ------------ ------------ ------------ ------------ ------------ ------------
(1,227,412) 2,702,014 (2,575,858) 4,035,752 (601,873) 1,316,059
- ------------ ------------ ------------ ------------ ------------ ------------
(1,076,680) (996,397) (1,821,052) (1,670,216) (958,948) (837,786)
-- -- -- -- (86,518) (37,141)
- ------------ ------------ ------------ ------------ ------------ ------------
(1,076,680) (996,397) (1,821,052) (1,670,216) (1,045,466) (874,927)
- ------------ ------------ ------------ ------------ ------------ ------------
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
- ------------ ------------ ------------ ------------ ------------ ------------
N/A N/A N/A N/A N/A N/A
- ------------ ------------ ------------ ------------ ------------ ------------
(691,805) (526,684) (1,269,258) (814,636) -- --
-- -- -- -- -- --
- ------------ ------------ ------------ ------------ ------------ ------------
(691,805) (526,684) (1,269,258) (814,636) -- --
- ------------ ------------ ------------ ------------ ------------ ------------
(1,768,485) (1,523,081) (3,090,310) (2,484,852) (1,045,466) (874,927)
- ------------ ------------ ------------ ------------ ------------ ------------
8,790,287 4,367,868 11,699,541 18,704,038 1,270,946 2,634,110
- ------------ ------------ ------------ ------------ ------------ ------------
5,794,390 5,546,801 6,033,373 20,254,938 (376,393) 3,075,242
- ------------ ------------ ------------ ------------ ------------ ------------
$ 44,562,475 $ 38,768,085 $ 73,593,103 $ 67,559,730 $ 19,833,264 $ 20,209,657
============ ============ ============ ============ ============ ============
$ (14,614) $ (14,614) $ (21,727) $ (21,727) $ (11,177) $ (10,223)
============ ============ ============ ============ ============ ============
</TABLE>
39
<PAGE>
Galaxy Tax-Exempt Bond Funds
Statements of Changes in Net Assets --
Capital Stock Activity
<TABLE>
<CAPTION>
New York
Tax-Exempt Bond Fund New Jersey Municipal Bond Fund
-------------------------- Municipal Bond Fund -------------------------
Years ended ---------------------- Years ended
October 31, Year ended Period ended October 31,
-------------------------- October 31, October 31, -------------------------
1999 1998 1999 1998* 1999 1998
------------ ------------ ---------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail A Shares:
Sold ........................................... $ 10,924,021 $ 4,120,071 $1,530,335 $ 795,210 $ 8,808,575 $16,948,796
Issued to shareholders in reinvestment
of dividends .................................. 1,054,920 993,669 27,090 4,695 1,440,313 1,196,021
Repurchased .................................... (8,919,372) (6,326,395) (969,625) -- (13,618,561) (9,680,079)
------------ ------------ ---------- ---------- ------------ -----------
Net increase (decrease) in shares outstanding .. $ 3,059,569 $ (1,212,655) $ 587,800 $ 799,905 $ (3,369,673) $ 8,464,738
============ ============ ========== ========== ============ ===========
Retail B Shares:
Sold ........................................... $ 1,359,050 $ 1,425,757 N/A N/A N/A N/A
Issued to shareholders in reinvestment
of dividends .................................. 100,123 58,048 N/A N/A N/A N/A
Repurchased .................................... (479,393) (509,491) N/A N/A N/A N/A
------------ ------------ ---------- ---------- ------------ -----------
Net increase in shares outstanding ............. $ 979,780 $ 974,314 N/A N/A N/A N/A
============ ============ ========== ========== ============ ===========
Trust Shares:
Sold ........................................... $ 27,090,728 $ 23,518,359 $ 757,940 $7,558,900 $ 10,126,919 $ 8,629,198
Issued to shareholders in reinvestment
of dividends .................................. 3,516,363 3,119,314 -- -- 172,798 192,826
Repurchased .................................... (11,540,714) (16,087,593) (504,113) (25,010) (5,368,630) (2,527,919)
------------ ------------ ---------- ---------- ------------ -----------
Net increase in shares outstanding ............. $ 19,066,377 $ 10,550,080 $ 253,827 $7,533,890 $ 4,931,087 $ 6,294,105
============ ============ ========== ========== ============ ===========
SHARE ACTIVITY
Retail A Shares:
Sold ........................................... 1,027,378 367,769 152,836 79,151 790,902 1,490,812
Issued to shareholders in reinvestment
of dividends .................................. 90,411 90,143 2,738 463 118,514 117,233
Repurchased .................................... (822,141) (568,242) (99,073) -- (1,215,806) (856,236)
------------ ------------ ---------- ---------- ------------ -----------
Net increase (decrease) in shares outstanding .. 295,648 (110,330) 56,501 79,614 (306,390) 751,809
============ ============ ========== ========== ============ ===========
Retail B Shares:
Sold ........................................... 121,001 127,743 N/A N/A N/A N/A
Issued to shareholders in reinvestment
of dividends .................................. 9,992 5,196 N/A N/A N/A N/A
Repurchased .................................... (43,965) (45,412) N/A N/A N/A N/A
------------ ------------ ---------- ---------- ------------ -----------
Net increase in shares outstanding ............. 87,028 87,527 N/A N/A N/A N/A
============ ============ ========== ========== ============ ===========
Trust Shares:
Sold ........................................... 2,480,419 2,106,905 74,984 754,850 895,936 771,140
Issued to shareholders in reinvestment
of dividends .................................. 320,864 279,668 -- -- 15,619 17,092
Repurchased .................................... (1,066,969) (1,428,414) (51,120) (2,486) (484,126) (229,638)
------------ ------------ ---------- ---------- ------------ -----------
Net increase in shares outstanding ............. 1,734,314 958,159 23,864 752,364 427,429 558,594
============ ============ ========== ========== ============ ===========
</TABLE>
- ---------------------------------------
* The New Jersey Municipal Bond Fund commenced operations on April 3, 1998.
(1) As of October 31, 1999, the Rhode Island Municipal Bond Fund had not
issued Trust Shares.
See Notes to Financial Statements.
40
<PAGE>
Connecticut Municipal Massachusetts Municipal Rhode Island Municipal
Bond Fund Bond Fund Bond Fund(1)
- -------------------------- -------------------------- ----------------------
Years ended Years ended Years ended
October 31, October 31, October 31,
- -------------------------- -------------------------- ----------------------
1999 1998 1999 1998 1999 1998
- ------------ ------------ ------------ ------------ ---------- ----------
$ 13,759,257 $ 7,407,851 $ 12,444,513 $ 19,663,945 $7,391,836 $8,016,637
674,313 732,578 1,440,807 1,310,122 490,026 417,557
(10,721,396) (7,427,287) (15,097,467) (11,175,520) (6,610,916) (5,800,084)
- ------------ ------------ ------------ ------------ ---------- ----------
$ 3,712,174 $ 713,142 $ (1,212,147) $ 9,798,547 $1,270,946 $2,634,110
============ ============ ============ ============ ========== ==========
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
- ------------ ------------ ------------ ------------ ---------- ----------
N/A N/A N/A N/A N/A N/A
============ ============ ============ ============ ========== ==========
$ 8,822,079 $ 13,217,871 $ 15,868,262 $ 12,225,250 $ -- $ --
2,396 3,553 50,657 587 -- --
(3,746,362) (9,566,698) (3,007,231) (3,320,346) -- --
- ------------ ------------ ------------ ------------ ---------- ----------
$ 5,078,113 $ 3,654,726 $ 12,911,688 $ 8,905,491 $ -- $ --
============ ============ ============ ============ ========== ==========
1,302,912 697,310 1,195,565 1,892,528 670,082 725,416
81,055 64,175 138,671 126,721 21,822 37,745
(1,033,862) (694,286) (1,464,110) (1,072,707) (585,107) (526,601)
- ------------ ------------ ------------ ------------ ---------- ----------
350,105 67,199 (129,874) 946,542 106,797 236,560
============ ============ ============ ============ ========== ==========
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A
- ------------ ------------ ------------ ------------ ---------- ----------
N/A N/A N/A N/A N/A N/A
============ ============ ============ ============ ========== ==========
832,405 1,242,161 1,544,810 1,174,113 -- --
318 308 4,943 57 -- --
(349,964) (898,692) (296,766) (318,922) -- --
- ------------ ------------ ------------ ------------ ---------- ----------
482,759 343,777 1,252,987 855,248 -- --
============ ============ ============ ============ ========== ==========
41
<PAGE>
Tax-Exempt Bond Fund
Financial Highlights
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 11.30 $ 11.06 $ 10.78 $ 10.78 $ 9.99
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A) ............................... 0.46 0.48 0.50 0.50 0.52
Net realized and unrealized gain (loss) on investments .. (0.83) 0.34 0.29 -- 0.79
-------- -------- -------- -------- --------
Total from Investment Operations: .................... (0.37) 0.82 0.79 0.50 1.31
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income .................... (0.46) (0.49) (0.50) (0.50) (0.52)
Dividends from net realized capital gains ............... (0.14) (0.09) (0.01) -- --
-------- -------- -------- -------- --------
Total Dividends: ....................................... (0.60) (0.58) (0.51) (0.50) (0.52)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value ................ (0.97) 0.24 0.28 -- 0.79
-------- -------- -------- -------- --------
Net Asset Value, End of Period ............................ $ 10.33 $ 11.30 $ 11.06 $ 10.78 $ 10.78
======== ======== ======== ======== ========
Total Return(2) ........................................... (3.45)% 7.60% 7.49% 4.77% 13.40%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ......................... $ 25,704 $ 24,764 $ 25,465 $ 28,339 $ 31,609
Ratios to average net assets:
Net investment income including reimbursement/waiver .... 4.25% 4.32% 4.60% 4.68% 4.99%
Operating expenses including reimbursement/waiver ....... 0.92% 0.94% 0.95% 0.93% 0.91%
Operating expenses excluding reimbursement/waiver ....... 1.12% 1.15% 1.18% 1.18% 1.24%
Portfolio Turnover Rate ................................... 23% 59% 78% 15% 11%
</TABLE>
- ---------------------------------------
* Annualized
** Not Annualized
(1) The Fund began offering Retail B shares on March 4, 1996.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares and Retail B Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the years
ended October 31, 1999, 1998, 1997, 1996 and 1995 were $0.44, $0.46,
$0.47, $0.48 and 0.48, 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, 1999, 1998,
1997, 1996 and 1995 were $0.47, $0.48, $0.51, $0.51 and $0.51,
respectively. Net investment income per share before reimbursement/waiver
of fees by the Investment Advisor and/or Administrator for Retail B Shares
for the years ended October 31, 1999, 1998 and 1997, and for the period
ended October 31, 1996 were $0.37, $0.40, $0.40 and $0.25, respectively.
See Notes to Financial Statements.
42
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31, Years ended October 31, Period ended
- -------------------------------------------------------- -------------------------------- October 31,
1999 1998 1997 1996 1995 1999 1998 1997 1996(1)
- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 11.30 $ 11.06 $ 10.78 $ 10.78 $ 9.99 $ 11.30 $ 11.06 $ 10.78 $ 10.94
- -------- -------- -------- -------- -------- -------- -------- -------- --------
0.49 0.50 0.53 0.53 0.54 0.39 0.42 0.43 0.27
(0.83) 0.34 0.29 -- 0.79 (0.83) 0.33 0.29 (0.16)
- -------- -------- -------- -------- -------- -------- -------- -------- --------
(0.34) 0.84 0.82 0.53 1.33 (0.44) 0.75 0.72 0.11
- -------- -------- -------- -------- -------- -------- -------- -------- --------
(0.49) (0.51) (0.53) (0.53) (0.54) (0.39) (0.42) (0.43) (0.27)
(0.14) (0.09) (0.01) -- -- (0.14) (0.09) (0.01) --
- -------- -------- -------- -------- -------- -------- -------- -------- --------
(0.63) (0.60) (0.54) (0.53) (0.54) (0.53) (0.51) (0.44) (0.27)
- -------- -------- -------- -------- -------- -------- -------- -------- --------
(0.97) 0.24 0.28 -- 0.79 (0.97) 0.24 0.28 (0.16)
- -------- -------- -------- -------- -------- -------- -------- -------- --------
$ 10.33 $ 11.30 $ 11.06 $ 10.78 $ 10.78 $ 10.33 $ 11.30 $ 11.06 $ 10.78
======== ======== ======== ======== ======== ======== ======== ======== ========
(3.25)% 7.85% 7.75% 5.03% 13.62% (4.07)% 6.95% 6.83% 1.08%**
$141,999 $135,664 $122,218 $103,163 $ 91,740 $ 3,382 $ 2,715 $ 1,690 $ 787
4.46% 4.55% 4.85% 4.91% 5.18% 3.61% 3.71% 3.95% 4.08%*
0.71% 0.71% 0.70% 0.70% 0.72% 1.55% 1.55% 1.60% 1.57%*
0.91% 0.92% 0.96% 0.95% 0.97% 1.75% 1.76% 1.83% 1.77%*
23% 59% 78% 15% 11% 23% 59% 78% 15%
</TABLE>
43
<PAGE>
New Jersey Municipal Bond Fund
Financial Highlights
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Year ended Period ended
October 31, October 31,
1999 1998(1)
---------- ----------
<S> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 10.24 $ 10.00
---------- ----------
Income from Investment Operations:
Net investment income (A) ............................... 0.36 0.20
Net realized and unrealized gain (loss) on investments .. (0.68) 0.24
---------- ----------
Total from Investment Operations: .................... (0.32) 0.44
---------- ----------
Less Dividends:
Dividends from net investment income .................... (0.36) (0.20)
---------- ----------
Total Dividends: ....................................... (0.36) (0.20)
---------- ----------
Net increase (decrease) in net asset value ................ (0.68) 0.24
---------- ----------
Net Asset Value, End of Period ............................ $ 9.56 $ 10.24
========== ==========
Total Return(2) ........................................... (3.24)% 4.34%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ......................... $ 1,302 $ 815
Ratios to average net assets:
Net investment income including reimbursement/waiver .... 3.56% 3.62%*
Operating expenses including reimbursement/waiver ....... 1.11% 1.09%*
Operating expenses excluding reimbursement/waiver ....... 2.11% 3.65%*
Portfolio Turnover Rate ................................... 41% 53%**
</TABLE>
- ---------------------------------------
* Annualized.
** Not Annualized.
(1) The Fund commenced operations on April 3, 1998.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the year
ended October 31, 1999 and the period ended October 31, 1998 was $0.26 and
$0.06, respectively. Net investment income per share before
reimbursement/waiver of fees by the Investment Advisor and/or
Administrator for Trust Shares for the year ended October 31, 1999 and the
period ended October 31, 1998 was $0.30 and $0.15, respectively.
See Notes to Financial Statements.
44
<PAGE>
Trust Shares
Year ended Period ended
October 31, October 31,
1999 1998(1)
- ----------- -----------
$ 10.24 $ 10.00
- ----------- -----------
0.38 0.21
(0.68) 0.24
- ----------- -----------
(0.30) 0.45
- ----------- -----------
(0.38) (0.21)
- ----------- -----------
(0.38) (0.21)
- ----------- -----------
(0.68) 0.24
- ----------- -----------
$ 9.56 $ 10.24
=========== ===========
(3.06)% 4.48%**
$ 7,422 $ 7,701
3.76% 3.79%*
0.92% 0.92%*
1.63% 2.07%*
41% 53%**
45
<PAGE>
New York Municipal Bond Fund
Financial Highlights
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 11.44 $ 11.09 $ 10.75 $ 10.78 $ 9.89
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A) ............................... 0.48 0.48 0.49 0.48 0.49
Net realized and unrealized gain (loss) on investments .. (0.89) 0.35 0.34 (0.03) 0.89
-------- -------- -------- -------- --------
Total from Investment Operations: .................... (0.41) 0.83 0.83 0.45 1.38
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income .................... (0.46) (0.48) (0.49) (0.48) (0.49)
-------- -------- -------- -------- --------
Total Dividends: ....................................... (0.46) (0.48) (0.49) (0.48) (0.49)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value ................ (0.87) 0.35 0.34 (0.03) 0.89
-------- -------- -------- -------- --------
Net Asset Value, End of Period ............................ $ 10.57 $ 11.44 $ 11.09 $ 10.75 $ 10.78
======== ======== ======== ======== ========
Total Return(1) ........................................... (3.72)% 7.65% 7.93% 4.31% 14.03%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ......................... $ 41,343 $ 48,218 $ 38,434 $ 40,154 $ 42,870
Ratios to average net assets:
Net investment income including reimbursement/waiver .... 4.31% 4.27% 4.52% 4.50% 4.73%
Operating expenses including reimbursement/waiver ....... 0.96% 0.87% 0.94% 0.95% 0.92%
Operating expenses excluding reimbursement/waiver ....... 1.16% 1.20% 1.26% 1.35% 1.31%
Portfolio Turnover Rate ................................... 24% 27% 61% 12% 5%
</TABLE>
- ---------------------------------------
(1) Calculation does not include the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the years
ended October 31, 1999, 1998, 1997, 1996 and 1995 were $0.46, $0.45,
$0.45, $0.44, and $0.44, 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, 1999, 1998,
1997, 1996 and 1995 were $0.48, $0.47, $0.49, $0.47 and $0.48,
respectively.
See Notes to Financial Statements.
46
<PAGE>
Trust Shares
Years ended October 31,
- --------------------------------------------------------
1999 1998 1997 1996 1995
- -------- -------- -------- -------- --------
$ 11.44 $ 11.09 $ 10.75 $ 10.78 $ 9.89
- -------- -------- -------- -------- --------
0.50 0.50 0.52 0.51 0.51
(0.89) 0.35 0.34 (0.03) 0.89
- -------- -------- -------- -------- --------
(0.39) 0.85 0.86 0.48 1.40
- -------- -------- -------- -------- --------
(0.48) (0.50) (0.52) (0.51) (0.51)
- -------- -------- -------- -------- --------
(0.48) (0.50) (0.52) (0.51) (0.51)
- -------- -------- -------- -------- --------
(0.87) 0.35 0.34 (0.03) 0.89
- -------- -------- -------- -------- --------
$ 10.57 $ 11.44 $ 11.09 $ 10.75 $ 10.78
======== ======== ======== ======== ========
(3.54)% 7.82% 8.17% 4.55% 14.23%
$ 36,696 $ 34,801 $ 27,562 $ 23,762 $ 23,077
4.50% 4.42% 4.75% 4.75% 4.91%
0.77% 0.72% 0.71% 0.70% 0.74%
0.97% 0.99% 1.02% 1.10% 1.07%
24% 27% 61% 12% 5%
47
<PAGE>
Connecticut Municipal Bond Fund
Financial Highlights
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 10.82 $ 10.47 $ 10.14 $ 10.13 $ 9.22
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A) ............................... 0.43 0.43 0.45 0.42 0.44
Net realized and unrealized gain (loss) on investments .. (0.73) 0.35 0.33 0.01 0.91
-------- -------- -------- -------- --------
Total from Investment Operations: .................... (0.30) 0.78 0.78 0.43 1.35
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income .................... (0.43) (0.43) (0.45) (0.42) (0.44)
-------- -------- -------- -------- --------
Total Dividends: ....................................... (0.43) (0.43) (0.45) (0.42) (0.44)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value ................ (0.73) 0.35 0.33 0.01 0.91
-------- -------- -------- -------- --------
Net Asset Value, End of Period ............................ $ 10.09 $ 10.82 $ 10.47 $ 10.14 $ 10.13
======== ======== ======== ======== ========
Total Return (1) .......................................... (2.87)% 7.58% 7.86% 4.32% 14.94%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ......................... $ 26,715 $ 24,856 $ 23,355 $ 23,244 $ 18,066
Ratios to average net assets:
Net investment income including reimbursement/waiver .... 4.07% 4.02% 4.30% 4.13% 4.53%
Operating expenses including reimbursement/waiver ....... 0.85% 0.88% 0.70% 0.70% 0.68%
Operating expenses excluding reimbursement/waiver ....... 1.25% 1.31% 1.31% 1.38% 1.48%
Portfolio Turnover Rate ................................... 53% 46% 42% 3% 7%
</TABLE>
- ---------------------------------------
(1) Calculation does not include the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the years
ended October 31, 1999, 1998, 1997, 1996 and 1995 were $0.39, $0.38,
$0.38, $0.35 and $0.37, 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, 1999, 1998,
1997, 1996 and 1995 were $0.41, $0.40, $0.41, $0.37 and $0.38,
respectively.
See Notes to Financial Statements.
48
<PAGE>
Trust Shares
Years ended October 31,
- --------------------------------------------------------
1999 1998 1997 1996 1995
- -------- -------- -------- -------- --------
$ 10.82 $ 10.47 $ 10.14 $ 10.13 $ 9.22
- -------- -------- -------- -------- --------
0.45 0.45 0.47 0.44 0.46
(0.73) 0.35 0.33 0.01 0.91
- -------- -------- -------- -------- --------
(0.28) 0.80 0.80 0.45 1.37
- -------- -------- -------- -------- --------
(0.45) (0.45) (0.47) (0.44) (0.46)
- -------- -------- -------- -------- --------
(0.45) (0.45) (0.47) (0.44) (0.46)
- -------- -------- -------- -------- --------
(0.73) 0.35 0.33 0.01 0.91
- -------- -------- -------- -------- --------
$ 10.09 $ 10.82 $ 10.47 $ 10.14 $ 10.13
======== ======== ======== ======== ========
(2.68)% 7.81% 8.06% 4.54% 15.21%
$ 17,848 $ 13,913 $ 9,866 $ 6,348 $ 4,083
4.26% 4.24% 4.51% 4.34% 4.76%
0.65% 0.67% 0.49% 0.49% 0.45%
1.05% 1.10% 1.10% 1.17% 1.24%
53% 46% 42% 3% 7%
49
<PAGE>
Massachusetts Municipal Bond Fund
Financial Highlights
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 10.53 $ 10.25 $ 9.94 $ 9.98 $ 9.12
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A) ............................... 0.43 0.46 0.45 0.43 0.44
Net realized and unrealized gain (loss) on investments .. (0.77) 0.27 0.32 (0.04) 0.86
-------- -------- -------- -------- --------
Total from Investment Operations: .................... (0.34) 0.73 0.77 0.39 1.30
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income .................... (0.43) (0.45) (0.46) (0.43) (0.44)
-------- -------- -------- -------- --------
Total Dividends: ....................................... (0.43) (0.45) (0.46) (0.43) (0.44)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value ................ (0.77) 0.28 0.31 (0.04) 0.86
-------- -------- -------- -------- --------
Net Asset Value, End of Period ............................ $ 9.76 $ 10.53 $ 10.25 $ 9.94 $ 9.98
======== ======== ======== ======== ========
Total Return (1) .......................................... (3.35)% 7.22% 7.92% 4.05% 14.52%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ......................... $ 39,696 $ 44,189 $ 33,318 $ 26,275 $ 16,113
Ratios to average net assets:
Net investment income including reimbursement/waiver .... 4.18% 4.30% 4.38% 4.42% 4.56%
Operating expenses including reimbursement/waiver ....... 0.79% 0.78% 0.63% 0.66% 0.70%
Operating expenses excluding reimbursement/waiver ....... 1.19% 1.21% 1.20% 1.32% 1.58%
Portfolio Turnover Rate ................................... 34% 44% 48% 16% 19%
</TABLE>
- ---------------------------------------
(1) Calculation does not include the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the years
ended October 31, 1999, 1998, 1997, 1996 and 1995 were $0.39, $0.41,
$0.39, $0.37 and $0.36, 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, 1999, 1998,
1997, 1996 and 1995 were $0.41, $0.42, $0.40, $0.40 and $0.38,
respectively.
See Notes to Financial Statements.
50
<PAGE>
Trust Shares
Years ended October 31,
- --------------------------------------------------------
1999 1998 1997 1996 1995
- -------- -------- -------- -------- --------
$ 10.53 $ 10.25 $ 9.94 $ 9.98 $ 9.12
- -------- -------- -------- -------- --------
0.45 0.47 0.46 0.46 0.45
(0.77) 0.27 0.32 (0.04) 0.86
- -------- -------- -------- -------- --------
(0.32) 0.74 0.78 0.42 1.31
- -------- -------- -------- -------- --------
(0.45) (0.46) (0.47) (0.46) (0.45)
- -------- -------- -------- -------- --------
(0.45) (0.46) (0.47) (0.46) (0.45)
- -------- -------- -------- -------- --------
(0.77) 0.28 0.31 (0.04) 0.86
- -------- -------- -------- -------- --------
$ 9.76 $ 10.53 $ 10.25 $ 9.94 $ 9.98
======== ======== ======== ======== ========
(3.17)% 7.42% 8.06% 4.27% 14.72%
$ 33,897 $ 23,371 $ 13,986 $ 11,047 $ 7,607
4.36% 4.49% 4.57% 4.60% 4.73%
0.61% 0.60% 0.44% 0.48% 0.52%
1.01% 1.03% 1.01% 1.14% 1.31%
34% 44% 48% 16% 19%
51
<PAGE>
Rhode Island Municipal Bond Fund
Financial Highlights
For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31, Period ended
-------------------------------------------- October 31,
1999 1998 1997 1996 1995(1)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...................... $ 11.18 $ 10.91 $ 10.65 $ 10.67 $ 10.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A) ............................... 0.48 0.50 0.48 0.51 0.44
Net realized and unrealized gain (loss) on investments .. (0.77) 0.29 0.32 0.03 0.67
-------- -------- -------- -------- --------
Total from Investment Operations: ...................... (0.29) 0.79 0.80 0.54 1.11
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income .................... (0.48) (0.50) (0.50) (0.51) (0.44)
Dividends from net realized capital gains ............... (0.05) (0.02) (0.04) (0.05) --
-------- -------- -------- -------- --------
Total Dividends: ...................................... (0.53) (0.52) (0.54) (0.56) (0.44)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value ................ (0.82) 0.27 0.26 (0.02) 0.67
-------- -------- -------- -------- --------
Net Asset Value, End of Period ............................ $ 10.36 $ 11.18 $ 10.91 $ 10.65 $ 10.67
======== ======== ======== ======== ========
Total Return (2) .......................................... (2.73)% 7.35% 7.78% 5.22% 11.29%**
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ......................... $ 19,833 $ 20,210 $ 17,134 $ 14,900 $ 10,850
Ratios to average net assets:
Net investment income including reimbursement/waiver .... 4.41% 4.52% 4.50% 4.78% 5.13%*
Operating expenses including reimbursement/waiver ....... 0.80% 0.81% 0.83% 0.77% 0.40%*
Operating expenses excluding reimbursement/waiver ....... 1.20% 1.23% 1.34% 1.34% 2.25%*
Portfolio Turnover Rate ................................... 34% 41% 19% 13% 34%**
</TABLE>
- ---------------------------------------
* Annualized
** Not Annualized
(1) The Fund commenced operations on December 20, 1994.
(2) Calculation does not include the effect of any sales charge for Retail A
Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for the years ended October 31,
1999, 1998, 1997 and 1996, and for the period ended October 31, 1995 were
$0.44, $0.45, $0.43, $0.45 and $0.28, respectively.
See Notes to Financial Statements.
52
<PAGE>
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-nine managed investment portfolios. The accompanying financial statements
and financial highlights are those of the Tax-Exempt Bond, New Jersey Municipal
Bond, New York Municipal Bond, Connecticut Municipal Bond, Massachusetts
Municipal Bond and Rhode Island Municipal Bond Funds (individually, a "Fund",
collectively, the "Funds") only.
Each Fund is authorized to issue two series of shares (Trust Shares and
Retail A Shares), except for the Tax-Exempt Bond Fund, which is authorized to
issue five series of shares (Trust Shares, Retail A Shares, Retail B Shares, A
Prime Shares and B Prime Shares). As of October 31, 1999, the Rhode Island
Municipal Bond Fund has offered only Retail A Shares and the Tax-Exempt Bond
Fund has offered only Trust Shares, Retail A Shares and Retail B Shares. Trust
Shares, Retail A Shares, Retail B Shares, A Prime Shares and B Prime Shares are
substantially the same except that (i) Retail A Shares are subject to a maximum
3.75% front-end sales charge, (ii) A Prime Shares are subject to a maximum 4.75%
front-end sales charge, (iii) Retail B Shares and B Prime Shares are subject to
a maximum 5.00% contingent deferred sales charge, and (iv) each series of shares
bears the following series specific expenses: distribution fees and/or
shareholder servicing and related fees and transfer agency charges. Six years
after purchase, Retail B Shares will convert automatically to Retail A Shares
and eight years after purchase, B Prime Shares will convert automatically to A
Prime Shares. On November 29, 1999, A Prime Shares and B Prime Shares were
redesignated Prime A Shares and Prime B Shares, respectively.
2. Significant Accounting Policies
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. The following is a
summary of significant accounting policies in conformity with generally accepted
accounting principles consistently followed by the Funds in the preparation of
their financial statements.
Portfolio Valuation: Investment securities are valued by an independent
pricing service approved by the Trust's Board of Trustees. When, in the judgment
of the service, quoted bid prices are readily available and are representative
of the bid side of the market, investments are valued at the mean between quoted
bid prices and asked prices. Other investments are carried at fair value as
determined by the service based on methods which include consideration of yields
or prices of bonds of comparable quality, coupon maturity and type; indications
as to values from dealers; and general market conditions. Short-term obligations
that mature in 60 days or less are valued at amortized cost, which approximates
fair value. All other securities and other assets are appraised at their fair
value as determined in good faith under consistently applied procedures
established by and under the general supervision of the Board of Trustees.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Net realized gains or losses on sales of
securities are determined by the identified cost method. Interest and dividend
income is recorded on the accrual basis. Investment income and realized and
unrealized gains and losses are allocated to the separate series of a Fund based
upon the relative net assets of each series.
Dividends to Shareholders: Dividends from net investment income are
determined separately for each series and are declared daily and paid monthly.
Net realized capital gains, if any, are distributed at least annually.
Income dividends and capital gain dividends are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
Federal Income Taxes: The Trust treats each Fund as a separate entity for
federal income tax purposes. Each Fund intends to qualify or continue to qualify
each year as a "regulated investment company" under Subchapter M of the Internal
Revenue Code. By so qualifying, each Fund will not be subject to federal income
taxes to the extent that it distributes substantially all of its taxable or
tax-exempt income, if any, for its tax year ending October 31. In addition, by
distributing in each calendar year substantially all of its net investment
income, capital gains and certain other amounts, if any, each Fund will not be
subject to a federal excise tax. Therefore, no federal income or excise tax
provision is recorded.
Expenses: The Trust accounts separately for the assets, liabilities and
operations of each Fund. Expenses directly attributable to a Fund are charged to
the Fund, while expenses which are attributable to more than one fund of the
Trust are allocated among the respective funds.
In addition, expenses of a Fund not directly attributable to the
operations of a particular series of shares of the Fund are allocated to the
separate series based upon the relative net assets of each series. Operating
expenses directly attributable to a series of shares of a Fund are charged to
the operations of that series.
53
<PAGE>
Notes to Financial Statements
Organization Costs: Each Fund bears all costs in connection with its
organization, including the fees and expenses of registering and qualifying its
initial shares for distribution under federal and state securities laws. All
such costs are amortized using the straight-line method over a period of five
years beginning with the commencement of each Fund's operations. In the event
that any of the initial shares purchased by a Fund's sponsor are redeemed during
such period by any holder thereof, the Fund involved will be reimbursed by such
holder for any unamortized organization costs in the same proportion as the
number of initial shares being redeemed bears to the number of initial shares
outstanding at the time of redemption.
When-Issued Securities: Each Fund may purchase and sell securities, such
as municipal obligations, on a "when-issued" basis. Delivery of the security and
payment take place after the date of the commitment to purchase and such
securities are subject to market fluctuations during this period. The fair value
of these securities is determined in the same manner as other municipal
obligations. The Trust's custodian will set aside cash or liquid portfolio
securities equal to the amount of the when-issued commitment in a separate
account.
3. Investment Advisory, Administration, Distribution
Shareholder Services and Other Fees
The Trust and Fleet Investment Advisors Inc. (the "Investment Advisor" or
"Fleet"), an indirect wholly-owned subsidiary of FleetBoston Corporation are
parties to an investment advisory agreement under which the Investment Advisor
provides services for a fee, computed daily and paid monthly, at the annual rate
of 0.75% of the average daily net assets of each Fund (See Note 4).
The Trust and First Data Investor Services Group, Inc. ("Investor Services
Group"), a wholly-owned subsidiary of First Data Corporation, are parties to an
administration agreement under which Investor Services Group (the
"Administrator") provides services for a fee, computed daily and paid monthly,
at the annual rate, effective September 10, 1998, 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. Prior to September 10, 1998, Investor
Services Group received administration fees at the annual rate of 0.09% of the
first $2.5 billion of 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 0.075% of combined average daily net assets over $5
billion.
In addition, Investor Services Group also provides certain fund
accounting, custody administration and transfer agency services in accordance
with certain fee arrangements. Pursuant to such fee arrangements, Investor
Services Group compensates The Chase Manhattan Bank, the Trust's custodian bank,
for its services.
First Data Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of Investor Services Group and an indirect wholly-owned subsidiary of
First Data Corporation, serves as the exclusive distributor of the Trust's
shares.
The Trust has adopted a shareholder services plan ("Services Plan") with
respect to Retail A Shares and Trust Shares of the Funds. Currently, the
Services Plan has not been implemented with respect to the Funds' Trust Shares.
The Services Plan provides compensation to institutions (including and currently
limited to Fleet Bank and its affiliates) which provide shareholder liaison
and/or administrative support services to their customers who beneficially own
Retail A Shares at an aggregate annual rate not to exceed 0.30% of the average
daily net asset value of the outstanding Retail A Shares of each Fund
beneficially owned by such customers. The Trust, under the direction of the
Board of Trustees, is currently limiting fees payable under the Services Plan
with respect to each Fund to an aggregate annual rate not to exceed 0.15% of the
average daily net asset value of the outstanding Retail A Shares beneficially
owned by such customers. No fees were charged under the Services Plan with
respect to the Rhode Island Municipal Bond Fund for the year ended October 31,
1999.
The Trust has adopted a distribution and shareholder services plan (the
"12b-1 Plan") with respect to Retail B Shares of the Tax-Exempt Bond Fund. Under
the 12b-1 Plan, the Trust may pay (i) the Distributor or another person for
expenses and activities primarily intended to result in the sale of Retail B
Shares, (ii) institutions for shareholder liaison services and (iii)
institutions for administrative support services. Currently, payments under the
12b-1 Plan for distribution services are being made solely to broker-dealer
affiliates of Fleet Bank and payments under the 12b-1 Plan for shareholder
liaison and shareholder administrative support services are being made solely to
Fleet Bank and its affilitates. Payments for distribution expenses may not
exceed an annual rate of 0.65% of the average daily net assets attributable to
each of the Fund's outstanding Retail B Shares. The fees for shareholder liaison
services and/or administrative support services may not exceed the annual rates
of 0.15% and 0.15%, respectively, of the average daily net assets attributable
to the Fund's outstanding Retail B Shares owned of record or beneficially by
customers of institutions. The Trust, under the direction of the Board of
Trustees, is currently limiting each Fund's payments for shareholder liaison and
administrative support ser-
54
<PAGE>
Notes to Financial Statements
vices under the 12b-1 Plan to an aggregate fee of not more than 0.15% of the
average daily net asset value of Retail B Shares owned of record or beneficially
by customers of institutions. For the year ended October 31, 1999, the Funds
paid fees under the Services Plan and 12b-1 Plan as follows:
12b-1 Plan
Services ----------
Fund Plan Services Distribution
- ---- ---- -------- ------------
Tax-Exempt Bond ............................ $ 33,072 $ 4,520 $ 21,499
New Jersey Municipal Bond .................. 960 N/A N/A
New York Municipal Bond .................... 66,562 N/A N/A
Connecticut Municipal Bond ................. 39,136 N/A N/A
Massachusetts Municipal Bond ............... 63,058 N/A N/A
Rhode Island Municipal Bond ................ -- N/A N/A
The Trust has adopted a Distribution Plan (the "A Prime Shares Plan") with
respect to A Prime Shares of the Tax-Exempt Bond Fund. Under the A Prime Shares
Plan, the Trust may pay the Distributor or another person for expenses and
activities primarily intended to result in the sale of A Prime Shares. Payments
by the Trust under the A Prime Shares Plan may not exceed the annual rate of
0.30% of the average daily net assets attributable to each Fund's outstanding A
Prime Shares. The Trust, under the direction of the Board of Trustees, intends
to limit the Fund's payments under the A Prime Shares Plan to an annual rate of
not more than 0.25% of the average daily net assets of the Fund's outstanding A
Prime Shares.
The Trust has adopted a Distribution and Services Plan (the "B Prime
Shares Plan") with respect to B Prime Shares of the Tax-Exempt Bond Fund. Under
the B Prime Shares Plan, the Trust may pay (i) the Distributor or another person
for expenses and activities primarily intended to result in the sale of B Prime
Shares, (ii) institutions for shareholder liaison services, and (iii)
institutions for administrative support services. Payments for distribution
expenses may not exceed an annual rate of 0.75% of the average daily net assets
attributable to the Fund's outstanding B Prime Shares. The fees for shareholder
liaison services and/or administrative support services may not exceed the
annual rates of 0.25% and 0.25%, respectively, of the average daily net assets
attributable to each Fund's outstanding B Prime Shares owned of record or
beneficially by customers of institutions. The Trust, under the direction of the
Board of Trustees, intends to limit the Fund's payments for shareholder liaison
and administrative support services under the B Prime Shares Plan to an
aggregate fee of not more than 0.25% of the average daily net assets of B Prime
Shares owned of record or beneficially by customers of institutions. As of
October 31, 1999, the Tax-Exempt Bond Fund had not commenced its offering of A
Prime Shares and B Prime Shares.
Retail A Shares, Retail B Shares, Trust Shares, A Prime Shares and B Prime
Shares of the Funds each bear series specific transfer agent charges based upon
the number of shareholder accounts for each series. For the year ended October
31, 1999, transfer agent charges for each series were as follows:
Fund Retail A Retail B Trust
- ---- -------- -------- -----
Tax-Exempt Bond ............................... $18,040 $ 2,095 $ 2,231
New Jersey Municipal Bond ..................... 5,233 N/A 53
New York Municipal Bond ....................... 22,653 N/A 789
Connecticut Municipal Bond .................... 12,517 N/A 47
Massachusetts Municipal Bond .................. 16,654 N/A 44
Rhode Island Municipal Bond ................... 5,100 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. Effective May 28, 1999, 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 $45,000 per
annum plus certain other fees for attending or participating in meetings as well
as reimbursement for expenses incurred in attending meetings. Prior to May 28,
1999, each Trustee was entitled to receive for services as a trustee of the
Trust, VIP and 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 "Plan"), an unfunded,
non-qualified deferred compensation plan. The Plan allows each Trustee to defer
receipt of all or a percentage of fees which otherwise would be payable for
services performed.
Expenses for the year ended October 31, 1999 include legal fees paid to
Drinker Biddle & Reath LLP. A partner of that firm is Secretary to the Trust.
4. Waiver of Fees and Reimbursement of Expenses
The Advisor and the Administrator voluntarily agreed to waive a portion of
their fees and/or reimburse the Funds for certain expenses so that total
expenses would not exceed certain expense limitations established for each Fund.
The respective parties, at their discretion, may revise or discontinue the
voluntary fee waivers and/or expense reimbursements at any time. For the year
ended October 31, 1999, the Investment Advisor and
55
<PAGE>
Notes to Financial Statements
Administrator waived fees and/or reimbursed expenses with respect to the Funds
as follows:
Fund Fees Waived
- ---- -----------
Tax-Exempt Bond ............................................ $338,345
New Jersey Municipal Bond .................................. 68,655
New York Municipal Bond .................................... 168,340
Connecticut Municipal Bond ................................. 170,690
Massachusetts Municipal Bond ............................... 290,517
Rhode Island Municipal Bond ................................ 86,559
Expenses
Fund Reimbursed
- ---- ----------
New Jersey Municipal Bond .................................... $ 65
New York Municipal Bond ...................................... 381
5. Shares of Beneficial Interest
The Trust's Declaration of Trust authorizes the Trustees to issue an
unlimited number of shares of beneficial interest, each with a par value of
$0.001. Shares of the Trust are currently classified into thirty-one classes of
shares each consisting of one or more series.
Each share represents an equal proportionate interest in the respective
Fund, bears the same fees and expenses (except that Retail A Shares of a Fund
bear the expense of payments under the Services Plan, Retail B Shares of a Fund
bear the expense of payments under the 12b-1 Plan, A Prime Shares of a Fund bear
the expense of payments under the A Prime Shares Plan, B Prime Shares of a Fund
bear the expense of payments under the B Prime Shares Plan and Trust Shares,
Retail A Shares, Retail B Shares, A Prime Shares and B Prime Shares of a Fund
each bear series specific transfer agent charges) and is entitled to such
dividends and distributions of income earned as are declared at the discretion
of the Trust's Board of Trustees.
Shareholders are entitled to one vote for each full share held and 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.
6. Purchases and Sales of Securities
The cost of purchases and proceeds from sales of securities, other than
short-term investments, for the year ended October 31, 1999 were as follows:
Fund Purchases Sales
- ---- --------- -----
Tax-Exempt Bond ............................ $52,087,906 $37,780,469
New Jersey Municipal Bond .................. 3,888,239 3,566,376
New York Municipal Bond .................... 22,275,220 20,101,894
Connecticut Municipal Bond ................. 28,441,515 21,486,493
Massachusetts Municipal Bond ............... 35,668,407 23,893,395
Rhode Island Municipal Bond ................ 8,063,561 7,213,761
The aggregate gross unrealized appreciation and depreciation, net
unrealized appreciation (depreciation), and cost for all securities as computed
on a federal income tax basis at October 31, 1999 for each Fund is as follows:
Fund Appreciation (Depreciation)
- ---- ------------ --------------
Tax-Exempt Bond ........................... $ 1,507,637 $(6,421,032)
New Jersey Municipal Bond ................. -- (406,498)
New York Municipal Bond ................... 978,445 (3,494,238)
Connecticut Municipal Bond ................ 389,973 (1,200,562)
Massachusetts Municipal Bond .............. 271,842 (3,471,434)
Rhode Island Municipal Bond ............... 264,670 (727,921)
Fund Net Cost
- ---- --- ----
Tax-Exempt Bond ........................... $ (4,913,395) $171,997,973
New Jersey Municipal Bond ................. (406,498) 9,054,014
New York Municipal Bond ................... (2,515,793) 80,496,158
Connecticut Municipal Bond ................ (810,589) 45,060,100
Massachusetts Municipal Bond .............. (3,199,592) 75,802,445
Rhode Island Municipal Bond ............... (463,251) 19,614,554
At October 31, 1999, the following Funds had capital loss carryforwards:
Fund Amount Expiration
- ---- ------ ----------
Tax-Exempt Bond ................................ $ 78,657 2007
New Jersey Municipal Bond ...................... 687 2006
44,349 2007
New York Municipal Bond ........................ 263,502 2003
16,589 2004
Connecticut Municipal Bond ..................... 31,295 2002
685,391 2003
82,263 2005
23,141 2007
Massachusetts Municipal Bond ................... 286,989 2003
65,783 2007
Rhode Island Municipal Bond .................... 76,090 2007
56
<PAGE>
Notes to Financial Statements
7. Concentration of Credit
The New Jersey Municipal Bond, New York Municipal Bond, Connecticut
Municipal Bond, Massachusetts Municipal Bond and Rhode Island Municipal Bond
Funds invest primarily in debt obligations issued by the State of New Jersey,
the State of New York, the State of Connecticut, the Commonwealth of
Massachusetts and the State of Rhode Island, respectively, and their respective
political subdivisions, agencies and public authorities to obtain funds for
various public purposes. The Funds, as non-diversified investment portfolios,
are more susceptible to economic and political factors adversely affecting
issuers of each respective state's specific municipal securities than are
municipal bond funds that are not concentrated in these issuers to the same
extent.
8. Subsequent Event - Change in Control of Administrator and
Change in Distributor (unaudited)
On December 1, 1999, PFPC Trust Company, a wholly-owned subsidiary of PFPC
Worldwide, Inc. and an indirect wholly-owned subsidiary of PNC Bank Corp.,
acquired all of the outstanding stock of Investor Services Group (the
"Transation"). On that same date and as part of the Transaction, PFPC Inc., an
indirect wholly-owned subsidiary of PNC Bank Corp., was merged into Investor
Services Group, which then changed its name to PFPC Inc.
In connection with the Transaction, on December 1, 1999, Provident
Distributors, Inc. became the distributor of the Trust's shares.
9. Tax Information (unaudited)
During the fiscal year ended October 31, 1999, the Funds earned the
following percent of their income from municipal obligations which generally
qualify as exempt from federal and state taxation:
Fund Income
- ---- ------
Tax-Exempt Bond ............................................. 100.00%
New Jersey Municipal Bond ................................... 100.00%
New York Municipal Bond ..................................... 100.00%
Connecticut Municipal Bond .................................. 100.00%
Massachusetts Municipal Bond ................................ 100.00%
Rhode Island Municipal Bond ................................. 100.00%
During the fiscal year ended October 31, 1999, the following Funds made
distributions from long-term capital gains as follows:
Fund Amount
- ---- ------
Tax-Exempt Bond .......................................... $1,323,693
Rhode Island Municipal Bond .............................. 63,388
57
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees of
The Galaxy Fund:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of the Tax-Exempt Bond Fund, New Jersey Municipal
Bond Fund, New York Municipal Bond Fund, Connecticut Municipal Bond Fund,
Massachusetts Municipal Bond Fund and Rhode Island Municipal Bond Fund (six of
the portfolios constituting The Galaxy Fund) as of October 31, 1999, and the
related statements of operations, the statements of changes in net assets, and
the financial highlights for the year then ended. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statements of changes in net assets
for the year ended October 31, 1998 and the financial highlights for the four
years then ended were audited by other auditors whose report dated December 23,
1998 expressed an unqualified opinion on those statements and financial
highlights.
We conducted our audit 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 financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of October 31, 1999 by correspondence with the custodian and brokers or other
appropriate auditing procedures where replies from brokers were not received. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Tax-Exempt Bond Fund, New Jersey Municipal Bond Fund, New York Municipal Bond
Fund, Connecticut Municipal Bond Fund, Massachusetts Municipal Bond Fund and
Rhode Island Municipal Bond Fund portfolios of The Galaxy Fund at October 31,
1999, the results of their operations, changes in their net assets and their
financial highlights for the year then ended, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
Boston, Massachusetts
December 13, 1999
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ANTXEBND (January 1, 2000)
