[front cover]
Annual Report
October 31, 1998
Galaxy Money Market Funds
Galaxy Funds
[cover graphics: acorn, column, graduation miter cap, handshake]
Galaxy Money Market Fund
Galaxy Government Fund
Galaxy U.S. Treasury Fund
Galaxy Tax-Exempt Fund
Galaxy Connecticut Municipal
Money Market Fund
Galaxy Massachusetts Municipal
Money Market Fund
[LOGO: GALAXY FUNDS]
<PAGE>
- ----------
CHAIRMAN'S
MESSAGE
- ----------
Dear Shareholder:
Enclosed is the Galaxy Money Market Fund performance report for the fiscal
year ended October 31, 1998. Inside, you will find a Market Overview describing
conditions that affected the money market during this time. There is also an
explanation of how Fleet Investment Advisors, Inc. managed the Funds' portfolios
in this environment. At the end of the report, you will find financial
statements for each of the Funds, including lists of portfolio holdings as of
October 31, 1998.
After trading in a relatively narrow range for most of the period, money
market yields moved sharply lower near the end of the period. This was due
largely to a deepening of Asia's economic problems, the spread of economic
turmoil to Russia and Latin America, and a slowdown in U.S. growth. At the end
of the period, with a severe credit crunch and recession possible, the Federal
Reserve cut short-term interest rates by 50 basis points.
As world economic problems created a "flight to quality," the Galaxy Money
Market Funds benefited from an emphasis on top-grade investments with strong
credit ratings. With the global economic picture still unclear, we believe this
attention to quality will continue to serve the Funds well in the months ahead.
Of course, money market investments are just one part of a
well-diversified portfolio. With short-term yields in decline, other investments
become particularly important. As with money market securities, however, recent
economic changes have significantly altered the values of stocks and bonds. This
may be a good time, therefore, to rebalance your portfolio to its original
allocations. As experienced investors know, proper portfolio diversification can
help to minimize investment risk.
You can also reduce risk by sticking with your long-term investment plan
and by using strategies like dollar-cost averaging -- in which you invest the
same amount of money at regular intervals, in good times and bad. Your
investment professional can help you implement these and other potential
risk-reduction techniques. Should you have any questions about the material in
this report, or want information about other Galaxy funds, please contact the
Galaxy Information Center at 1-877-BUY-GALAXY (289-4252). You can also visit our
Investment Specialists located at Fleet branches.
Sincerely,
/s/ Dwight E. Vicks, Jr.
Dwight E. Vicks, Jr.
Chairman of the Board of Trustees
[start sidebar]
Mutual Funds:
[bullet] are not bank deposits
[bullet] are not FDIC insured
[bullet] are not obligations of Fleet Bank
[bullet] are not guaranteed by Fleet Bank
[bullet] are subject to investment risk including possible loss of principal
amount invested
[end sidebar]
<PAGE>
- ---------------
MARKET OVERVIEW
- ---------------
[start sidebar]
"After fluctuating
in a narrow range
from November 1997
through June 1998,
short-term yields
tumbled sharply in
the months that
followed."
[end sidebar]
MONEY MARKET OVERVIEW
By Fleet Investment Advisors Inc.
Money market yields fell substantially in the fiscal year ended October
31, 1998 -- as economic uncertainty turned to economic concern, and the Federal
Reserve (the "Fed") trimmed short-term interest rates twice -- for a total rate
cut of 50 basis points. Throughout this time we adjusted the maturities of
investments in the Galaxy Money Market Funds to optimize both major and minor
changes in yields.
Economic Concerns Deepen
When the period began, three-month Treasury bills were yielding about
5.2%, and the annual rate of inflation was about 2.2%. Following an annual
growth rate of 3.1% in the third quarter of 1997, the gross domestic product
("GDP"), which measures U.S. goods and services, increased to an annual rate of
3.7% in the fourth quarter. Despite a tight labor market, which put upward
pressure on wages, the annual rate of inflation declined to 1.7%.
Economic problems in the emerging markets of Asia, which surfaced earlier
in 1997, began to worsen at the end of the year and spurred a flight to quality
that increased demand for U.S. Treasury securities. This pushed Treasury yields
lower until late in December, when heavy sales by foreign investors in need of
liquidity drove yields higher.
Although GDP annual growth accelerated to 5.5% in the first quarter of
1998, inflation fell to an annual rate of 1.4%. Money market yields edged lower
in January, as further deterioration in Asia and signs of slower earnings for
U.S. firms raised expectations that the Fed would trim short-term interest
rates. These expectations faded in the months that followed, as wages continued
to rise and economic growth remained solid. However, with continued demand for
Treasury bills and news that a federal budget surplus might reduce supplies of
new issues, short-term treasury yields moved lower again.
GDP growth slowed to an annual rate of 1.6% in the second quarter of 1998
- -- as the economic trouble in Asia, which had spread to Japan, continued to hurt
U.S. earnings. However, with consumer spending still strong, and inflation still
weak, stock prices continued to rise. As the Fed hinted it might boost
short-term rates to keep stock gains from overstimulating the economy, money
market yields edged higher.
In the third quarter of 1998, GDP improved to an annual rate of 3.9%, but
serious economic problems abroad began to threaten future U.S. growth. Economic
trouble had spread to Russia and the emerging markets of Latin America, and
raised the possibility of a worldwide recession. Following a sharp selloff in
stocks during August and September, the Fed cut short-term rates by 25 basis
points on September 29, 1998. When liquidity concerns nearly halted trading in
U.S. corporate bonds in the weeks that followed, the Fed trimmed rates by
another 25 basis points on October 15, 1998. This, plus the strong demand for
quality, left yields for three-month Treasury bills at 4.32% when the
1
<PAGE>
- ---------------
MARKET OVERVIEW
- ---------------
[start sidebar]
"The Fed may feel
that additional cuts
in interest rates
are necessary to
stabilize economies
abroad and prevent a
recession at home."
[end sidebar]
Performance At-A-Glance As of October 31, 1998
<TABLE>
<CAPTION>
Retail Retail B Trust
Shares Shares Shares
------ -------- ------
<S> <C> <C> <C>
Galaxy Money Market Fund
7-day average yield........... 4.61% 3.97% 4.79%
30-day average yield.......... 4.68% 4.05% 4.85%
Galaxy Government Fund
7-day average yield........... 4.53% N/A 4.71%
30-day average yield.......... 4.55% N/A 4.73%
Galaxy Tax-Exempt Fund
7-day average yield........... 2.64% N/A 2.77%
30-day average yield.......... 2.67% N/A 2.80%
Galaxy U.S. Treasury Fund
7-day average yield........... 4.24% N/A 4.40%
30-day average yield.......... 4.26% N/A 4.43%
Galaxy Connecticut Municipal
Money Market Fund
7-day average yield........... 2.58% N/A N/A
30-day average yield.......... 2.59% N/A N/A
Galaxy Massachusetts Municipal
Money Market Fund
7-day average yield........... 2.61% N/A N/A
30-day average yield.......... 2.63% N/A N/A
</TABLE>
Past performance is no guarantee of future results. Investments in the Galaxy
Money Market Funds are neither insured nor guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the Funds seek to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the Funds. Yields are historical and will vary with market
performance.
Retail Shares are currently charged a shareholder servicing fee of 0.10% of
average daily net assets. Retail B Shares are currently charged a distribution
fee of 0.65% of average daily net assets and a shareholder servicing fee of
0.10% of average daily net assets. (See Note 3 in the Notes to Financial
Statements.)
period ended.
During this time we looked for opportunities to enhance the Funds' yields
where we could, while maintaining a high level of quality and liquidity.
Lower Rates Possible
We believe that the Fed may have to cut interest rates again in the months
ahead. U.S. trade, manufacturing, and consumer confidence are now in decline --
making a further slide in corporate earnings likely. The Fed may feel that
additional cuts in interest rates are necessary to stabilize economies abroad
and prevent a recession at home. With inflation near an annual rate of 1.6%,
there could be plenty of room for rates to fall.
2
<PAGE>
- -----------------
PORTFOLIO REVIEWS
- -----------------
[photo: Karen Arneil]
GALAXY TAXABLE
MONEY MARKET FUNDS
By Karen Arneil
Portfolio Manager
As expectations changed about the direction of inflation and interest
rates in the past year, we changed the mix of maturities in the Galaxy Taxable
Money Market Funds -- which include the Galaxy Money Market Fund, the Galaxy
Government Fund and the Galaxy U.S. Treasury Fund (as collectively the "Funds").
This let us take advantage of special yield opportunities that arose in certain
market sectors. By also emphasizing issues with good liquidity and strong credit
quality, we helped the Funds earn returns for the fiscal year ended October 31,
1998 that compared favorably with returns for their benchmarks.
[pie chart]
Galaxy Money
Market Fund
Distribution of Total Net
Assets as of October 31, 1998
U.S. Gov't. & Agency Obligations 50%
Commercial Paper 33%
Repurchase Agreement &
Net Other Assets & Liabilities 8%
Corporate Notes & Bonds 7%
Certificates of Deposit 2%
[end pie chart]
During the period, Trust Shares of the Galaxy Money Market Fund had a
total return of 5.23%, and Retail A Shares of the Galaxy Money Market Fund
earned a total return of 5.04%. Retail B Shares earned a total return of 4.33%
before deducting the 5.00% contingent deferred sales charge, and a return of
- -0.67% after deducting the 5.00% contingent deferred sales charge.
Over the same time, Lipper Analytical Services ("Lipper"), a mutual fund
performance tracking service, measured average total returns of 5.21% for trust
shares and 5.03% for retail shares of other taxable money market funds that
reported their results to Lipper.
[line chart]
Galaxy Money Market Fund
7-Day Average Yield
<TABLE>
<CAPTION>
Galaxy Money Galaxy Money Galaxy Money
Market Fund - Market Fund - Market Fund -
Trust Retail A Retail B
<S> <C> <C> <C>
11/30/97 4.99 5.18 4.36
12/31/97 5 5.19 4.32
1/31/98 5.01 5.2 4.27
2/29/98 4.97 5.14 4.19
3/31/98 4.95 5.12 4.19
4/30/98 4.92 5.1 4.24
5/30/98 4.94 5.11 4.14
6/30/98 4.95 5.12 4.23
7/31/98 4.94 5.12 4.12
8/31/98 4.94 5.11 4.14
9/30/98 4.88 5.05 4.29
10/30/98 4.61 4.79 3.97
</TABLE>
[end line chart]
For the fiscal year ended October 31, 1998, Trust Shares of the Galaxy
Government Fund had a total return of 5.15%, and Retail A Shares of the Galaxy
Government Fund had a total return of 4.94%. Trust shares of other money market
funds investing in U.S. government issues that reported their performances to
Lipper earned an average total return of 5.13% over the same period. Retail
shares of similar funds that reported their performances to Lipper earned an
average total return of 4.93% for the period.
During this time, Trust Shares of the Galaxy U.S. Treasury Fund had a
total return of 4.90%, and Retail A Shares of the Galaxy U.S. Treasury Fund
earned a total return of 4.73%. These returns compared with an average total
return of 4.90% for trust shares of other money market funds investing in U.S.
Treasury issues that reported their results to Lipper. Retail shares of similar
funds that reported their performances to Lipper earned a total return of 4.72%
for the period.
On October 31, 1998, the Galaxy Money Market Fund had an average maturity
of 41 days, the Galaxy Government Fund had an average maturity of 28 days, and
the Galaxy U.S. Treasury Fund had an average maturity of 50 days.
Seizing Yield Opportunities
Because yields for short-term U.S. Treasury issues were relatively flat
when the period started, we emphasized maturities of one month or less in the
Galaxy U.S. Treasury
[pie chart]
Galaxy Government Fund
Distribution of Total Net Assets as of October 31, 1998
Federal National Mortgage Association 29%
Federal Home Loan Mortgage
Corporation 25%
Federal Home Loan Bank 19%
Repurchase Agreement 16%
Federal Farm Credit Bank 6%
Net Other Assets and Liabilities 3%
Student Loan Marketing Association 2%
[end pie chart]
3
<PAGE>
- -----------------
PORTFOLIO REVIEWS
- -----------------
Fund. Once heavy sales of short-term Treasuries by foreign investors improved
yields late in December 1997, we added longer maturities to the portfolio. With
the typical technical year-end increase in yields for commercial paper and U.S.
government agency discount notes, we bought investments for the Galaxy Money
Market Fund and the Galaxy Government Fund that matured early in 1998.
[line chart]
Galaxy Government Fund
7-Day Average Yield
<TABLE>
<CAPTION>
Galaxy Galaxy
Government Fund - Government Fund -
Trust Retail A
<S> <C> <C>
11/30/97 4.86 5.06
12/31/97 4.88 5.08
1/30/98 4.91 5.11
2/29/98 4.9 5.07
3/31/98 4.89 5.07
4/30/98 4.86 5.04
5/29/98 4.87 5.06
6/30/98 4.87 5.05
7/31/98 4.85 5.03
8/31/98 4.86 5.04
9/30/98 4.74 4.93
10/30/98 4.53 4.71
</TABLE>
[end line chart]
When expectations for a cut in short-term rates drove yields lower in the
first weeks of 1998, we added issues with slightly longer maturities to the
Galaxy U.S. Treasury Fund. These included Treasury notes and bonds that matured
in one year or less. We also purchased cash-management bills issued by the U.S.
Treasury for short-term borrowing needs, which had higher yields than comparable
Treasury issues.
We kept large overnight positions in the Galaxy Government Fund until the
yields for government agency issues improved in the first months of 1998. With
the yield curve for commercial paper comparatively flat by that time, we focused
on shorter maturities in the Galaxy Money Market Fund -- enhancing yield with
individual issues that looked attractive.
[start pie chart]
Galaxy U.S. Treasury Fund
Distribution of Total Net Assets as of October 31, 1998
U.S. Treasury Notes 43%
U.S. Treasury Bills 24%
Student Loan Marketing Association 19%
Federal Home Loan Bank & Net Other Assets & Liabilities 7%
Federal Farm Credit Bank 7%
[end pie chart]
When economic concern deepened in the summer and fall, we emphasized
liquidity by keeping a higher amount of overnight securities in all of the
Galaxy Money Market Funds. With demand still increasing for Treasury securities,
which pushed yields to all-time lows, we continued emphasizing longer-term
issues in the Galaxy U.S. Treasury Fund. Because we were concerned about
liquidity in this climate, we added U.S. government agency issues and stayed
focused on commercial paper of high-quality domestic firms in the Galaxy Money
Market Fund.
Liquidity and Quality Remain Key
With the market and economic outlook uncertain, we believe our emphasis on
liquidity and quality will serve the Fund well in months to come.
As anticipated year-end technical pressure, which causes higher yields,
gets priced into instruments that mature in 1999, we plan to add these
securities to the Funds' portfolios. In the immediate future, we expect to keep
the maturities of Fund instruments in line with those of their market benchmarks
- -- as we wait to see how the global economic crisis that we have been
experiencing turns out.
Karen Arneil has managed the Galaxy Money Market Fund, the Galaxy Government
Fund and the Galaxy U.S. Treasury Fund since September 1996. She has managed
money market investments since 1993.
[line chart]
Galaxy U.S. Treasury Fund
7-Day Average Yield
<TABLE>
<CAPTION>
Galaxy Galaxy
U.S. Treasury Fund - U.S. Treasury Fund -
Trust Retail A
<S> <C> <C>
11/30/97 4.67 4.84
12/31/97 4.68 4.85
1/31/98 4.7 4.87
2/29/98 4.73 4.89
3/31/98 4.75 4.91
4/30/98 4.7 4.86
5/29/98 4.63 4.79
6/30/98 4.65 4.81
7/31/98 4.67 4.83
8/31/98 4.63 4.79
9/30/98 4.49 4.66
10/30/98 4.24 4.4
</TABLE>
[end line chart]
4
<PAGE>
- -----------------
PORTFOLIO REVIEWS
- -----------------
GALAXY TAX-EXEMPT
MONEY MARKET FUNDS
By Karen Arneil
Portfolio Manager
As in the past, seasonal shifts in supply and demand caused yields for
tax-exempt money market instruments to fluctuate in the fiscal year ended
October 31, 1998. To make the most of these changes, we adjusted maturities of
investments in the Galaxy Tax-Exempt Money Market Funds -- which include the
Galaxy Tax-Exempt Fund, the Galaxy Connecticut Municipal Money Market Fund and
the Galaxy Massachusetts Municipal Money Market Fund (as collectively the
"Funds"). These strategies, plus a constant search for individual investments
offering good value, helped the Funds earn competitive returns.
[start pie chart]
Galaxy
Tax-Exempt Fund
Distribution of Total Net Assets
as of October 31, 1998
South 51%
East 14%
North Central 13%
Mountain 12%
Pacific 6%
Other Territories, Cash Equivalents &
Net Other Assets & Liabilities 4%
[end pie chart]
During the period, Trust and Retail A Shares of the Galaxy Tax-Exempt Fund
had total returns of 3.03% and 2.89%, respectively. Over the same time, trust
and retail shares of other tax-exempt money market funds reporting their
performances to Lipper earned average total returns of 3.03% and 2.89%,
respectively.
[line chart]
Galaxy Tax-Exempt Fund
7-Day Average Yield
<TABLE>
<CAPTION>
Galaxy Galaxy
Tax-Exempt Fund - Tax-Exempt Fund -
Trust Retail A
<S> <C> <C>
11/30/97 3.08 3.23
12/31/97 3 3.15
1/30/98 2.93 3.07
2/29/98 2.83 2.96
3/31/98 2.91 3.04
4/30/98 3.2 3.34
5/29/98 3.07 3.21
6/30/98 2.96 3.1
7/31/98 2.9 3.04
8/31/98 2.77 2.91
9/30/98 3.11 3.24
10/30/98 2.64 2.77
</TABLE>
[end line chart]
Shares of the Galaxy Connecticut Municipal Money Market Fund had a total
return of 2.87%, versus 2.86% for the retail shares of other Connecticut
tax-exempt money market funds tracked by Lipper. Shares of the Galaxy
Massachusetts Municipal Money Market Fund had a total return of 2.86%, versus
2.85% for the retail shares of other Massachusetts tax-exempt money market funds
reporting performances to Lipper.
As of October 31, 1998, the average maturity of the Tax-Exempt Fund was 42
days, and the average maturities of the Connecticut and Massachusetts Municipal
Money Market Funds were 67 days and 51 days, respectively.
Watching Supply and Demand
In the final months of 1997 we emphasized investments with strong
liquidity to meet traditional year-end outflows of cash. At the same time, we
continuously added longer-term investments that would mature after January of
1998 -- when historically strong demand puts downward pressure on the yields of
short-term tax-exempt securities.
Demand remained strong after January, while supplies of tax-exempt money
market instruments were relatively tight -- making
[line chart]
Galaxy Connecticut Municipal
Money Market Fund
7-Day Average Yield
<TABLE>
<S> <C>
November 1, 1997
October 31, 1998
Connecticut Municipal Money Market Fund
11/30/97 3.12
12/31/97 3
1/31/98 2.87
2/29/98 2.77
3/31/98 2.97
4/30/98 3.36
5/29/98 3.1
6/30/98 2.91
7/31/98 2.87
8/31/98 2.66
9/30/98 3.12
10/30/98 2.58
</TABLE>
[end line chart]
5
<PAGE>
- -----------------
PORTFOLIO REVIEWS
- -----------------
[start pie chart]
Galaxy
Connecticut Municipal
Money Market Fund
Distribution of Total Net Assets
as of October 31, 1998
Connecticut 61%
South 15%
Puerto Rico 11%
Pacific 7%
Mountain 5%
North Central,
Other Territories,
Cash Equivalents
& Net Other Assets
& Liabilities 1%
[end pie chart]
the yields of these securities less attractive. At this point we increased
investments in variable-rate instruments, whose rates reset weekly instead of
daily. This added income while reducing daily yield fluctuations.
As investors sold tax-exempt instruments to pay taxes in April, the yields
for these issues became more attractive. With a significant portion of the Funds
in variable-rate instruments, we were able to capture higher yields in many
cases. We were also able to seize yield opportunities that arose in June, when a
seasonal increase in new issues pushed supplies of tax-exempt instruments
higher.
When short-term interest rates fell in the final months of the period, the
Funds enjoyed strong yields from the longer-maturity issues we had bought in
June. We maintained our investments in weekly and daily maturities -- which were
available in ample supply.
Throughout the period we stressed issues with good liquidity and strong
credit quality. Given the economic turmoil abroad, we remained focused on
investments backed by strong financial firms.
[start pie chart]
Galaxy Massachusetts Municipal
Money Market Fund
Distribution of Total Net Assets as of
October 31, 1998
Massachusetts 72%
South 13%
Other Territories 11%
North Central 3%
Cash Equivalents &
Net Other Assets
& Liabilities 1%
[end pie chart]
Focus on Value
We expect to maintain these emphases in the months ahead. With the recent
uptick in yields for Treasury securities, yields for tax-exempt issues have
become slightly less attractive. In this environment we will continue to look
for issues offering good value -- which may include general obligation
securities and tax-exempt notes with short maturities. Given the expected
increase in demand that should put downward pressure on yields in January, we
are again purchasing issues that mature after that time.
Karen Arneil has managed the Galaxy Tax-Exempt Fund, the Galaxy Connecticut
Municipal Money Market Fund and the Galaxy Massachusetts Municipal Money Market
Fund since September 1996. She has managed money market investments since 1993.
[start line chart]
Galaxy Massachusetts Municipal
Money Market Fund
7-Day Average Yield
<TABLE>
<S> <C>
November 1, 1997
October 31, 1998
Mass. Municipal Money Market Fund
11/30/97 3.09
12/31/97 2.96
1/31/98 2.83
2/28/98 2.72
3/31/98 2.87
4/30/98 3.33
5/29/98 3.07
6/30/98 2.9
7/31/98 2.92
8/31/98 2.68
9/30/98 3.16
10/30/98 2.61
</TABLE>
[end line chart]
- --------------------------------------------------------------------------------
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 exclude the deduction of any contingent deferred sales charge
unless otherwise indicated. 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. There can be no assurance that the
Funds will be able to maintain a stable net asset value of $1.00 per share.
6
<PAGE>
- -----------
SHAREHOLDER
SERVICES
- -----------
[start sidebar]
"A well-balanced
asset allocation
plan may help to
control your risk
while pursuing your
goals."
[end sidebar]
AUTOMATIC INVESTMENT PROGRAM
The Golden Rule of investing is "pay yourself first." That is easy to do with
Galaxy's Automatic Investment Program. For as little as $50 per month deducted
directly from your checking, savings, or bank money market account, you can
consistently and conveniently add to your Galaxy investment. When you establish
an Automatic Investment Program, the $2,500 initial investment requirement for
Galaxy is waived. Of course, such a program does not assure a profit and does
not protect against loss in a declining market.
DIVERSIFICATION
A fundamental investment practice is "diversification." A well-balanced asset
allocation plan may help to control your risk while pursuing your goals. Many
mutual funds offer a low-cost way to diversify your investments while you
benefit from professional management. Galaxy's comprehensive array of investment
choices can be used in combination to match the needs of nearly everyone.
EXCHANGE PRIVILEGES
As your investment needs change, you can conveniently exchange your shares in
one fund for shares in another fund within the same share class.
QUARTERLY MAGAZINE
Service also means giving you the practical information you need in language you
can understand to make smart investment decisions. The quarterly magazine,
Galaxy Observer, brings news, strategies and simple, straight-forward
explanations of investment basics and terminology.
CONSOLIDATED STATEMENTS
Timely, comprehensive mutual fund account statements offer detailed information
on your individual account. If you have a Fleet One, Fleet Gold or a Fleet
Private Banking Account, your Galaxy Fund information can be added to these
statements.
24-HOUR ACCESS TO REGISTERED
REPRESENTATIVES
24 hours a day, seven days a week, 365 days a year, we are ready and available
to help. Our toll-free telephone lines offer round-the-clock access to Fund
information and services. Call 1-877-BUY-GALAXY (289-4252) for information
on initial purchases and current performance.
CUSTOMER SERVICE
Quality customer service is only a phone call away. Call 1-877-BUYGALAXY
(289-4252) between 8 a.m. and 6 p.m. to arrange bank wires, or to make telephone
exchanges and redemptions.
- --------------------------------------------------------------------------------
Certain shareholder services may not be available to Trust Share investors.
Please consult the Fund Prospectus.
* Shares of the Funds are distributed through First Data Distributors, Inc.,
member NASD and SIPC. Investment Specialists are registered representatives of
FIS Securities, Inc., Fleet Enterprises Inc. or Quick & Reilly Inc., members
NASD and SIPC.
7
<PAGE>
[start sidebar]
TRUSTEES
AND OFFICERS
Dwight E. Vicks, Jr.
Chairman and Trustee
John T. O'Neill
President, Treasurer
and Trustee
Louis DeThomasis,
F.S.C., Ph.D.
Trustee
Donald B. Miller
Trustee
James M. Seed
Trustee
Bradford S. Wellman
Trustee
W. Bruce
McConnel, III, Esq.
Secretary
Jylanne Dunne
Vice President &
Assistant Treasurer
William Greilich
Vice President
INVESTMENT ADVISOR
Fleet Investment
Advisors Inc.
75 State Street
Boston, MA
02109
DISTRIBUTOR
First Data
Distributors, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
ADMINISTRATOR
First Data Investor Services Group, Inc.
4400 Computer Drive
Westborough,
Massachusetts 01581-5108
[end sidebar]
This report is submitted for the general information of shareholders of The
Galaxy Fund. It is not authorized for distribution to prospective investors
unless accompanied or preceded by an effective prospectus for the Fund, which
contains more information concerning the Fund's investment policies, as well as
fees and expenses and other pertinent information. Read the prospectus carefully
before you invest.
Shares of the Funds are not bank deposits or obligations of, or guaranteed or
endorsed by, Fleet Financial Group, Inc. or any of its affiliates, Fleet
Investment Advisors Inc., or any Fleet bank. Shares of the Funds are not
federally insured by, guaranteed by, obligations of or otherwise supported by
the U.S. Government, the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other governmental agency. Investment return and principal
value will vary as a result of market conditions or other factors so that shares
of the Funds, when redeemed, may be worth more or less than their original cost.
An investment in the Funds involves investment risks, including the possible
loss of principal amount invested. There is no assurance that the Funds will be
able to maintain a stable net asset value of $1.00 per share.
[Recycle symbol]
This report was printed on recycled paper.
8
<PAGE>
- --------------- Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 49.51%
Federal Home Loan
Mortgage Corporation - 29.42%
$ 70,000,000 5.12%, 11/09/98 (A) ............ $ 69,920,433
80,000,000 5.40%, 11/10/98 (A) ............ 79,891,900
7,157,000 5.06%, 11/12/98 (A) ............ 7,145,934
50,000,000 5.35%, 11/24/98 (A) ............ 49,829,097
41,910,000 5.33%, 11/25/98 (A) ............ 41,761,147
25,000,000 5.12%, 11/30/98 (A) ............ 24,896,889
90,000,000 5.06%, 12/02/98 (A) ............ 89,607,850
44,792,000 5.07%, 12/08/98 (A) ............ 44,558,596
36,500,000 5.30%, 12/09/98 (A) ............ 36,295,803
40,000,000 5.28%, 12/17/98 (A) ............ 39,730,133
36,684,000 4.77%, 12/18/98 (A) ............ 36,455,550
23,100,000 4.76%, 12/21/98 (A) ............ 22,947,283
40,000,000 4.76%, 12/23/98 (A) ............ 39,724,978
50,000,000 5.04%, 12/30/98 (A) ............ 49,587,000
50,000,000 5.16%, 01/22/99 (A) ............ 49,459,027
50,000,000 5.18%, 02/02/99 (A) ............ 49,330,917
35,000,000 5.22%, 02/03/99 (A) ............ 34,522,950
60,400,000 4.79%, 02/05/99 (A) ............ 59,628,011
50,000,000 4.92%, 02/09/99 (A) ............ 49,316,667
28,602,000 4.70%, 02/24/99 (A) ............ 28,172,573
40,000,000 5.61%, 03/12/99 ................ 40,033,009
59,800,000 4.96%, 03/26/99 (A) ............ 58,606,505
-------------
1,001,422,252
-------------
Federal Home Loan Bank - 10.36%
25,000,000 5.13%, 11/04/98 (A) ............ 24,989,313
50,000,000 4.78%, 11/20/98 (A) ............ 49,873,861
50,000,000 5.05%, 12/04/98 (A) ............ 49,768,542
25,000,000 5.07%, 12/09/98 (A) ............ 24,866,208
35,000,000 5.05%, 12/11/98 (A) ............ 34,803,611
30,000,000 4.74%, 12/23/98 (A) ............ 29,794,600
25,000,000 4.75%, 12/28/98 (A) ............ 24,811,979
25,000,000 4.75%, 01/15/99 (A) ............ 24,752,604
35,000,000 4.92%, 02/12/99 (A) ............ 34,507,317
40,000,000 4.66%, 02/19/99 (A) ............ 39,430,444
15,000,000 5.56%, 08/04/99 ................ 14,994,215
-------------
352,592,694
-------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Federal National
Mortgage Association - 9.73%
$ 50,000,000 5.42%, 11/06/98 (A) ............ $ 49,962,361
10,000,000 5.14%, 11/09/98 (A) ............ 9,988,578
25,000,000 5.15%, 11/10/98 (A) ............ 24,967,813
40,000,000 5.43%, 11/13/98 (A) ............ 39,927,600
30,000,000 5.06%, 12/07/98 (A) ............ 29,848,200
30,000,000 5.33%, 12/09/98 (A) ............ 29,831,217
20,000,000 7.05%, 12/10/98 ................ 20,036,521
40,000,000 4.80%, 02/01/99 (A) ............ 39,509,333
30,000,000 4.98%, 02/02/99 (A) ............ 29,614,050
22,745,000 4.63%, 03/04/99 (A) ............ 22,385,193
35,000,000 5.42%, 05/14/99 MTN (B) ........ 34,984,467
-------------
331,055,333
-------------
Total U.S. Government and
Agency Obligations ............. 1,685,070,279
(Cost $1,685,070,279) -------------
COMMERCIAL PAPER (A) - 33.13%
Finance - 17.56%
30,000,000 American Express Credit Corp.
5.21%, 11/02/98 ................ 29,995,658
35,000,000 American Express Credit Corp.
5.39%, 11/30/98 ................ 34,848,032
75,000,000 Associates Corp. of North America
5.50%, 11/02/98 ................ 74,988,542
31,000,000 Caterpillar Financial Services Corp.
5.45%, 11/04/98 ................ 30,985,921
32,500,000 Diageo Capital PLC
5.40%, 11/16/98 (C) ............ 32,426,875
15,000,000 Ford Motor Credit Co.
5.50%, 11/05/98 ................ 14,990,833
40,000,000 Ford Motor Credit Co.
5.05%, 12/01/98 ................ 39,831,667
45,000,000 Ford Motor Credit Co.
5.40%, 12/11/98 ................ 44,730,000
40,000,000 General Electric Capital Corp.
5.37%, 11/05/98 ................ 39,976,134
30,000,000 General Electric Capital Corp.
5.06%, 11/18/98 ................ 29,928,317
30,000,000 General Electric Capital Corp.
5.48%, 11/23/98 ................ 29,899,533
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
- --------------- Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Finance (continued)
$ 40,000,000 General Motors Corp.
5.10%, 11/06/98 ................ $ 39,971,667
47,000,000 General Re Corp.
5.48%, 11/24/98 ................ 46,835,493
23,350,000 General Re Corp.
5.40%, 12/11/98 ................ 23,209,900
31,100,000 National Rural Utilities
Cooperative Finance Corp.
5.03%, 12/08/98 ................ 30,939,222
30,000,000 National Rural Utilities
Cooperative Finance Corp.
5.33%, 12/10/98 ................ 29,826,775
24,500,000 USAA Capital Corp.
5.27%, 01/06/99 ................ 24,263,289
-------------
597,647,858
-------------
Consumer Staples - 8.74%
43,560,000 Abbott Laboratories
5.25%, 11/13/98 ................ 43,483,770
20,000,000 Abbott Laboratories
5.02%, 11/18/98 ................ 19,952,589
21,000,000 Abbott Laboratories
5.02%, 11/19/98 ................ 20,947,290
49,800,000 Colgate Palmolive Co.
5.40%, 11/24/98 (C) ............ 49,628,190
60,000,000 Gillette Co.
5.62%, 11/02/98 (C) ............ 59,990,633
13,000,000 Kellogg Co.
5.40%, 11/17/98 ................ 12,968,800
17,000,000 Pepsi Co, Inc.
5.00%, 11/10/98 ................ 16,978,750
22,000,000 Pepsi Co,Inc.
5.05%, 11/17/98 ................ 21,950,622
38,000,000 Procter & Gamble Co.
5.45%, 12/18/98 ................ 37,729,619
14,000,000 Procter & Gamble Co.
5.30%, 12/31/98 ................ 13,876,333
-------------
297,506,596
-------------
Technology - 3.02%
28,033,000 Lucent Technologies, Inc.
5.03%, 11/20/98 ................ 27,958,580
50,000,000 Lucent Technologies, Inc.
5.07%, 12/03/98 ................ 49,774,667
25,000,000 Xerox Corp.
5.24%, 11/06/98 ................ 24,981,806
-------------
102,715,053
-------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Chemicals and Drugs - 2.64%
40,000,000 duPont (E.I.) deNemours & Co.
5.46%, 11/04/98 ................ 39,981,800
50,000,000 Pfizer, Inc.
5.02%, 11/23/98 (C) ............ 49,846,611
-------------
89,828,411
-------------
Basic Materials - 1.17%
40,000,000 Minnesota Mining & Manufacturing Co.
5.47%, 11/19/98 ................ 39,890,600
-------------
Total Commercial Paper ......... 1,127,588,518
(Cost $1,127,588,518) -------------
CORPORATE NOTES AND BONDS - 6.97%
Banking - 5.07%
$ 40,000,000 BankBoston, NA
5.58%, 11/17/98 ................ $ 40,000,000
50,000,000 Bank One Wisconsin, Bank Note
5.55%, 02/26/99 ................ 49,969,362
25,000,000 NationsBank, Bank Note
5.60%, 12/18/98(B) ............. 25,005,378
50,000,000 PNC Bank NA, Bank Note
5.25%, 07/02/99(B) ............. 49,976,208
7,500,000 PNC Bank NA, Bank Note
5.28%, 08/16/99(B) ............. 7,495,636
-------------
172,446,584
-------------
Finance - 1.17%
40,000,000 Deere (John) Capital Corp., MTN
5.56%, 02/09/99 (B) ............ 39,993,425
-------------
Utilities - 0.73%
25,000,000 National Rural Utilities
Cooperative, MTN
5.61%, 09/21/99 (B) ............ 25,000,000
-------------
Total Corporate Notes and Bonds 237,440,009
(Cost $237,440,009) -------------
CERTIFICATES OF DEPOSIT - 2.20%
50,000,000 Harris Trust and Savings Bank
5.45%, 11/16/98 ................ 50,000,000
25,000,000 PNC Bank, NA
5.09%, 07/27/99 (B) ............ 24,986,233
-------------
Total Certificates of Deposit .. 74,986,233
(Cost $74,986,233) -------------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- --------------- Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
REPURCHASE AGREEMENTS - 8.79%
$ 150,000,000 Repurchase Agreement with:
HSBC Securities, Inc.
5.40%, 11/02/98, dated 10/30/98
Repurchase Price $150,067,500
(Collateralized by U.S. Treasury Notes
5.50%, Due 2000, 6.13%, Due 2001;
Total Par $145,425,000;
Market Value $153,004,574) ..... $ 150,000,000
149,085,000 Repurchase Agreement with:
Goldman Sachs & Co.
5.38%, 11/02/98, dated 10/30/98
Repurchase Price $149,151,840
(Collateralized by U.S. Treasury
Notes and Bonds; 5.38%, Due 2001,
8.13%, Due 2021;
Total Par $133,921,000;
Market Value $152,067,216) ..... 149,085,000
-------------
Total Repurchase Agreements .... 299,085,000
(Cost $299,085,000) -------------
Total Investments - 100.60% ...................... 3,424,170,039
(Cost $3,424,170,039)* -------------
Net Other Assets and Liabilities - (0.60)% ....... (20,450,820)
-------------
Net Assets - 100.00% .............................$3,403,719,219
=============
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for federal tax purposes.
(A) Discount yield at time of purchase.
(B) Interest is reset at various time intervals. The interest rate shown
reflects the rate in effect at October 31,1998.
(C) Securities exempt from registration under section 4(2) of the Securities
Act of 1933, as amended. These securities may only be resold in an exempt
transaction to qualified institutional buyers. At October 31,1998, these
securities amounted to $191,892,309 or 5.60% of net assets.
MTN Medium Term Note
See Notes to Financial Statements.
11
<PAGE>
- --------------- Government Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 80.19%
Federal National
Mortgage Association - 28.48%
$ 41,015,000 5.38%, 11/04/98 (A) ............ $ 40,996,612
38,350,000 4.67%, 11/09/98 MTN (B) ........ 38,349,989
15,000,000 5.15%, 11/10/98 (A) ............ 14,980,688
23,000,000 5.06%, 12/07/98 (A) ............ 22,883,620
15,000,000 7.05%, 12/10/98 ................ 15,031,331
31,000,000 5.30%, 12/11/98 (A) ............ 30,817,444
14,468,000 5.28%, 12/15/98 (A) ............ 14,374,633
25,000,000 5.28%, 12/18/98 (A) ............ 24,827,667
20,000,000 4.80%, 02/01/99 (A) ............ 19,754,667
25,000,000 4.98%, 02/02/99 (A) ............ 24,678,375
30,000,000 5.16%, 02/11/99 (A) ............ 29,561,400
30,000,000 5.42%, 05/14/99 MTN (B) ........ 29,986,686
-------------
306,243,112
-------------
Federal Home Loan
Mortgage Corporation (A) - 25.17%
62,477,000 5.38%, 11/05/98 ................ 62,439,625
18,810,000 5.41%, 11/06/98 ................ 18,795,866
25,000,000 5.13%, 11/12/98 ................ 24,960,851
30,000,000 5.36%, 11/16/98 ................ 29,933,000
39,940,000 5.40%, 11/19/98 ................ 39,832,162
25,000,000 5.35%, 11/24/98 ................ 24,914,549
25,000,000 5.11%, 11/30/98 ................ 24,897,090
11,000,000 5.06%, 12/02/98 ................ 10,952,071
19,269,000 4.76%, 12/23/98 ................ 19,136,515
15,000,000 5.22%, 02/03/99 ................ 14,795,550
-------------
270,657,279
-------------
Federal Home Loan Bank - 19.10%
35,000,000 5.08%, 11/12/98 (A) ............ 34,945,672
25,000,000 5.11%, 11/27/98 (A) ............ 24,907,736
30,000,000 4.90%, 12/08/98 (A) ............ 29,848,916
65,000,000 5.06%, 12/09/98 (A) ............ 64,652,881
26,455,000 4.66%, 02/19/99 (A) ............ 26,078,310
25,000,000 5.23%, 09/08/99 (B) ............ 24,989,349
-------------
205,422,864
-------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
Federal Farm Credit Bank - 5.58%
<S> <C> <C>
$ 25,000,000 5.50%, 11/02/98 ................ $ 24,999,955
20,000,000 5.70%, 11/03/98 ................ 19,999,990
15,000,000 5.09%, 11/25/98 (A) ............ 14,949,100
-------------
59,949,045
-------------
Student Loan
Marketing Association - 1.86%
20,000,000 4.65%, 11/25/98 MTN (B) ........ 20,000,000
-------------
Total U.S. Government
and Agency Obligations ......... 862,272,300
(Cost $862,272,300) -------------
REPURCHASE AGREEMENT - 16.43%
176,649,000 Repurchase Agreement with:
HSBC Securities, Inc.
5.40%, 11/02/98, dated 10/30/98
Repurchase Price $176,728,492
(Collateralized by U.S. Treasury
Notes and Bonds 5.63%, Due 1999,
7.75%, Due 2001, 7.88%, Due 2004
9.13%, Due 2018;
Total Par $151,092,000
Market Value $180,184,245) ..... 176,649,000
-------------
Total Repurchase Agreement ..... 176,649,000
(Cost $176,649,000) -------------
Total Investments - 96.62% ....................... 1,038,921,300
(Cost $1,038,921,300)* -------------
Net Other Assets and Liabilities - 3.38% ......... 36,353,638
-------------
Net Assets - 100.00% .............................$1,075,274,938
=============
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for federal tax purposes.
(A) Discount yield at time of purchase.
(B) Interest is reset at various time intervals. The interest rate shown
reflects the rate in effect at October 31, 1998.
MTN Medium Term Note
See Notes to Financial Statements.
12
<PAGE>
- --------------- Tax-Exempt Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
MUNICIPAL SECURITIES - 97.99%
Alabama - 2.22%
$ 6,000,000 Chatom, Industrial Development
Board, PCR Alabama Electric
Cooperative
3.25%, 11/23/98
Guaranteed: National Rural
Utilities CFC .................. $ 6,000,000
1,000,000 Phoenix County Industrial
Development Board
Environmental Improvements
Revenue Georgia Kraft Project
3.70%, 12/01/15 (A)
LOC: Deutsche Bank AG .......... 1,000,000
1,700,000 Stevenson Industrial
Development Board
Environmental Improvements
Revenue Mead Corp Project
3.60%, 11/01/16 (A)
LOC: Credit Suisse First Boston 1,700,000
-------------
8,700,000
-------------
</TABLE>
<TABLE>
<CAPTION>
Alaska - 1.56%
<S> <C> <C> <C>
2,600,000 Valdez Marine Terminal Revenue
Exxon Pipeline Co. Project,
Series A 3.70%, 12/01/33 (A)
Guaranteed: Exxon Corp. ........ 2,600,000
3,500,000 Valdez Marine Terminal Revenue
Exxon Pipeline Co. Project,
Series B 3.70%, 12/01/33 (A)
Guaranteed: Exxon Corp. ........ 3,500,000
-------------
6,100,000
-------------
Arizona - 0.72%
2,800,000 Maricopa County, PCR
Arizona Public Service Co.,
Series F 3.70%, 05/01/29 (A)
LOC: Bank of America NT & SA ... 2,800,000
-------------
Arkansas - 1.76%
5,700,000 Crossett PCR
Georgia Pacific Corp. Project
3.00%, 10/01/07 (A)
LOC: Toronto Dominion Bank ..... 5,700,000
1,200,000 Pulaski County, PCR
Minnesota Mining & Manufacturing
3.15%, 08/01/22 (A)
Guaranteed: Minnesota
Mining & Manufacturing ......... 1,200,000
-------------
6,900,000
-------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Colorado - 3.12%
$ 2,935,000 Colorado HFA
Boulder Community Hospital,
Series B
3.00%, 10/01/14 (A)
Insured: MBIA
SPA: Rabobank Nederland NV ..... $ 2,935,000
2,265,000 Colorado HFA
Boulder Community Hospital,
Series C
3.00%, 10/01/14 (A)
Insured: MBIA
SPA: Rabobank Nederland NV ..... 2,265,000
7,000,000 Moffat County, PCR
UTE Electric Co.
3.20%, 07/01/10 (A)
Insured: AMBAC
SPA: Societe Generale .......... 7,000,000
-------------
12,200,000
-------------
Connecticut - 0.26%
1,000,000 Connecticut State Special
Assessment Unemployment
Compensation Advisory Fund,
Series C 3.60%, 11/15/01 (A)
Insured: FGIC
SPA: FGIC - SPI ................ 1,000,000
-------------
Delaware - 1.02%
4,000,000 Delaware State Economic
Development, IDR
W. L. Gore & Associates, Barksdale
3.50%, 11/17/98
LOC: Morgan Guaranty Trust Co. . 4,000,000
-------------
Florida - 3.68%
10,000,000 Putnam County Development
Authority PCR, Seminole Electric
Cooperative, Series D
3.65%, 12/15/09 (A)
Guaranteed: National Rural
Utilities CFC .................. 10,000,000
4,400,000 West Orange Memorial Hospital
Tax District, Revenue Updates
Series A-2
3.50%, 11/18/98
LOC: Rabobank Nederland NV ..... 4,400,000
-------------
14,400,000
-------------
</TABLE>
See Notes to Financial Statements.
13
<PAGE>
- --------------- Tax-Exempt Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Georgia - 4.98%
$ 8,600,000 Burke County Development Authority
PCR, Oglethorpe Power Corp.
Series A
3.05%, 01/01/16 (A)
Insured: FGIC
SPA: Canadian Imperial
Bank of Commerce ............... $ 8,600,000
9,000,000 Municipal Electric Authority
Project One B
3.05%, 01/01/16 (A)
LOC: ABN-AMRO Bank N.V. ........ 9,000,000
1,900,000 Municipal Electric Authority
Project One - Series D
3.25%, 01/01/22 (A)
LOC: ABN-AMRO Bank N.V. ........ 1,900,000
-------------
19,500,000
-------------
Illinois - 6.74%
4,900,000 Chicago O'Hare International Airport
American Airlines, Series C
3.70%, 12/01/17(A)
LOC: Royal Bank of Canada ...... 4,900,000
5,000,000 Illinois Development Finance
Authority PCR, Illinois Power Co.
Project, Series A
3.10%, 11/01/28 (A)
LOC: Canadian Imperial
Bank of Commerce ............... 5,000,000
7,800,000 Illinois Educational Facilities
Authority 3.50%, 11/25/98
LOC: Northern Trust Co. ........ 7,800,000
2,600,000 Illinois HFA
Rush-Presbyterian Medical Center
Series B
3.30%, 11/13/98
LOC: Northern Trust Co. ........ 2,600,000
3,600,000 Joliet Regional Port District
Marine Terminal Revenue, Exxon
Project 3.70%, 10/01/24 (A)
Guaranteed: Exxon Corp. ........ 3,600,000
2,500,000 Northbrook IDR
Euromarket Designs, Inc.
3.05%, 07/01/02 (A)
LOC: Harris Trust & Savings Bank 2,500,000
-------------
26,400,000
-------------
Indiana - 1.49%
3,840,000 Fort Wayne Hospital Authority
Parkview Memorial Hospital,
Series C 3.00%, 01/01/16 (A)
LOC: Bank of America NT & SA ... 3,840,000
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Indiana (continued)
2,000,000 Sullivan PCR
Hoosier - L5
3.50%, 12/15/98
Guaranteed: National Rural
Utilities CFC .................. 2,000,000
-------------
5,840,000
-------------
Kentucky - 3.90%
$ 15,200,000 Kentucky Asset Liability Commission
General Fund Revenue, TRAN
Series A
4.50%, 06/25/99 ................ $ 15,287,441
-------------
Louisiana - 3.82%
1,800,000 Lake Charles Harbor &
Terminal District
Port Facilities Revenue
Citgo Petroleum Corp.
3.25%, 08/01/07 (A)
LOC: Westdeutsche Landesbank ... 1,800,000
1,100,000 Lake Charles Harbor &
Terminal District
Revenue Updates
Reynolds Metals Co. Project
3.15%, 05/01/06 (A)
LOC: Canadian Imperial
Bank of Commerce ............... 1,100,000
1,000,000 Louisiana Public Facilities
Authority PCR, Ciba-Geigy Corp.
Project 3.05%, 12/01/04 (A)
LOC: UBS AG .................... 1,000,000
1,060,000 Louisiana Public Facilities
Authority College & University
Equipment & Capital, Series A
3.15%, 09/01/10 (A)
Insured: FGIC
SPA: Societe Generale .......... 1,060,000
10,000,000 St James Parish, PCR
Texaco Project, Series A
3.20%, 11/24/98
Guaranteed: Texaco, Inc. ....... 10,000,000
-------------
14,960,000
-------------
Massachusetts - 2.61%
3,260,000 Bedford, BAN, GO
3.90%,12/31/98 ................. 3,261,414
3,000,000 Massachusetts State Housing
Finance Multi-Family, Series A
2.90%, 12/01/25 (A)
LOC: GNMA
SPA: Republic National Bank NY . 3,000,000
3,930,000 Massachusetts State Water
Polution Abatement Treatment
Series-A
4.25%, 08/01/99 ................ 3,947,408
-------------
10,208,822
-------------
</TABLE>
See Notes to Financial Statements.
14
<PAGE>
- --------------- Tax-Exempt Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Michigan - 2.50%
$ 2,240,000 Michigan Municipal Bond
Authority Revenue, Series B-1
4.50%, 07/02/99 ................ $ 2,253,244
2,800,000 Michigan State Building Authority
3.30%, 02/09/9 LOC: Canadian
Imperial Bank of Commerce ...... 2,800,000
200,000 Michigan State Strategic Fund,
PCR Consumers Power Project
3.70%, 04/15/18 (A)
LOC: UBS AG .................... 200,000
4,535,000 Michigan State University
Revenue, Series A-2
3.00%, 08/15/22 (A) ............ 4,535,000
-------------
9,788,244
-------------
Missouri - 1.69%
500,000 Jackson County, PCR
Chevron USA, Inc. Project
3.70%, 12/01/16 (A)
Guaranteed: Chevron Corp. ...... 500,000
6,100,000 Missouri State Environmental
Improvement and Energy Resource
Authority, PCR Union Electric Co.
Project, Series A
3.10%, 12/08/98
LOC: UBS AG .................... 6,100,000
-------------
6,600,000
-------------
Nevada - 0.51%
2,000,000 Reno Hospital
St Mary's Regional Medical Center
Series B
3.65%, 05/15/23 (A)
Insured: MBIA
SPA: Rabobank Nederland NV ..... 2,000,000
-------------
New Mexico - 2.92%
3,900,000 Farmington PCR El Paso Electric
Co., Series B 3.20%, 11/01/13
(A)
LOC: Barclays Bank Plc ......... 3,900,000
7,500,000 New Mexico State, TRAN
4.25%, 06/30/99 ................ 7,531,072
-------------
11,431,072
-------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
New York - 1.50%
$ 1,900,000 Long Island Power Authority
New York Electric System Revenue,
Series 6
3.60%, 05/01/33 (A)
LOC: ABN-AMRO,
Morgan Guaranty Trust .......... $ 1,900,000
1,000,000 New York State Energy
Research & Development Authority
Niagra Mohawk Power Corp.,
Series C
3.70%, 12/01/25 (A)
LOC: Canadian Imperial
Bank of Commerce ............... 1,000,000
2,000,000 New York State Energy
Research & Development Authority
Orange & Rockland Project,
Series A 2.75%, 10/01/14 (A)
Insured: FGIC
LOC: Societe Generale .......... 2,000,000
960,000 New York State
Housing Finance Agency
Hospital Special Surgery Staff,
Series A
2.90%, 11/01/10 (A)
LOC: Chase Manhattan Bank, N.A. 960,000
-------------
5,860,000
-------------
North Carolina - 2.63%
3,200,000 North Carolina Eastern
Municipal Power Agency
Power System Revenue, Series B
3.35%, 11/17/98
LOC: Morgan Guaranty Trust Co.
and Union Bank of Switzerland .. 3,200,000
7,100,000 North Carolina Educational
Facilities Finance Agency
Bowman Gray School Project
3.15%, 09/01/26 (A)
LOC: Wachovia Bank, N.A. ....... 7,100,000
-------------
10,300,000
-------------
</TABLE>
See Notes to Financial Statements.
15
<PAGE>
- --------------- Tax-Exempt Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Ohio - 1.97%
$ 1,700,000 Evendale, IDR
SHV Real Estate, Inc.
3.00%, 09/01/15 (A)
LOC: ABN-AMRO Bank NV .......... $ 1,700,000
1,900,000 Ohio State
Air Quality Development Authority
Cincinnati Gas & Electric, Series A
3.70%, 09/01/30 (A)
LOC: ABN-AMRO Bank NV .......... 1,900,000
1,000,000 Ohio State
Air Quality Development Authority
Environmental, Mead Corp.
3.60%, 10/01/01 (A)
LOC: Deutsche Bank AG .......... 1,000,000
3,100,000 Toledo-Lucas County Port Authority
CSX Transportation, Inc. Project
3.50%, 11/10/98
LOC: Toronto Dominion Bank ..... 3,100,000
-------------
7,700,000
-------------
Oregon - 0.82%
3,200,000 Port Portland, PCR
Reynolds Metals Co.
3.65%, 12/01/09 (A)
LOC: Bank of Nova Scotia ....... 3,200,000
-------------
Pennsylvania - 8.99%
7,400,000 Allegheny County, HDA
Health Center Development, Inc.
Series B
3.15%, 11/30/98
LOC: PNC Bank, N.A. ............ 7,400,000
2,300,000 Allegheny County, HDA
Health Center Development, Inc.
Series B
3.05%, 02/05/99 LOC: PNC Bank,
N.A ............................ 2,300,000
2,000,000 Beaver County, IDA, PCR
Duquesne-Beaver Valley, Series A
3.05%, 08/01/20 (A)
LOC: Barclays Bank Plc ......... 2,000,000
4,800,000 Beaver County, IDA, PCR
Duquesne-Mansfield, Series B
3.05%, 08/01/09 (A)
LOC: Barclays Bank Plc ......... 4,800,000
6,300,000 Delaware County, IDA, PCR
Philadelphia Electric, Series A
3.30%, 02/10/99
Insured: FGIC .................. 6,300,000
3,005,000 Delaware County, IDA
Resource Recovery Facility,
Series G 3.00%, 12/01/31 (A)
Guaranteed: General Electric
Capital Corp. .................. 3,005,000
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Pennsylvania (continued)
$ 6,900,000 Delaware Valley
Regional Finance Authority
Local Government Revenue, Series C
3.10%, 12/01/20 (A)
LOC: Credit Suisse First Boston $ 6,900,000
2,500,000 Lehigh County
General Purpose Authority Revenue
Lehigh Valley Hospital, Series A
3.60%, 07/01/28 (A)
Insured: AMBAC
SPA: Chase Manhattan Bank, N.A. 2,500,000
-------------
35,205,000
-------------
South Carolina - 4.78%
7,500,000 South Carolina Jobs
Economic Development Authority
St. Francis Hospital
3.65%, 07/01/22 (A)
LOC: Chase Manhattan Bank, N.A. 7,500,000
1,200,000 South Carolina State
Capital Improvement, GO
5.50%, 04/01/99 ................ 1,209,532
10,000,000 Spartanburg County
Health Services District, Inc.
Hospital Revenue
3.05%, 04/15/23 (A)
LOC: MBIA
SPA: NationsBank N.A. .......... 10,000,000
-------------
18,709,532
-------------
Tennessee - 2.48%
3,500,000 Knox County, Industrial
Development Board
Old Kingston Properties. Ltd.
3.70%, 12/01/14 (A)
Insured: FGIC
LOC: BankBoston N.A. ........... 3,500,000
6,200,000 Metropolitan Nashville Airport
Authority Special Facilities
Revenue Series-A, American Airlines
Project 3.65%, 10/01/12 (A)
LOC: Credit Suisse First Boston 6,200,000
-------------
9,700,000
-------------
Texas - 19.18%
4,000,000 Brazos River Authority, PCR Texas
Utilities, Series B 3.80%,
02/01/32 (A)
Insured: MBIA
SPA: Bank of New York .......... 4,000,000
6,600,000 Guadalupe-Blanco River Authority
PCR, Central Power & Light Co.
Project 3.75%, 11/01/15 (A)
LOC: ABN-AMRO Bank NV .......... 6,600,000
</TABLE>
See Notes to Financial Statements.
16
<PAGE>
- --------------- Tax-Exempt Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Texas (continued)
$ 7,500,000 Gulf Coast Waste Disposal Authority
PCR, Exxon Project
3.15%, 12/09/98
Guaranteed: Exxon Corp. ........ $ 7,500,000
5,000,000 Gulf Coast Waste Disposal Authority
PCR, Amoco Oil Co. Project
3.70%, 10/01/17 (A)
Guaranteed: Amoco Oil Co. ...... 5,000,000
1,300,000 Harris County, HFDC
Texas Medical Center Project
3.75%, 02/15/22 (A)
Insured: MBIA
SPA: Texas Commerce Bank NA .... 1,300,000
13,000,000 Harris County, IDC
Baytank Houston, Inc. Project
3.15%, 02/01/20 (A)
LOC: Rabobank Nederland ........ 13,000,000
2,500,000 Harris County, IDC, PCR
3.70%, 03/01/24 (A)
Guaranteed: Exxon Corp. ........ 2,500,000
5,000,000 Hockley County, IDC, PCR
Amoco Project, Standard Oil Co.
3.60%, 03/01/14 (A)
Guaranteed: Amoco Oil Co. ...... 5,001,115
10,300,000 Lower Neches Valley Authority
Chevron USA, Inc. Project
3.45%, 02/15/17 (A)
Guaranteed: Chevron Corp. ...... 10,300,000
2,600,000 North Central, HFDC, Hospital
Revenue Presbyterian Medical
Center Series C
3.65%, 12/01/15 (A)
Insured: MBIA
SPA: NationsBank ............... 2,600,000
7,300,000 Plano HFDC, Hospital Revenue
Childrens & Presbyterian Hospital
3.35%, 11/19/98
Insured: MBIA
SPA: Texas Commerce Bank, N.A. . 7,300,000
10,000,000 Sabine River Authority, PCR
Texas Utilities Project, Series A
3.75%, 03/01/26 (A)
Insured: AMBAC
SPA: Bank of New York .......... 10,000,000
-------------
75,101,115
-------------
Utah - 1.28%
5,000,000 Utah State Highway, GO
3.10%, 02/11/99 SPA: Toronto
Dominion Bank .................. 5,000,000
-------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Virgina - 0.33%
$ 1,300,000 Peninsula Ports Authority Coal
Terminal Dominion Project
Series C
3.65%, 07/01/16 (A)
LOC: National Westminster Plc .. $ 1,300,000
-------------
Washington - 4.35%
6,750,000 Seattle Municipal Light &
Power Revenue
3.00%, 02/08/99
SPA: Morgan Guaranty Trust Co. . 6,750,000
1,000,000 Snohomish County Public Utility
District No. 1, Electric Revenue
Generation System
3.05%, 01/01/25 (A)
Insured: MBIA
SPA: Bayerische Vereinsbank .... 1,000,000
5,205,000 Washington State
Public Power Supply System
Nuclear Project No. 1 Revenue,
Series 1A-1
3.10%, 07/01/17 (A)
LOC: Bank of America NT & SA ... 5,205,000
4,090,000 Washington State Public Power
Supply Nuclear Project No. 1
Revenue, Series 1A-3
3.00%, 07/01/17 (A)
LOC: Morgan Guaranty Trust Co... 4,090,000
-------------
17,045,000
-------------
Wyoming - 4.18%
3,200,000 Converse County, PCR
Pacificorp Project
3.30%, 11/04/98
LOC: Deutsche Bank AG .......... 3,200,000
600,000 Platte County, PCR
Tri-State G & T, Series A
3.75%, 07/01/14 (A)
LOC: Societe Generale .......... 600,000
8,900,000 Sweetwater County, PCR
Pacificorp Project, Series A
3.20%, 11/20/98
LOC: UBS AG .................... 8,900,000
2,200,000 Uinta County, PCR
3.70%, 04/01/10 (A)
Guaranteed: Chevron USA, Inc. .. 2,200,000
1,500,000 Uinta County, PCR
3.70%, 12/01/22 (A)
Guaranteed: Chevron USA, Inc. .. 1,500,000
-------------
16,400,000
-------------
Total Municipal Securities ..... 383,636,226
(Cost $383,636,226) -------------
</TABLE>
See Notes to Financial Statements.
17
<PAGE>
- --------------- Tax-Exempt Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
---------- ---------
<S> <C> <C>
INVESTMENT COMPANY - 0.12%
485,312 Federated Tax-Free Obligations
Fund ........................... $ 485,312
-------------
Total Investment Company ....... 485,312
(Cost $485,312) -------------
Total Investments - 98.11% ....................... 384,121,538
(Cost $384,121,538) * -------------
Net Other Assets and Liabilities - 1.89% ......... 7,393,878
-------------
Net Assets - 100.00% ............................. $ 391,515,416
=============
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for federal tax purposes
(A) Variable rate demand notes are payable upon not more than one, seven or
thirty business days notice. Put bonds and notes have demand features which
mature within one year. The interest rate shown reflects the rate in effect
at October 31, 1998.
AMBAC American Municipal Bond Assurance Corp.
BAN Bond Anticipation Notes
CFC Cooperative Finance Corp.
FGIC Federal Guaranty Insurance Corp.
GNMA Government National Mortgage Association
GO General Obligation
HDA Health Development Authority
HFA Health Facilities Authority
HFDC Health Facilities Development Corp.
IDA Industrial Development Authority
IDR Industrial Development Revenue
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Polution Control Revenue
SPA Stand-by Purchase Agreement
TRAN Tax and Revenue Anticipation Notes
See Notes to Financial Statements.
18
<PAGE>
- --------------- U.S. Treasury Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 99.50%
U.S. Treasury Notes - 43.08%
$ 35,000,000 5.13%, 11/30/98 ................ $ 34,994,808
70,000,000 5.63%, 11/30/98 ................ 70,012,710
20,000,000 5.13%, 12/31/98 ................ 20,020,380
100,000,000 5.75%, 12/31/98 ................ 100,083,364
40,000,000 5.88%, 01/31/99 ................ 40,071,094
65,000,000 6.38%, 01/15/99 ................ 65,199,722
75,000,000 6.25%, 03/31/99 ................ 75,477,858
20,000,000 6.38%, 04/30/99 ................ 20,083,670
-------------
425,943,606
-------------
U.S. Treasury Bills (A) - 23.84%
7,000,000 3.53%, 11/05/98 ................ 6,997,255
50,000,000 5.01%, 11/12/98 ................ 49,923,413
10,000,000 4.92%, 11/19/98 ................ 9,975,375
70,000,000 4.37%, 12/17/98 ................ 69,609,447
25,000,000 4.37%, 12/24/98 ................ 24,839,160
25,000,000 3.85%, 01/14/99 ................ 24,802,410
50,000,000 4.99%, 01/21/99 ................ 49,551,125
-------------
235,698,185
-------------
Student Loan
Marketing Association - 18.55%
158,380,000 5.42%, 11/02/98 (A) ............ 158,356,155
25,000,000 4.65%, 11/25/98 MTN (B) ........ 25,000,000
-------------
183,356,155
-------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Federal Home Loan Bank - 7.07%
$ 15,000,000 5.09%, 11/09/98 (A) ............ $ 14,983,033
10,000,000 5.08%, 11/12/98 (A) ............ 9,984,478
20,000,000 4.77%, 11/18/98 (A) ............ 19,954,950
25,000,000 5.23%, 09/08/99 (B) ............ 24,989,349
-------------
69,911,810
-------------
Federal Farm Credit Bank - 6.96%
25,000,000 5.50%, 11/02/98 ................ 24,999,955
29,000,000 4.75%, 11/23/98 (A) ............ 28,915,819
10,000,000 4.75%, 11/25/98 (A) ............ 9,968,333
5,000,000 5.02%, 12/07/98 (A) ............ 4,974,900
-------------
68,859,007
-------------
Total Investments - 99.50% ....................... 983,768,763
(Cost $983,768,763)* -------------
Net Other Assets and Liabilities - 0.50% ......... 4,929,459
-------------
Net Assets - 100.00% ............................. $ 988,698,222
=============
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for federal tax purposes
(A) Discount yield at time of purchase
(B) Interest is reset at various time intervals. The interest rate shown
reflects the rate in effect at October 31, 1998
MTN Medium Term Note
See Notes to Financial Statements.
19
<PAGE>
- --------------- Connecticut Municipal Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
MUNICIPAL SECURITIES - 104.47%
Alaska - 1.69%
$ 2,800,000 Valdez Marine Terminal Revenue
Exxon Pipeline Co., Series B
3.70%, 12/01/33 (A)
Guaranteed: Exxon Corp. ........ $ 2,800,000
-------------
Arizona - 1.03%
1,700,000 Farmington, NM, PCR
Arizona Public Services Co.
Series B
3.70%, 09/01/24 (A)
LOC: Barclays Bank Plc ......... 1,700,000
-------------
California - 2.36%
2,000,000 Los Angeles Regional Airports
Improvement Corp.
Lease Revenue, Series D
LA International Airport
3.65%, 12/01/24 (A)
LOC: Wachovia Bank, N.A. ....... 2,000,000
600,000 Los Angeles Regional Airports
Improvement Corp.
Lease Revenue, Series F
LA International Airport
3.65%, 12/01/24 (A)
LOC: Wachovia Bank, N.A. ....... 600,000
1,300,000 Los Angeles Regional Airports
Improvement Corp.
Lease Revenue, Series G
LA International Airport
3.65%, 12/01/24 (A)
LOC: Wachovia Bank, N.A. ....... 1,300,000
-------------
3,900,000
-------------
Connecticut - 61.24%
7,355,000 Connecticut State
Series B, GO
2.80%, 05/15/14 (A)
SPA: Bayerische Landesbank GZ .. 7,355,000
5,000,000 Connecticut State
Series C, GO
3.50%, 10/15/99 ................ 5,033,700
2,600,000 Connecticut State
Development Authority, PCR
Central Vermont Public Service
3.15%, 12/01/15 (A)
LOC: Toronto Dominion Bank ..... 2,600,000
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Connecticut (continued)
$ 1,300,000 Connecticut State
Development Authority
Conco Project
2.90%, 11/01/05 (A)
LOC: Bayerische Vereinsbank AG . $ 1,300,000
5,880,000 Connecticut State
Development Authority
Health Care Corp.
for Independent Living
2.75%, 07/01/15 (A)
LOC: Chase Manhattan Bank, N.A. 5,880,000
1,540,000 Connecticut State HEFA
Charlotte Hungerford, Series C
3.15%, 07/01/13 (A)
LOC: BankBoston, N.A. .......... 1,540,000
1,000,000 Connecticut State HEFA
Sharon Hospital Issue, Series A
3.15%, 07/01/27 (A)
LOC: BankBoston, N.A. .......... 1,000,000
5,500,000 Connecticut State HEFA
Yale University
3.05%, 02/11/99 (A) ............ 5,500,000
1,190,000 Connecticut State HEFA
Yale University
3.05%, 02/19/99 (A) ............ 1,190,000
6,000,000 Connecticut State HEFA
Yale University, Series T-1
2.80%, 07/01/29 (A) ............ 6,000,000
6,200,000 Connecticut State
Housing Finance Authority
Housing Mortgage Finance Program
Series G
2.90%, 05/15/18 (A)
Insured: AMBAC
SPA: Morgan Guaranty ........... 6,200,000
3,500,000 Connecticut State, IDA
Allen Group, Inc.
3.65%, 02/01/13 (A)
LOC: Bayerische Vereinsbank AG . 3,500,000
900,000 Connecticut State, IDA
Trudy Corp., Series 1984
3.50%, 09/01/09 (A)
LOC: Citibank, N.A. ............ 900,000
6,000,000 Connecticut State Special
Assessment Unemployment
Compensation Advisory Fund,
Series C 3.60%, 11/15/01 (A)
Insured: FGIC
SPA: FGIC - SPI ................ 6,000,000
4,500,000 Connecticut State Special
Assessment Second Injury Fund
3.25%, 11/10/98
LOC: Credit Agricole/Credit
Communat de Belgique ........... 4,500,000
</TABLE>
See Notes to Financial Statements.
20
<PAGE>
- --------------- Connecticut Municipal Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Connecticut (continued)
$ 2,500,000 Connecticut State Special
Assessment Second Injury Fund
3.10%, 11/30/98
LOC: Credit Agricole/Credit
Communat de Belgique ........... $ 2,500,000
8,000,000 Connecticut State Special Tax
Obligation Revenue, Second Lien,
Transportation Infrastructure,
Series 1
3.05%, 12/01/10 (A)
LOC: Commerzbank AG ............ 8,000,000
4,550,000 Danbury, BAN, GO
3.75%, 02/08/99 ................ 4,553,238
1,387,000 Fairfield, BAN
Lot A ,GO
3.75%, 06/04/99 ................ 1,387,942
1,710,000 Glastonbury, BAN, GO
3.50%, 12/15/98 ................ 1,710,544
1,000,000 Hartford Redevelopment Agency
Multi-Family Mortgage Revenue
Underwood Tower Project
3.20%, 06/01/20 (A)
Insured: FSA
SPA: Barclays Bank of New York . 1,000,000
1,505,000 Manchester, Temporary Notes,
Lot A 3.75%, 07/08/99 .......... 1,506,874
3,665,000 New Canaan, BAN, GO
4.00%, 03/09/99 ................ 3,671,831
1,460,000 Norwalk, GO
4.30%, 01/15/99 ................ 1,462,178
7,000,000 Norwich, BAN, GO
3.00%, 11/04/99 ................ 7,013,370
5,925,000 Stamford, GO
4.50%, 07/15/99 ................ 5,964,489
1,477,000 Westport, BAN, GO
Lot B
3.90%, 06/25/99 ................ 1,480,036
2,400,000 Wilton, BAN, GO
3.75%, 07/20/99 ................ 2,404,473
-------------
101,153,675
-------------
Idaho - 0.42%
700,000 Power County, PCR
FMC Corp. Project
3.75%, 12/01/10 (A)
LOC: Wachovia Bank, N.A. ....... 700,000
-------------
Illinois - 1.82%
1,600,000 Chicago O'Hare International
Airport American Airlines,
Series C 3.70%, 12/01/17 (A)
LOC: Royal Bank of Canada ...... 1,600,000
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Illinois (continued)
$ 1,400,000 Joliet Regional Port District
Marine Terminal Revenue
Exxon Project
3.70%, 10/01/24 (A)
Guaranteed: Exxon Corp. ........ $ 1,400,000
-------------
3,000,000
-------------
Indiana - 0.67%
1,100,000 Princeton, PCR
PSI Energy, Inc. Project
3.75%, 03/01/19 (A)
LOC: Canadian Imperial
Bank of Commerce ............... 1,100,000
-------------
Louisiana - 1.33%
2,200,000 Louisiana State Offshore Terminal
Authority Deepwater Port Revenue,
1st Stage A Loop, Inc.
3.70%, 09/01/08 (A)
LOC: UBS AG .................... 2,200,000
-------------
Mississippi - 1.33%
2,200,000 Jackson County, PCR
3.70%, 12/01/16 (A)
Guaranteed: Chevron, USA ....... 2,200,000
-------------
Nevada - 2.24%
3,700,000 Reno Nevada Hospital Saint Mary's
Regional, Series B 3.65%,
05/15/23 (A)
Insured: MBIA
SPA: Rabobank Nederland NV ..... 3,700,000
-------------
New York - 0.73%
1,200,000 New York State Energy Research
and Development Authority, PCR
New York State Electric & Gas
Series C
3.60%, 06/01/29 (A)
LOC: Morgan Guaranty ........... 1,200,000
-------------
Ohio - 0.85%
1,400,000 Ohio State
Air Quality Development Authority
Cincinnati Gas & Electric,
Series A 3.70%, 09/01/30 (A)
LOC: ABN-AMRO Bank NV .......... 1,400,000
-------------
</TABLE>
See Notes to Financial Statements.
21
<PAGE>
- --------------- Connecticut Municipal Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Oregon - 3.51%
$ 5,800,000 Port Portland PCR
Reynolds Metals
3.65%, 12/01/09 (A)
LOC: Bank of Nova Scotia ....... $ 5,800,000
-------------
Puerto Rico - 10.97%
8,000,000 Puerto Rico Commonwealth
Government Development Bank
2.75%, 12/01/15 (A)
LOC: Credit Suisse First Boston 8,000,000
7,400,000 Puerto Rico Commonwealth
Highway & Transportation
Authority Series A
2.60%, 07/01/28 (A)
Insured: AMBAC
SPA: Bank of Nova Scotia ....... 7,400,000
2,728,100 Puerto Rico Commonwealth
Highway & Transportation
Authority Series X
2.75%, 07/01/99 (A)
LOC: Union Bank of Switzerland . 2,728,100
-------------
18,128,100
-------------
South Carolina - 2.05%
3,390,000 South Carolina Jobs Economic
Development Authority,
St. Francis Hospital
3.65%, 07/01/22 (A)
LOC: Chase Manhattan Bank, N.A. 3,390,000
-------------
Tennessee - 3.39%
3,300,000 Metropolitan Nashville Airport
Authority Revenue, American
Airlines, Series A
3.65%, 10/01/12 (A)
LOC: Credit Suisse First Boston 3,300,000
2,300,000 Metropolitan Nashville Airport
Authority Revenue, American
Airlines, Series B
3.65%, 10/01/12 (A)
LOC: Bayerische Landesbank GZ .. 2,300,000
-------------
5,600,000
-------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Texas - 6.96%
$ 1,800,000 Grapevine Industrial Development
Corp. Revenue, American Airlines,
Series A4
3.65%, 12/01/24 (A)
LOC: Morgan Guaranty Trust ..... $ 1,800,000
4,000,000 Grapevine Industrial Development
Corp. Revenue, American Airlines,
Series B1
3.65%, 12/01/24 (A)
LOC: Morgan Guaranty Trust ..... 4,000,000
1,400,000 Lone Star Airport Improvement
Authority, American Airlines
Series A-1
3.65%, 12/01/14 (A)
LOC: Royal Bank of Canada ...... 1,400,000
1,000,000 Lone Star Airport Improvement
Authority, American Airlines
Series B-3
3.65%, 12/01/14 (A)
LOC: Royal Bank of Canada ...... 1,000,000
1,000,000 Lone Star Airport Improvement
Authority, American Airlines
Series B-4
3.65%, 12/01/14 (A)
LOC: Royal Bank of Canada ...... 1,000,000
2,300,000 North Central Texas Health
Facilities Development Corp,
Revenue Presbyterian Medical
Center Series D
3.65%, 12/01/15 (A)
Insured: MBIA
SPA: NationsBank ............... 2,300,000
-------------
11,500,000
-------------
Wyoming - 1.88%
3,100,000 Uinta County PCR,
Chevron, USA, Inc. Project
3.70%, 08/15/20 (A)
Guaranteed: Chevron Corp. ...... 3,100,000
-------------
Total Municipal Securities ..... 172,571,775
(Cost $172,571,775) -------------
</TABLE>
See Notes to Financial Statements.
22
<PAGE>
- --------------- Connecticut Municipal Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Shares (Note 2)
---------- ---------
<S> <C> <C>
INVESTMENT COMPANIES - 0.57%
404,462 Dreyfus Connecticut
Municipal Money Market Fund .... 404,462
544,070 Federated Municipal Trust
Connecticut Municipal Cash Trust 544,070
-------------
Total Investment Companies ..... 948,532
(Cost $948,532) -------------
Total Investments - 105.04% ...................... 173,520,307
(Cost $173,520,307)* -------------
Net Other Assets and Liabilities - (5.04)% ....... (8,334,680)
-------------
Net Assets - 100.00% ............................. $ 165,185,627
=============
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for federal tax purposes
(A) Variable rate demand notes are payable upon not more than one, seven or
thirty business days notice. Put bonds and notes have demand features which
mature within one year. The interest rate shown reflects the rate in effect
at October 31, 1998.
AMBAC American Municipal Bond Assurance Corp.
BAN Bond Anticipation Notes
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GO General Obligation
HEFA Health and Educational Facilities Authority
IDA Industrial Development Authority
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Polution Control Revenue
SPA Stand-by Purchase Agreement
See Notes to Financial Statements.
23
<PAGE>
- --------------- Massachusetts Municipal Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
MUNICIPAL SECURITIES - 99.09%
Alaska - 3.91%
$ 1,600,000 Valdez Alaska Marine Terminal
Exxon Pipeline Co., Project A
3.70%, 12/01/33 (A)
Guaranteed: Exxon Corp. ........ $ 1,600,000
900,000 Valdez Alaska Marine Terminal
Exxon Pipeline Co., Project B
3.70%, 12/01/33 (A)
Guaranteed: Exxon Corp. ........ 900,000
2,500,000 Valdez Alaska Marine Terminal
Exxon Pipeline Co., Project C
3.70%, 12/01/33 (A)
Guaranteed: Exxon Corp. ........ 2,500,000
-------------
5,000,000
-------------
Louisiana - 1.95%
1,400,000 Louisiana State Offshore Terminal
Authority Deepwater Port Revenue
Loop, Inc., 1st Stage
3.70%, 09/01/06 (A)
LOC: UBS AG .................... 1,400,000
1,100,000 Louisiana State Offshore Terminal
Authority Deepwater Port Revenue
Loop, Inc., 1st Stage A
3.70%, 09/01/08 (A)
LOC: UBS AG .................... 1,100,000
-------------
2,500,000
-------------
Massachusetts - 72.52%
2,500,000 Bedford, BAN, GO
3.90%, 12/31/98 ................ 2,501,084
1,450,000 Boston, GO, Series A
5.00%, 11/01/98
Insured: FGIC .................. 1,450,000
2,400,000 Boston Water and Sewer Commission
General Purpose, Senior Series A
2.80%, 11/01/24 (A)
LOC: State Street .............. 2,400,000
4,000,000 Brookline, BAN, GO
4.00%, 06/04/99 ................ 4,006,338
1,070,000 Cambridge, GO
4.30%, 08/01/99 ................ 1,075,842
1,925,000 Hanover, BAN, GO
3.25%, 10/28/99 ................ 1,929,614
3,300,000 Hopkinton, BAN, GO
4.00%, 08/03/99 ................ 3,307,906
1,145,000 Lexington, BAN, GO
3.75%, 04/15/99 ................ 1,145,393
2,900,000 Massachusetts Bay
Transportation Authority
General Transportation System
Series 1984-A
3.40%, 03/01/14 (A)
LOC: State Street .............. 2,900,000
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Massachusetts (continued)
$ 2,500,000 Massachusetts Municipal
Wholesale Electric Co.
Power Supply System, Series C
2.95%, 07/01/19 (A)
Insured: MBIA
LOC: Credit Suisse First Boston $ 2,500,000
5,000,000 Massachusetts State, GO
Series B
2.90%, 09/01/16 (A)
SPA: Toronto Dominion Bank ..... 5,000,000
3,500,000 Massachusetts State HEFA
Amherst College, Series F
2.95%, 11/01/26 (A) ............ 3,500,000
3,030,000 Massachusetts State HEFA Becker
College, Series A-1 3.20%,
07/01/28 (A)
LOC: BankBoston, NA ............ 3,030,000
4,000,000 Massachusetts State HEFA
Capital Asset Program, Series A
2.75%, 01/01/01 (A)
LOC: First National
Bank of Chicago ................ 4,000,000
1,800,000 Massachusetts State HEFA
Capital Asset Program, Series E
3.70%, 01/01/35 (A)
LOC: First National
Bank of Chicago ................ 1,800,000
2,000,000 Massachusetts State HEFA
Capital Asset Program, Series G-1
2.80%, 01/01/19 (A)
Insured: MBIA
SPA: Credit Suisse First Boston 2,000,000
1,920,000 Massachusetts State HEFA
Dimock Community Health Center
Series A
3.40%, 03/01/15 (A)
LOC: BankBoston N.A. ........... 1,920,000
3,000,000 Massachusetts State HEFA
Endicott College, Series B
4.10%, 10/01/18 (A)
LOC: BankBoston N.A. ........... 3,000,000
2,500,000 Massachusetts State HEFA
Harvard University
3.00%, 08/01/17 (A) ............ 2,500,000
1,400,000 Massachusetts State HEFA
Harvard University, Series Q
3.00%, 02/01/16 (A) ............ 1,400,000
1,000,000 Massachusetts State HEFA
Harvard University, Series Q
3.00%, 09/01/40 (A) ............ 1,000,000
2,000,000 Massachusetts State HEFA
Newton Wellesley Hospital,
Series F 3.00%, 07/01/25 (A)
Insured: MBIA
SPA: Credit Suisse First Boston 2,000,000
</TABLE>
See Notes to Financial Statements.
24
<PAGE>
- --------------- Massachusetts Municipal Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Massachusetts (continued)
$ 2,000,000 Massachusetts State HEFA
Partners Healthcare System,
Series P-2 2.90%, 07/01/27 (A)
Insured: FSA
SPA: Morgan Guaranty
Bayerische Lundersbank ......... $ 2,000,000
6,000,000 Massachusetts State
Housing Finance Agency
Multi-Family, Series A
2.90%, 12/01/25 (A)
Insured: GNMA
SPA: Republic National
Bank of New York ............... 6,000,000
1,000,000 Massachusetts State IFA
Beverly Enterprises-Dedham
3.70%, 04/01/09 (A)
LOC: PNC Bank, N.A. ............ 1,000,000
1,800,000 Massachusetts State IFA
Buckingham Browne Nichols Issue
3.00%, 05/01/27 (A)
LOC: State Street .............. 1,800,000
1,500,000 Massachusetts State IFA
Gordon College Issue
3.00%, 12/01/27 (A)
LOC: State Street .............. 1,500,000
1,000,000 Massachusetts State IFA
Governor Dummer Academy
3.00%, 07/01/26 (A)
LOC: State Street .............. 1,000,000
3,300,000 Massachusetts State IFA, PCR
Holyoke Water Power Co.
2.80%, 05/01/22 (A)
LOC: Canadian Imperial
Bank of Commerce ............... 3,300,000
4,700,000 Massachusetts State
Water Resource Authority
Subordinated, General Purpose,
Series A 2.75%, 04/01/28 (A)
Insured: AMBAC
SPA: Bank of Nova Scotia ....... 4,700,000
1,500,000 Peabody, BAN, GO
3.90%, 05/14/99 ................ 1,501,524
3,000,000 Southborough, BAN, GO
3.75%, 12/18/98 ................ 3,000,751
4,500,000 Sudbury, BAN Series A, GO
3.75%, 04/15/99 ................ 4,504,359
4,500,000 Weston, BAN, GO
3.50%, 01/15/99 ................ 4,501,830
3,580,000 Winchester, BAN, GO
4.00%, 07/01/99 ................ 3,589,537
-------------
92,764,178
-------------
</TABLE>
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
Michigan - 1.45%
$ 1,855,000 Cornell Township Economic
Development Corp.
Mead-Escanaba Paper Co.
3.60%, 11/01/16 (A)
LOC: Bank of America NT & SA .. $ 1,855,000
-------------
Mississippi - 0.78%
1,000,000 Jackson County PCR
3.70%, 12/01/16 (A)
Guaranteed: Chevron USA, Inc. .. 1,000,000
-------------
Nevada - 1.64%
2,100,000 Reno Hospital Revenue
St. Mary's Regional Medical
Center, Series B
3.65%, 05/15/23 (A)
Insured: MBIA
SPA: Rabobank Nederland ........ 2,100,000
-------------
Ohio - 1.10%
1,400,000 Franklin County Health Systems
Franciscan Sister-St. Anthony's
3.60%, 07/01/15 (A)
LOC: Chase Manhattan Bank, N.A. 1,400,000
-------------
Oregon - 1.25%
1,600,000 Port Portland, PCR
Reynolds Metals Co.
3.65%, 12/01/09 (A)
LOC: Bank of Nova Scotia ....... 1,600,000
-------------
Pennsylvania - 0.70%
900,000 Delaware County, IDA
3.60%, 12/01/15 (A)
Guaranteed: United Parcel
Service ........................ 900,000
-------------
Puerto Rico - 3.65%
4,000,000 Puerto Rico Commonwealth
Highway & Transportation Authority
Series A
2.60%, 07/01/28 (A)
Insured: AMBAC
SPA: Bank of Nova Scotia ....... 4,000,000
672,400 Puerto Rico Commonwealth
Highway & Transportation Authority
Series X
2.75%, 07/01/99 (A)
LOC: Union Bank of Switzerland . 672,400
-------------
4,672,400
-------------
</TABLE>
See Notes to Financial Statements.
25
<PAGE>
- --------------- Massachusetts Municipal Money Market Fund
THE GALAXY FUND PORTFOLIO OF INVESTMENTS (continued)
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Value
Par Value (Note 2)
---------- ---------
<S> <C> <C>
South Carolina - 3.77%
$ 4,815,000 South Carolina Jobs Economic
Development Authority
St. Francis Hospital
3.65%, 07/01/22 (A)
LOC: Chase Manhattan Bank, N.A. $ 4,815,000
-------------
Tennessee - 2.97%
1,800,000 Metropolitan Nashville Airport
Authority American Airlines
Project, Series A 3.65%,
10/01/12 (A)
LOC: Credit Suisse First Boston . 1,800,000
2,000,000 Hamilton County, Chattanooga
Tennessee Hospital Authority
Revenue 3.70%, 10/01/17 (A)
LOC: Morgan Guaranty Trust Co. . 2,000,000
-------------
3,800,000
-------------
Texas - 3.32%
2,500,000 Guadalupe-Blanco River Authority
PCR, Central Power & Light Co.
Project 3.75%, 11/01/15 (A)
LOC: ABN-AMRO Bank NV .......... 2,500,000
1,640,000 Gulf Coast Waste Disposal
Authority PCR, Amoco Oil Co.
Project 3.70%, 10/01/17 (A)
Guaranteed: Amoco Oil Co. ...... 1,640,000
110,000 Texas Higher Education Authority,
Inc. Educational Equipment &
Improvement Series B
3.15%, 12/01/25 (A)
Insured: FGIC .................. 110,000
-------------
4,250,000
-------------
Washington - 0.08%
95,000 Washington State Public Power
Supply System Nuclear Project
No. 1 Revenue, Series 1A-1
3.10%, 07/01/17 (A)
LOC: Bank of America NT & SA ... 95,000
-------------
Total Municipal Securities ..... 126,751,578
(Cost $126,751,578) -------------
</TABLE>
<TABLE>
<CAPTION>
Value
Shares (Note 2)
---------- ---------
<S> <C> <C>
INVESTMENT COMPANIES - 0.53%
187,261 Dreyfus Massachusetts Tax
Exempt Money Market ............ $ 187,261
494,604 Federated Municipal Trust
Massachusetts Municipal
Cash Trust ..................... 494,604
-------------
Total Investment Companies ..... 681,865
(Cost $681,865) -------------
Total Investments - 99.62% ....................... 127,433,443
(Cost $127,433,443)* -------------
Net Other Assets and Liabilities - 0.38% ......... 488,472
-------------
Net Assets - 100.00% ............................. $ 127,921,915
=============
</TABLE>
- --------------------------------------------------------------------------------
* Aggregate cost for federal tax purposes
(A) Variable rate demand notes are payable upon not more than one, seven or
thirty business days notice. Put bonds and notes have demand features
which mature within one year. The interest rate shown reflects the rate in
effect at October 31, 1998.
AMBAC American Municipal Bond Assurance Corp.
BAN Bond Anticipation Note
FGIC Federal Guaranty Insurance Corp.
FSA Financial Security Assurance Company
GNMA Government National Mortgage Association
GO General Obligation
HEFA Health and Educational Facilities Authority
IDA Industrial Development Authority
IFA Industrial Finance Authority
LOC Letter of Credit
MBIA Municipal Bond Insurance Association
PCR Polution Control Revenue
SPA Stand-by Purchase Agreement
See Notes to Financial Statements.
26
<PAGE>
This page left blank intentionally.
<PAGE>
- ---------------
THE GALAXY FUND STATEMENTS OF ASSETS AND LIABILITIES
- --------------- October 31, 1998
<TABLE>
<CAPTION>
Money Market Government Tax-Exempt U.S. Treasury
Fund Fund Fund Fund
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments (Note 2):
Investments at amortized cost.............................. $3,125,085,039 $ 862,272,300 $ 384,121,538 $ 983,768,763
Repurchase agreement....................................... 299,085,000 176,649,000 -- --
-------------- -------------- ------------- --------------
Total investments at value............................... 3,424,170,039 1,038,921,300 384,121,538 983,768,763
Cash......................................................... -- 7,900 11,234 9,317
Receivable for investments sold.............................. -- -- -- --
Receivable for shares sold................................... 18,803,462 39,938,782 7,663,948 3,500,534
Interest and dividends receivable............................ 5,477,397 2,454,435 1,700,283 8,277,207
-------------- -------------- ------------- --------------
Total Assets............................................... 3,448,450,898 1,081,322,417 393,497,003 995,555,821
-------------- -------------- ------------- --------------
LIABILITIES:
Dividends payable............................................ 5,173,376 2,868,894 526,068 1,430,855
Payable for investments purchased............................ -- -- -- --
Payable for shares repurchased............................... 37,766,219 2,627,934 1,231,415 4,926,145
Investment advisory fee payable (Note 3)..................... 1,039,682 352,276 129,951 321,392
Payable to Fleet affiliates (Note 3)......................... 184,233 26,011 17,839 63,770
Payable to Administrator (Note 3)............................ 290,853 104,119 33,307 84,813
Trustees' fees and expenses payable (Note 3)................. 14,372 9,838 1,390 7,679
Payable to custodian......................................... 71,104 -- -- --
Accrued expenses and other payables.......................... 191,840 58,407 41,617 22,945
-------------- -------------- ------------- --------------
Total Liabilities.......................................... 44,731,679 6,047,479 1,981,587 6,857,599
-------------- -------------- ------------- --------------
NET ASSETS...................................................... $3,403,719,219 $1,075,274,938 $ 391,515,416 $ 988,698,222
============== ============== ============= ==============
NET ASSETS consist of:
Par value (Note 5)........................................... $ 3,404,827 $ 1,076,164 $ 391,667 $ 989,128
Paid-in capital in excess of par value....................... 3,401,413,817 1,075,087,707 391,274,848 988,139,344
Undistributed (overdistributed) net investment income (loss). 242,576 (45,378) (19,528) 316,537
Accumulated net realized (loss) on investments sold.......... (1,342,001)) (843,555) (131,571) (746,787)
-------------- -------------- ------------- --------------
TOTAL NET ASSETS................................................ $3,403,719,219 $1,075,274,938 $ 391,515,416 $ 988,698,222
============== ============== ============= ==============
Retail A Shares:
Net assets................................................... $2,139,212,517 $ 352,799,163 $ 164,339,861 $ 559,053,362
Shares of beneficial interest outstanding.................... 2,139,851,262 353,001,963 164,397,370 559,252,381
NET ASSET VALUE, offering and redemption price per share..... $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============= ==============
Retail B Shares:
Net assets................................................... $ 1,606,948 N/A N/A N/A
Shares of beneficial interest outstanding.................... 1,607,007 N/A N/A N/A
NET ASSET VALUE and offering price per share*................ $ 1.00 N/A N/A N/A
============== ============== ============= ==============
Trust Shares:
Net assets................................................... $1,262,899,754 $ 722,475,775 $ 227,175,555 $ 429,644,860
Shares of beneficial interest outstanding.................... 1,263,368,278 723,161,908 227,269,144 429,876,088
NET ASSET VALUE, offering and redemption price per share..... $ 1.00 $ 1.00 $ 1.00 $ 1.00
============== ============== ============= ==============
</TABLE>
- --------------------------------------------------------------------------------
* Redemption price per share is equal to the Net Asset Value per share less
any applicable contingent deferred sales charge.
See Notes to Financial Statements.
28
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Money Market Fund Money Market Fund
------------------- ------------------
<S> <C>
$173,520,307 $127,433,443
-- --
------------ ------------
173,520,307 127,433,443
-- 20,083
1,700,142 --
2,085,947 404,409
841,453 616,449
------------ ------------
178,147,849 128,474,384
------------ ------------
133,317 136,114
12,059,223 --
678,296 349,908
44,365 34,160
14,443 11,219
11,807 4,202
1,265 347
7,252 --
12,254 16,519
------------ ------------
12,962,222 552,469
------------ ------------
$165,185,627 $127,921,915
============ ============
$ 165,192 $ 127,934
165,032,983 127,806,614
(5,112) (53)
(7,436) (12,580)
------------ ------------
$165,185,627 $127,921,915
============ ============
$165,185,627 $127,921,915
165,191,556 127,934,384
$ 1.00 $ 1.00
============ ============
N/A N/A
N/A N/A
N/A N/A
============ ============
N/A N/A
N/A N/A
N/A N/A
============ ============
</TABLE>
29
<PAGE>
- ---------------
THE GALAXY FUND STATEMENTS OF OPERATIONS
- --------------- For the year ended October 31, 1998
<TABLE>
<CAPTION>
Money Market Government Tax-Exempt U.S. Treasury
Fund Fund Fund Fund
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest (Note 2) .................................. $180,949,214 $60,528,990 $13,236,174 $50,861,339
Dividends (Note 2) ................................. -- -- 102,874 --
------------ ----------- ----------- -----------
Total Investment Income .......................... 180,949,214 60,528,990 13,339,048 50,861,339
------------ ----------- ----------- -----------
EXPENSES:
Investment advisory fee (Note 3) ................... 12,906,407 4,372,173 1,514,545 3,727,152
Administration fee (Note 3) ........................ 2,596,354 879,555 304,716 770,823
Custodian fee (Note 3) ............................. 71,127 27,631 22,280 27,642
Fund accounting fee (Note 3) ....................... 144,090 113,228 62,980 97,639
Legal fee (Note 3) ................................. 137,038 45,241 15,985 41,992
Audit fee .......................................... 26,211 17,610 19,132 17,610
Shareholder servicing fee (Note 3) ................. 2,057,474 364,278 163,842 569,986
Transfer agent fee (Note 3) ........................ 2,049,016 393,828 61,614 419,358
12b-1 fee (Note 3) ................................. 5,051 -- -- --
Trustees' fees and expenses (Note 3) ............... 74,079 24,578 8,631 22,629
Reports to shareholders (Note 3) ................... 438,015 80,208 13,595 93,916
Insurance .......................................... 27,161 11,539 3,207 8,626
Miscellaneous ...................................... 280,402 80,867 43,357 65,236
------------ ----------- ----------- -----------
Total expenses before reimbursement/waiver (Note 4) 20,812,425 6,410,736 2,233,884 5,862,609
------------ ----------- ----------- -----------
Less: reimbursement/waiver (Note 4) .............. (1,238,301) (171,522) -- --
------------ ----------- ----------- -----------
Total expenses net of reimbursement/waiver .... 19,574,124 6,239,214 2,233,884 5,862,609
------------ ----------- ----------- -----------
NET INVESTMENT INCOME ................................. 161,375,090 54,289,776 11,105,164 44,998,730
------------ ----------- ----------- -----------
Net realized gain on investments SOLD (Note 2) ........ 10,935 27,699 -- 28,589
------------ ----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ...................................... $161,386,025 $54,317,475 $11,105,164 $45,027,319
============ =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
30
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Money Market Fund Money Market Fund
------------------- -------------------
<S> <C>
$ 5,296,260 $ 3,565,137
62,199 48,981
----------- ------------
5,358,459 3,614,118
----------- ------------
621,495 420,919
124,998 84,643
14,295 11,104
36,559 36,092
6,545 3,885
16,697 16,697
155,374 105,230
22,877 13,515
-- --
3,533 2,106
5,246 3,085
1,298 710
8,723 13,430
----------- ------------
1,017,640 711,416
----------- ------------
(54,320) (58,991)
----------- ------------
963,320 652,425
----------- ------------
4,395,139 2,961,693
----------- ------------
-- --
----------- ------------
$ 4,395,139 $ 2,961,693
=========== ============
</TABLE>
31
<PAGE>
- ---------------
THE GALAXY FUND STATEMENTS OF CHANGES IN NET ASSETS
- ---------------
<TABLE>
<CAPTION>
Money Market Fund Government Fund
----------------------------- -----------------------------
Years ended October 31, Years ended October 31,
----------------------------- -----------------------------
1998 1997 1998 1997
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period. ............................ $3,016,823,396 $2,083,533,947 $ 981,371,917 $1,060,170,053
-------------- ------------- ------------- --------------
Increase in Net Assets resulting from operations:
Net investment income ...................................... 161,375,090 127,748,599 54,289,776 53,506,212
Net realized gain on investments sold ...................... 10,935 352 27,699 1,250
-------------- ------------- ------------- --------------
Net increase in net assets resulting from operations ..... 161,386,025 127,748,951 54,317,475 53,507,462
-------------- ------------- ------------- --------------
Dividends to shareholders from:
Retail Shares:
Net investment income .................................... (101,530,947) (76,502,698) (17,622,243) (16,580,573)
Dividends in excess of net investment income ............. -- -- -- --
-------------- ------------- ------------- --------------
Total Dividends ........................................ (101,530,947) (76,502,698) (17,622,243) (16,580,573)
-------------- ------------- ------------- --------------
Retail B Shares:
Net investment income .................................... (28,669) (12,281) N/A N/A
Dividends in excess of net investment income ............. -- -- N/A N/A
-------------- ------------- ------------- --------------
Total Dividends ........................................ (28,669) (12,281) N/A N/A
-------------- ------------- ------------- --------------
Trust Shares:
Net investment income .................................... (59,798,762) (51,241,328) (36,667,533) (36,925,639)
Dividends in excess of net investment income ............. -- -- -- --
-------------- ------------- ------------- --------------
Total Dividends ........................................ (59,798,762) (51,241,328) (36,667,533) (36,925,639)
-------------- ------------- ------------- --------------
Total Dividends to shareholders ........................ (161,358,378) (127,756,307) (54,289,776) (53,506,212)
-------------- ------------- ------------- --------------
Net increase (decrease) from share transactions(1) ............ 386,868,176 933,296,805 93,875,322 (78,799,386)
-------------- ------------- ------------- --------------
Net increase (decrease) in net assets ...................... 386,895,823 933,289,449 93,903,021 (78,798,136)
-------------- ------------- ------------- --------------
NET ASSETS at end of period (including line A below) .......... $3,403,719,219 $3,016,823,396 $1,075,274,938 $ 981,371,917
============== ============= ============= ==============
(A) Undistributed (overdistributed) net investment income (loss) $ 242,576 $ 225,864 $ (45,378) $ (45,378)
============== ============= ============= ==============
</TABLE>
- --------------------------------------------------------------------------------
(1) For detail on share transactions by series, see statements of Changes in
Net Assets - Capital Stock Activity on pages 34 and 35.
See Notes to Financial Statements.
32
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Tax-Exempt Fund U.S. Treasury Fund Money Market Fund Money Market Fund
- ---------------------------- ---------------------------- --------------------------- -------------------------
Years ended October 31, Years ended October 31, Years ended October 31, Years ended October 31,
- ---------------------------- ---------------------------- --------------------------- -------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 321,222,118 $ 301,854,872 $ 979,144,066 $ 797,561,471 $137,094,660 $ 110,544,441 $ 80,965,571 $47,066,054
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
11,105,164 9,677,246 44,998,730 41,077,546 4,395,139 3,617,480 2,961,693 1,818,846
-- -- 28,589 19,124 -- -- -- --
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
11,105,164 9,677,246 45,027,319 41,096,670 4,395,139 3,617,480 2,961,693 1,818,846
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
(4,682,093) (3,944,381) (26,401,651) (23,823,527) (4,395,162) (3,614,319) (2,961,746) (1,818,846)
-- -- -- -- -- -- -- --
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
(4,682,093) (3,944,381) (26,401,651) (23,823,527) (4,395,162) (3,614,319) (2,961,746) (1,818,846)
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A N/A
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
N/A N/A N/A N/A N/A N/A N/A N/A
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
(6,422,658) (5,732,832) (18,597,072) (17,254,019) N/A N/A N/A N/A
-- -- -- -- N/A N/A N/A N/A
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
(6,422,658) (5,732,832) (18,597,072) (17,254,019) N/A N/A N/A N/A
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
(11,104,751) (9,677,213) (44,998,723) (41,077,546) (4,395,162) (3,614,319) (2,961,746) (1,818,846)
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
70,292,885 19,367,213 9,525,560 181,563,471 28,090,990 26,547,058 46,956,397 33,899,517
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
70,293,298 19,367,246 9,554,156 181,582,595 28,090,967 26,550,219 46,956,344 33,899,517
- ------------- ------------- ------------- ------------- ------------ ------------- ------------ -----------
$ 391,515,416 $ 321,222,118 $ 988,698,222 $ 979,144,066 $165,185,627 $ 137,094,660 $127,921,915 $80,965,571
============= ============= ============= ============= ============ ============= ============ ===========
$ (19,528) $ (19,941) $ 316,537 $ 316,530 $ (5,112) $ (5,089) $ (53) $ --
============= ============= ============= ============= ============ ============= ============ ===========
</TABLE>
33
<PAGE>
- ---------------
THE GALAXY FUND STATEMENTS OF CHANGES IN NET ASSETS -
- --------------- Capital Stock Activity
<TABLE>
<CAPTION>
Money Market Fund Government Fund
----------------------------- -----------------------------
Years ended October 31, Years ended October 31,
----------------------------- -----------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
DOLLAR AMOUNTS
Retail Shares:
Sold ................................................. $6,260,244,949 $4,623,828,689 $ 820,134,497 $ 729,544,101
Issued to shareholders in reinvestment of dividends .. 100,806,250 75,954,856 17,568,387 16,519,769
Repurchased .......................................... (6,099,746,389) (3,981,201,650) (835,396,007) (721,962,501)
-------------- -------------- ------------- --------------
Net increase (decrease) in shares outstanding ........ $ 261,304,810 $ 718,581,895 $ 2,306,877 $ 24,101,369
============== ============== ============== ==============
Retail B Shares:
Sold ................................................. $ 6,169,532 $ 1,047,623 N/A N/A
Issued to shareholders in reinvestment of dividends .. 25,226 12,123 N/A N/A
Repurchased .......................................... (5,336,739) (310,758) N/A N/A
-------------- -------------- -------------- --------------
Net increase in shares outstanding ................... $ 858,019 $ 748,988 N/A N/A
============== ============== ============== ==============
Trust Shares:
Sold ................................................. $2,082,969,065 $2,442,712,102 $1,513,726,831 $1,419,192,696
Issued to shareholders in reinvestment of dividends .. 473,182 824,412 646,367 779,351
Repurchased .......................................... (1,958,736,900) (2,229,570,592) (1,422,804,753) (1,522,872,802)
-------------- -------------- -------------- --------------
Net increase (decrease) in shares outstanding ........ $ 124,705,347 $ 213,965,922 $ 91,568,445 $ (102,900,755)
============== ============== ============== ==============
SHARE ACTIVITY
Retail Shares:
Sold ................................................. 6,260,244,949 4,623,828,689 820,134,497 729,544,101
Issued to shareholders in reinvestment of dividends .. 100,806,250 75,954,856 17,568,387 16,519,769
Repurchased .......................................... (6,099,746,389) (3,981,201,650) (835,396,007) (721,962,501)
-------------- -------------- -------------- --------------
Net increase (decrease) in shares outstanding ........ 261,304,810 718,581,895 2,306,877 24,101,369
============== ============== ============== ==============
Retail B Shares:
Sold ................................................. 6,169,532 1,047,623 N/A N/A
Issued to shareholders in reinvestment of dividends .. 25,226 12,123 N/A N/A
Repurchased .......................................... (5,336,739) (310,758) N/A N/A
-------------- -------------- -------------- --------------
Net increase in shares outstanding ................... 858,019 748,988 N/A N/A
============== ============== ============== ==============
Trust Shares:
Sold ................................................. 2,082,969,065 2,442,712,102 1,513,726,831 1,419,192,696
Issued to shareholders in reinvestment of dividends .. 473,182 824,412 646,367 779,351
Repurchased .......................................... (1,958,736,900) (2,229,570,592) (1,422,804,753) (1,522,872,802)
-------------- -------------- -------------- --------------
Net increase (decrease) in shares outstanding ........ 124,705,347 213,965,922 91,568,445 (102,900,755)
============== ============== ============== ==============
</TABLE>
See Notes to Financial Statements.
34
<PAGE>
<TABLE>
<CAPTION>
Connecticut Municipal Massachusetts Municipal
Tax-Exempt Fund U.S. Treasury Fund Money Market Fund Money Market Fund
- ---------------------------- ------------------------------- ----------------------------------------------------------
Years ended October 31, Years ended October 31, Years ended October 31, Years ended October 31,
- ---------------------------- ------------------------------- ----------------------------------------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ------------- ------------- -------------- -------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 472,089,252 $ 405,375,839 $1,201,282,799 $1,252,641,737 $ 439,511,535 $ 308,300,041 $ 287,313,215 $ 164,854,517
4,666,644 3,935,706 26,324,657 23,742,666 3,071,043 2,576,197 1,572,995 1,161,644
(464,321,475) (374,953,462) (1,254,541,716) (1,133,657,607) (414,491,588) (284,329,180) (241,929,813) (132,116,644)
- ------------- ------------- -------------- -------------- ------------- ------------- ------------- -------------
$ 12,434,421 $ 34,358,083 $ (26,934,260) $ 142,726,796 $ 28,090,990 $ 26,547,058 $ 46,956,397 $ 33,899,517
============= ============= ============== ============== ============= ============= ============= =============
N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A N/A
- ------------- ------------- -------------- -------------- ------------- ------------- ------------- -------------
N/A N/A N/A N/A N/A N/A N/A N/A
============= ============= ============== ============== ============= ============= ============= =============
$ 253,133,512 $ 232,513,701 $ 814,143,806 $1,081,964,225 N/A N/A N/A N/A
23,573 35,548 1,298,463 520,650 N/A N/A N/A N/A
(195,298,621) (247,540,119) (778,982,449) (1,043,648,200) N/A N/A N/A N/A
- ------------- ------------- -------------- -------------- ------------- ------------- ------------- -------------
$ 57,858,464 $ (14,990,870) $ 36,459,820 $ 38,836,675 N/A N/A N/A N/A
============= ============= ============== ============== ============= ============= ============= =============
472,089,252 405,375,839 1,201,282,799 1,252,641,737 439,511,535 308,300,041 287,313,215 164,854,517
4,666,644 3,935,706 26,324,657 23,742,666 3,071,043 2,576,197 1,572,995 1,161,644
(464,321,475) (374,953,462) (1,254,541,716) (1,133,657,607) (414,491,588) (284,329,180) (241,929,813) (132,116,644)
- ------------- ------------- -------------- -------------- ------------- ------------- ------------- -------------
12,434,421 34,358,083 (26,934,260) 142,726,796 28,090,990 26,547,058 46,956,397 33,899,517
============= ============= ============== ============== ============= ============= ============= =============
N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A N/A
N/A N/A N/A N/A N/A N/A N/A N/A
- ------------- ------------- -------------- -------------- ------------- ------------- ------------- -------------
N/A N/A N/A N/A N/A N/A N/A N/A
============= ============= ============== ============== ============= ============= ============= =============
253,133,512 232,513,701 814,143,806 1,081,964,225 N/A N/A N/A N/A
23,573 35,548 1,298,463 520,650 N/A N/A N/A N/A
(195,298,621) (247,540,119) (778,982,449) (1,043,648,200) N/A N/A N/A N/A
- ------------- ------------- -------------- -------------- ------------- ------------- ------------- -------------
57,858,464 (14,990,870) 36,459,820 38,836,675 N/A N/A N/A N/A
============= ============= ============== ============== ============= ============= ============= =============
</TABLE>
35
<PAGE>
- --------------- Money Market Fund
THE GALAXY FUND FINANCIAL HIGHLIGHTS
- --------------- For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994(1)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........... $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- -----------
Income from Investment Operations:
Net investment income (A) .................... 0.05 0.05 0.05 0.05 0.03
Net realized gain (loss) on investments ...... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total from Investment Operations: .......... 0.05 0.05 0.05 0.05 0.03
----------- ----------- ----------- ----------- -----------
Less Dividends:
Dividends from net investment income ......... (0.05) (0.05) (0.05) (0.05) (0.03)
Dividends from net realized capital gains .... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total Dividends: ........................... (0.05) (0.05) (0.05) (0.05) (0.03)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net asset value ..... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Period ................. $1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ===========
Total Return (B) ............................... 5.04% 4.93% 4.78% 5.23% 3.35%
Ratios/Supplemental Data:
Net assets, end of Period (000's) .............. $ 2,139,213 $ 1,877,889 $ 1,159,312 $ 580,762 $ 797,399
Ratios to average net assets:
Net investment income including
reimbursement/waiver ....................... 4.94% 4.85% 4.67% 5.12% 3.38%
Operating expenses including
reimbursement/waiver ....................... 0.67% 0.69% 0.77% 0.74% 0.64%
Operating expenses excluding
reimbursement/waiver ....................... 0.71% 0.73% 0.80% 0.76% 0.64%
</TABLE>
- --------------------------------------------------------------------------------
* Annualized.
** Not Annualized.
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail A
Shares and the Fund began issuing a second series of shares designated as
Trust Shares.
(2) The Fund began offering Retail B Shares on March 6, 1997.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 were $0.05, $0.05, $0.05,
$0.05 and $0.03, respectively. Net investment income per share before
reimbursement/waiver of fees by the Investment Advisor and/or Administrator
for Trust Shares for the years ended October 31, 1998, 1997, 1996 and 1995
were $0.05, $0.05, $0.05 and $0.05, respectively. Net investment income per
share before reimbursement/waiver of fees by Investment Advisor and/or
Administrator for Retail B Shares for the year ended October 31, 1998 and
the period ended October 31, 1997 were $0.04 and $0.03, respectively.
(B) Calculation does not include the effect of any sales charge for Retail B
Shares. Total return for the year ended October 31, 1994 includes the
effect of the voluntary capital contribution of $1.6 million from Fleet in
order to partially offset losses realized on the sale of certain securities
held by the Fund. Without this capital contribution, the total return would
have been 3.35%.
See Notes to Financial Statements.
36
<PAGE>
<TABLE>
<CAPTION>
Trust Shares Retail B Shares
Years ended October 31, Years ended October 31,
- ------------------------------------------------------------------ -------------------------------
1998 1997 1996 1995(1) 1998 1997(2)
- ------------- -------------- ------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ---------- ---------- -------- -------- ------ ------
0.05 0.05 0.05 0.05 0.04 0.03
-- -- -- -- -- --
- ---------- ---------- -------- -------- ------ ------
0.05 0.05 0.05 0.05 0.04 0.03
- ---------- ---------- -------- -------- ------ ------
(0.05) (0.05) (0.05) (0.05) (0.04) (0.03)
-- -- -- -- -- --
- ---------- ---------- -------- -------- ------ ------
(0.05) (0.05) (0.05) (0.05) (0.04) (0.03)
- ---------- ---------- -------- -------- ------ ------
-- -- -- -- -- --
- ---------- ---------- -------- -------- ------ ------
$ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ======== ======== ====== ======
5.23% 5.13% 5.00% 5.43% 4.33% 2.66%**
$1,262,900 $1,138,185 $924,222 $334,054 $1,607 $ 749
5.12% 5.04% 4.89% 5.30% 4.26% 4.27%*
0.49% 0.50% 0.55% 0.55% 1.35% 1.38%*
0.53% 0.54% 0.58% 0.56% 1.39% 1.42%*
</TABLE>
37
<PAGE>
- --------------- Government Fund
THE GALAXY FUND FINANCIAL HIGHLIGHTS
- --------------- For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994(1)
----------- ----------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A) ........................ 0.05 0.05 0.05 0.05 0.03
Net realized gain (loss) on investments .......... -- -- -- -- --
-------- -------- -------- -------- --------
Total from Investment Operations: .............. 0.05 0.05 0.05 0.05 0.03
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income ............. (0.05) (0.05) (0.05) (0.05) (0.03)
Dividends from net realized capital gains ........ -- -- -- -- --
-------- -------- -------- -------- --------
Total Dividends: (0.05) (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value ....... -- -- -- -- --
-------- -------- -------- -------- --------
Net Asset Value, End of Period ..................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return (B) ................................... 4.94% 4.85% 4.72% 5.20% 3.49%
Ratios/Supplemental Data:
Net assets, End of Period (000's) $352,799 $350,513 $326,411 $320,795 $759,106
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.84% 4.74% 4.62% 5.11% 3.36%
Operating expenses including reimbursement/waiver 0.70% 0.71% 0.75% 0.73% 0.54%
Operating expenses excluding reimbursement/waiver 0.71% 0.72% 0.76% 0.74% 0.54%
</TABLE>
- --------------------------------------------------------------------------------
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail A
Shares and the Fund began issuing a second series of shares designated as
Trust Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 were $0.05, $0.05, $0.05,
$0.05 and $0.03, respectively. Net investment income per share before
reimbursement/waiver of fees by the Investment Advisor and/or Administrator
for Trust Shares for the years ended October 31, 1998, 1997, 1996 and 1995
were $0.05, $0.05, $0.05 and $0.05, respectively.
(B) Total return for the year ended October 31, 1994 includes the effect of the
voluntary capital contribution of $2.3 million from Fleet in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.49%.
See Notes to Financial Statements.
38
<PAGE>
<TABLE>
<CAPTION>
Trust Shares
Years ended October 31,
- ------------------------------------------------------------------
1998 1997 1996 1995(1)
- ------------- -------------- ------------- --------------
<S> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------- -------- -------- -------
0.05 0.05 0.05 0.05
-- -- -- --
- -------- -------- -------- -------
0.05 0.05 0.05 0.05
- -------- -------- -------- -------
(0.05) (0.05) (0.05) (0.05)
-- -- -- --
- -------- -------- -------- -------
(0.05) (0.05) (0.05) (0.05)
- -------- -------- -------- -------
-- -- -- --
- -------- -------- -------- -------
$ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== =======
5.15% 5.06% 4.95% 5.39%
$722,476 $630,859 $733,759 $678,679
5.03% 4.94% 4.85% 5.27%
0.51% 0.51% 0.52% 0.53%
0.52% 0.52% 0.53% 0.54%
</TABLE>
39
<PAGE>
- --------------- Tax-Exempt Fund
THE GALAXY FUND FINANCIAL HIGHLIGHTS
- --------------- For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994(1)
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ------- --------
Income from Investment Operations:
Net investment income (A) .......................... 0.03 0.03 0.03 0.03 0.02
Net realized gain (loss) on investments ............ -- -- -- -- --
-------- -------- -------- ------- --------
Total from Investment Operations: ................ 0.03 0.03 0.03 0.03 0.02
-------- -------- -------- ------- --------
Less Dividends:
Dividends from net investment income ............... (0.03) (0.03) (0.03) (0.03) (0.02)
Dividends from net realized capital gains .......... -- -- -- -- --
-------- -------- -------- ------- --------
Total Dividends: ................................. (0.03) (0.03) (0.03) (0.03) (0.02)
-------- -------- -------- ------- --------
Net increase (decrease) in net asset value ............ -- -- -- -- --
-------- -------- -------- ------- --------
Net Asset Value, End of Period ........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======= ========
Total Return .......................................... 2.89% 2.95% 2.82% 3.16% 2.24%
Ratios/Supplemental data:
Net Assets, End of Period (000's) ..................... $164,340 $151,907 $117,548 $127,056 $271,050
Ratios to average net assets:
Net investment income including reimbursement/waiver 2.85% 2.92% 2.78% 3.12% 2.12%
Operating expenses including reimbursement/waiver .. 0.67% 0.68% 0.68% 0.68% 0.58%
Operating expenses excluding reimbursement/waiver .. 0.67% 0.69% 0.69% 0.71% 0.58%
</TABLE>
- --------------------------------------------------------------------------------
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail A
Shares and the Fund began issuing a second series of shares designated as
Trust Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 were $0.03, $0.03, $0.03,
$0.03 and $0.02, respectively. Net investment income per share before
reimbursement/waiver of fees by the Investment Advisor and/or Administrator
for Trust Shares for the years ended October 31, 1998, 1997, 1996 and 1995
were $0.03, $0.03, $0.03 and $0.03, respectively.
See Notes to Financial Statements.
40
<PAGE>
<TABLE>
<CAPTION>
Trust Shares
Years ended October 31,
- --------------------------------------------------
1998 1997 1996 1995(1)
- ---------- --------- ---------- -----------
<S> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------- -------- -------- --------
0.03 0.03 0.03 0.03
-- -- -- --
- -------- -------- -------- --------
0.03 0.03 0.03 0.03
- -------- -------- -------- --------
(0.03) (0.03) (0.03) (0.03)
-- -- -- --
- -------- -------- -------- --------
(0.03) (0.03) (0.03) (0.03)
- -------- -------- -------- --------
-- -- -- --
- -------- -------- -------- --------
$ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
3.03% 3.10% 2.97% 3.29%
$227,176 $169,316 $184,307 $180,706
2.99% 3.05% 2.92% 3.24%
0.53% 0.53% 0.54% 0.55%
0.53% 0.53% 0.54% 0.56%
</TABLE>
41
<PAGE>
- --------------- U.S. Treasury Fund
THE GALAXY FUND FINANCIAL HIGHLIGHTS
- --------------- For a Share outstanding throughout each period.
Retail A Shares
<TABLE>
<CAPTION>
Years ended October 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994(1)
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from Investment Operations:
Net investment income (A) .......................... 0.05 0.05 0.05 0.05 0.03
Net realized gain (loss) on investments ............ -- -- -- -- --
-------- -------- -------- -------- --------
Total from Investment Operations: ................ 0.05 0.05 0.05 0.05 0.03
-------- -------- -------- -------- --------
Less Dividends:
Dividends from net investment income ............... (0.05) (0.05) (0.05) (0.05) (0.03)
Dividends from net realized capital gains .......... -- -- -- -- --
-------- -------- -------- -------- --------
Total Dividends: ................................. (0.05) (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- -------- --------
Net increase (decrease) in net asset value ............ -- -- -- -- --
-------- -------- -------- -------- --------
Net Asset Value, End of Period ........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return (B) ...................................... 4.73% 4.67% 4.63% 4.99% 3.30%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ..................... $559,053 $585,969 $443,230 $318,621 $466,993
Ratios to average net assets:
Net investment income including reimbursement/waiver 4.63% 4.58% 4.53% 4.90% 3.24%
Operating expenses including reimbursement/waiver .. 0.68% 0.69% 0.69% 0.73% 0.56%
Operating expenses excluding reimbursement/waiver .. 0.68% 0.70% 0.69% 0.73% 0.56%
</TABLE>
- --------------------------------------------------------------------------------
(1) Prior to November 1, 1994, the Fund offered a single series of shares. As
of such date, the existing series of shares was designated as Retail A
Shares and the Fund began issuing a second series of shares designated as
Trust Shares.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for Retail A Shares for the years
ended October 31, 1998, 1997, 1996, 1995 and 1994 were $0.05, $0.05, $0.05,
$0.05 and $0.03, respectively. Net investment income per share before
reimbursement/waiver of fees by the Investment Advisor and/or Administrator
for Trust Shares for the years ended October 31, 1998, 1997, 1996 and 1995
were $0.05, $0.05, $0.05 and $0.05, respectively.
(B) Total return for the year ended October 31, 1994 includes the effect of the
voluntary capital contribution of $1 million from Fleet in order to
partially offset losses realized on the sale of certain securities held by
the Fund. Without this capital contribution, the total return would have
been 3.30%.
See Notes to Financial Statements.
42
<PAGE>
<TABLE>
<CAPTION>
Trust Shares
Years ended October 31,
- ------------------------------------------------
1998 1997 1996 1995(1)
- ----------- ----------- --------- ---------
<S> <C> <C> <C>
$ 1.00 $ 1.00 $ 1.00 $ 1.00
- -------- -------- -------- --------
0.05 0.05 0.05 0.05
-- -- -- --
- -------- -------- -------- --------
0.05 0.05 0.05 0.05
- -------- -------- -------- --------
(0.05) (0.05) (0.05) (0.05)
-- -- -- --
- -------- -------- -------- --------
(0.05) (0.05) (0.05) (0.05)
- -------- -------- -------- --------
-- -- -- --
- -------- -------- -------- --------
$ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
4.90% 4.85% 4.80% 5.18%
$429,645 $393,175 $354,331 $271,036
4.80% 4.75% 4.69% 5.06%
0.51% 0.52% 0.53% 0.55%
0.51% 0.53% 0.53% 0.55%
</TABLE>
43
<PAGE>
- --------------- Connecticut Municipal Money Market Fund(1)
THE GALAXY FUND FINANCIAL HIGHLIGHTS
- --------------- For a Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
------------------------------------------------------------
1998 1997 1996 1995
----------- ----------- ------------ --------------------
Investment Trust
Shares Shares Shares(3) Shares Shares
----------- ----------- ------------ ---------- --------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ------- -------
Income from Investment Operations:
Net investment income (B) .................... 0.03 0.03 0.03 0.03 0.03
Net realized gain (loss) on investments ...... -- -- -- -- --
-------- -------- -------- ------- -------
Total from Investment Operations: ........ 0.03 0.03 0.03 0.03 0.03
-------- -------- -------- ------- -------
Less Dividends:
Dividends from net investment income ......... (0.03) (0.03) (0.03) (0.03) (0.03)
Dividends from net realized capital gains .... -- -- -- -- --
-------- -------- -------- ------- -------
Total Dividends: ........................... (0.03) (0.03) (0.03) (0.03) (0.03)
-------- -------- -------- ------- -------
Net increase (decrease) in net asset value ...... -- -- -- -- --
-------- -------- -------- ------- -------
Net Asset Value, End of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======= =======
Total Return (A) ................................ 2.87% 2.94% 2.83% 2.94% 3.19%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ............... $165,186 $137,095 $110,544 $71,472 $31,164
Ratios to average net assets:
Net investment income
including reimbursement/waiver ............. 2.83% 2.91% 2.79% 2.88% 3.14%
Operating expenses
including reimbursement/waiver ............. 0.62% 0.60% 0.64% 0.82% 0.57%
Operating expenses
excluding reimbursement/waiver ............. 0.65% 0.65% 0.73% 1.29% 0.79%
</TABLE>
- --------------------------------------------------------------------------------
* Annualized.
** Not Annualized.
(1) The Fund commenced operations on October 4, 1993 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds.
(2) The Predecessor Fund began offering Trust Shares on December 16, 1993.
(3) On December 4, 1995, the Predecessor Fund was reorganized as a new
portfolio of the Trust with a single series of shares. Prior to the
reorganization, the Predecessor Fund offered two series of shares,
Investment Shares and Trust Shares. In connection with the reorganization,
the shareholders of the Predecessor Fund exchanged shares of each of the
two series for a single series of shares in the Galaxy Connecticut
Municipal Money Market Fund.
(A) Calculation does not include the effect of any sales charge for Investment
Shares of the Predecessor Fund.
(B) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or Administrator for the years ended October 31,
1998, 1997 and 1996 were $0.03, $0.03 and $0.03, respectively. Net
investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or other parties for Investment Shares for the years
ended October 31, 1995 (unaudited) and 1994 (unaudited) were $0.03 and
$0.01, respectively. Net investment income per share before
reimbursement/waiver of fees by the Investment Advisor and/or other parties
for Trust Shares for the year ended October 31, 1995 (unaudited) and the
period ended October 31, 1994 (unaudited) were $0.02 and $0.01,
respectively.
See Notes to Financial Statements.
44
<PAGE>
<TABLE>
<CAPTION>
Years ended October 31,
- -------------------------------
1994
- -------------------------------
Investment Trust
Shares Shares(2)
- ------------- --------------
<S> <C>
$ 1.00 $ 1.00
- ------- -------
0.02 0.02
-- --
- ------- -------
0.02 0.02
- ------- -------
(0.02) (0.02)
-- --
- ------- -------
(0.02) (0.02)
- ------- -------
-- --
- ------- -------
$ 1.00 $ 1.00
======= =======
1.83% 2.08%**
$80,663 $34,354
1.99% 2.24%*
0.78% 0.53%*
1.50% 1.00%*
</TABLE>
45
<PAGE>
- --------------- Massachusetts Municipal Money Market Fund(1)
THE GALAXY FUND FINANCIAL HIGHLIGHTS
- --------------- For a Share outstanding throughout each period.
<TABLE>
<CAPTION>
Years ended October 31,
----------------------------------------------------------
1998 1997 1996(2) 1995 1994
---------- ---------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (A) .......................... 0.03 0.03 0.03 0.03 0.02
Net realized gain (loss) on investments ............ -- -- -- -- --
-------- ------- ------- ------- -------
Total from Investment Operations: .............. 0.03 0.03 0.03 0.03 0.02
-------- ------- ------- ------- -------
Less Dividends:
Dividends from net investment income ............... (0.03) (0.03) (0.03) (0.03) (0.02)
Dividends from net realized capital gains .......... -- -- -- -- --
-------- ------- ------- ------- -------
Total Dividends: ................................. (0.03) (0.03) (0.03) (0.03) (0.02)
-------- ------- ------- ------- -------
Net increase (decrease) in net asset value ............ -- -- -- -- --
-------- ------- ------- ------- -------
Net Asset Value, End of Period ........................ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======= ======= =======
Total Return .......................................... 2.86% 2.92% 2.83% 3.21% 1.99%
Ratios/Supplemental Data:
Net Assets, End of Period (000's) ..................... $127,922 $80,966 $47,066 $40,326 $31,516
Ratios to average net assets:
Net investment income including
reimbursement/waiver ............................. 2.81% 2.90% 2.78% 3.16% 2.00%
Operating expenses including
reimbursement/waiver ............................. 0.62% 0.61% 0.62% 0.57% 0.53%
Operating expenses excluding
reimbursement/waiver ............................. 0.68% 0.69% 0.83% 1.06% 1.21%
</TABLE>
- --------------------------------------------------------------------------------
* Annualized.
** Not Annualized.
(1) The Fund commenced operations on October 5, 1993 as a separate investment
portfolio (the "Predecessor Fund") of The Shawmut Funds.
(2) On December 4, 1995, the Predecessor Fund was reorganized as a new
portfolio of the Trust.
(A) Net investment income per share before reimbursement/waiver of fees by the
Investment Advisor and/or other parties for the years ended October 31,
1998, 1997, 1996, 1995 (unaudited) and 1994 (unaudited) were $0.03, $0.03,
$0.03, $0.03 and $0.01, respectively.
See Notes to Financial Statements.
46
<PAGE>
- ---------------
THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS
- ---------------
1. Organization
The Galaxy Fund, a Massachusetts business trust (the "Trust"), is registered
under the Investment Company Act of 1940, as amended, (the "1940 Act"), as an
open-end management investment company. As of the date of this report, the Trust
offered twenty-nine managed investment portfolios. The accompanying financial
statements and financial highlights are those of the Money Market, Government,
Tax-Exempt, U.S. Treasury, Connecticut Municipal Money Market and Massachusetts
Municipal Money Market Funds (individually, a "Fund," collectively, the "Funds")
only.
The Money Market Fund is authorized to issue three series of shares (Trust
Shares, Retail A Shares and Retail B Shares). The Government, Tax-Exempt and
U.S. Treasury Funds are authorized to issue two series of Shares (Trust Shares
and Retail A Shares). Trust Shares, Retail A Shares and Retail B Shares are
substantially the same, except (i) Retail B Shares are subject to a maximum
5.00% contingent deferred sales charge and (ii) each series of shares bears the
following series specific expenses: distribution fees and/or shareholder
servicing and related fees and transfer agency charges. Six years after the
date of purchase, Retail B Shares of the Money Market Fund will automatically
convert to Retail A Shares of such Fund.
The Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds are authorized to issue one series of shares. Shares of the
Connecticut Municipal Money Market and Massachusetts Municipal Money Market
Funds, together with Retail A Shares of the Money Market, Government, Tax-Exempt
and U.S. Treasury Funds, are hereinafter referred to as "Retail Shares".
2. Significant Accounting Policies
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies in conformity with generally accepted accounting
principles consistently followed by the Funds in the preparation of their
financial statements.
Portfolio Valuation: Securities in the Funds are valued utilizing the
amortized cost valuation method permitted in accordance with Rule 2a-7 under the
1940 Act. This method involves valuing a portfolio security initially at its
cost and thereafter assuming a constant amortization to maturity of any discount
or premium.
Securities Transactions and Investment Income: Securities transactions are
accounted for on a trade date basis. Net realized gains or losses on sales of
securities are determined by the identified cost method. Interest income is
recorded on the accrual basis. Investment income and realized and unrealized
gains and losses are allocated to the separate series of a Fund based upon the
outstanding shares of each series.
Dividends to Shareholders: Dividends from net investment income are determined
separately for each series of a Fund and are declared daily and paid monthly.
Net realized capital gains, if any, are distributed at least annually.
Income dividends and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles.
Federal Income Taxes: The Trust treats each Fund as a separate entity for
Federal income tax purposes. Each Fund intends to qualify each year as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended. By so qualifying, each Fund will not be subject to Federal
income taxes to the extent that it distributes substantially all of its taxable
or tax-exempt income, if any, for its tax year ending October 31. In addition,
by distributing in each calendar year substantially all of its net investment
income, capital gains, and certain other amounts, if any, each Fund will not be
subject to a Federal excise tax. Therefore, no Federal income or excise tax
provision is recorded.
Repurchase Agreements: Each Fund, except the U.S. Treasury Fund, may engage in
repurchase agreement transactions with institutions that the Trust's investment
advisor has determined are creditworthy pursuant to guidelines established by
the Trust's Board of Trustees. Each repurchase agreement transaction is recorded
at cost plus accrued interest. Each Fund requires that the securities
collateralizing a repurchase agreement transaction be transferred to the Trust's
custodian in a manner that is intended to enable the Fund to obtain those
securities in the event of a counterparty default. The value of the collateral
securities is monitored daily to ensure that the value of the collateral,
including accrued interest, equals or exceeds the repurchase price. Repurchase
agreement transactions involve certain risks in the event of default or
insolvency of the counterparty, including possible delays or restrictions upon a
Fund's ability to dispose of the underlying
47
<PAGE>
- ---------------
THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS (continued)
- ---------------
securities, and a possible decline in the value of the underlying securities
during the period while the Fund seeks to assert its rights.
Expenses: The Trust accounts separately for the assets, liabilities and
operations of each Fund. Expenses directly attributable to a Fund are charged to
the Fund, while expenses which are attributable to more than one fund of the
Trust are allocated among the respective funds.
In addition, expenses of a Fund not directly attributable to the operations of
a particular series of shares of the Fund are allocated to the separate series
based upon the outstanding shares of each series. Operating expenses directly
attributable to a series of shares of a Fund are charged to the operations of
that series.
3. Investment Advisory, Administration, Distribution, Shareholder Services and
Other Fees
The Trust and Fleet Investment Advisors Inc. (the "Investment Advisor" or
"Fleet"), an indirect wholly-owned subsidiary of Fleet Financial Group, Inc. and
affiliate of the Funds, are parties to an investment advisory agreement under
which the Investment Advisor provides services for a fee, computed daily and
paid monthly, at the following annual rates: with respect to the Money Market,
Government and Tax-Exempt Funds, 0.40% of the average daily net assets of each
Fund, and with respect to the U.S. Treasury, Connecticut Municipal Money Market
and Massachusetts Municipal Money Market Funds, 0.40% of the first $750,000,000
of net assets of each Fund plus 0.35% of net assets of each Fund in excess of
$750,000,000. The Trust has been advised by the Investment Advisor that, with
respect to the Money Market, Government and Tax-Exempt Funds, the Investment
Advisor intends to waive advisory fees payable to it by each Fund by 0.05% to
the extent that a Fund's net assets exceed $750,000,000.
The Trust and First Data Investor Services Group, Inc. ("Investor Services
Group"), a wholly-owned subsidiary of First Data Corporation, are parties to an
administration agreement under which Investor Services Group (the
"Administrator") provides services for a fee, computed daily and paid monthly,
at the annual rate, 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 with an October 31 fiscal year (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 pursuant to certain fee
arrangements. In accordance with such fee arrangements, Investor Services Group
compensates the Trust's custodian bank, The Chase Manhattan Bank, for its
services.
First Data Distributors, Inc. (the "Distributor"), a wholly-owned subsidiary
of Investor Services Group and an indirect wholly-owned subsidiary of First Data
Corporation, serves as the distributor of the Trust's shares.
The Trust has adopted a shareholder services plan (the "Services Plan") with
respect to Retail Shares and Trust Shares of the Funds. Currently, the Services
Plan has not been implemented with respect to the Funds' Trust Shares. The
Services Plan provides compensation to institutions (including and currently
limited to Fleet Bank and its affiliates) which provide administrative and
support services to their customers who beneficially own Retail Shares, at an
aggregate annual rate not to exceed 0.25% of the average daily net asset value
of the outstanding Retail Shares of each Fund beneficially owned by such
customers. The Trust, under the direction of the Board of the Trustees, is
currently limiting fees payable under the Services Plan with respect to each
Fund to an aggregate annual rate not to exceed 0.10% of the average daily net
asset value of the outstanding Retail Shares beneficially owned by such
customers.
The Trust has adopted a distribution and services plan (the "12b-1 Plan")
with respect to Retail B Shares of the Money Market Fund. Under the 12b-1 Plan,
the Trust may pay (i) the Distributor or another person for expenses and
activities primarily intended to result in the sale of Retail B Shares, (ii)
institutions for shareholder liaison services and (iii) institutions for
administrative support services. Currently, payments under the 12b-1 Plan for
distribution services are being made solely to broker-dealer affiliates of Fleet
Bank and payments under the 12b-1 Plan for shareholder liaison and
administrative support services are being made solely to Fleet Bank and its
affiliates. Payments for distribution expenses may not exceed an annual rate of
0.65% of the average daily net assets attributable to the Money Market Fund's
outstanding Retail B Shares. The
48
<PAGE>
- ---------------
THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS (continued)
- ---------------
fees paid for shareholder liaison and administrative support services may not
exceed the annual rates of 0.25% and 0.25%, respectively, of the average daily
net assets attributable to the Money Market Fund's outstanding Retail B Shares
owned of record or beneficially by customers of institutions. The Trust is
currently limiting the Money Market Fund's payments for shareholder liaison and
administrative support services under the 12b-1 Plan to an aggregate fee of not
more than 0.10% of the average daily net asset value of Retail B Shares owned of
record or beneficially by customers of institutions. For the year ended October
31, 1998, the Funds accrued fees under the Services Plan and 12b-1 Plan as
follows:
<TABLE>
<CAPTION>
12b-1 Plan
Services ----------
Fund Plan Services Distribution
---- ---- -------- ------------
<S> <C> <C> <C>
Money Market Fund .......... $2,057,474 $ 674 $ 4,377
Government Fund ............ 364,278 -- --
Tax-Exempt Fund ............ 163,842 -- --
U.S. Treasury Fund ......... 569,986 -- --
Connecticut Municipal
Money Market Fund .......... 155,374 -- --
Massachusetts Municipal
Money Market Fund .......... 105,230 -- --
</TABLE>
The Retail Shares, Retail B Shares and Trust Shares of a Fund bear series
specific transfer agent charges based upon the number of shareholder accounts
for each series. Trust Shares of the Funds (except the Tax-Exempt Fund) also
bear additional transfer agency fees in order to compensate Investor Services
Group for payments made to Fleet Bank, an affiliate of the Investment Advisor,
for performing certain sub-account and administrative functions on a per account
basis with respect to Trust Shares held by defined contribution plans. These
additional fees are based on the number of underlying participant accounts. For
the year ended October 31, 1998, transfer agent charges for each series were as
follows:
<TABLE>
<CAPTION>
Fund Retail Retail B Trust
---- ------ -------- -----
<S> <C> <C> <C>
Money Market Fund .......... $1,898,509 $ 794 $149,713
Government Fund ............ 346,770 -- 47,058
Tax-Exempt Fund ............ 61,539 -- 75
U.S. Treasury Fund ......... 402,017 -- 17,341
Connecticut Municipal
Money Market Fund .......... 22,877 -- --
Massachusetts Municipal
Money Market Fund .......... 13,515 -- --
</TABLE>
Certain officers of the Trust may be officers of the Administrator. Such
officers receive no compensation from the Trust for serving in their respective
roles. No officer, director or employee of the Investment Advisor serves as an
officer, trustee or employee of the Trust. Effective March 5, 1998, each Trustee
is entitled to receive for services as a trustee of the Trust, The Galaxy VIP
Fund ("VIP") and Galaxy Fund II ("Galaxy II") an aggregate fee of $40,000 per
annum plus certain other fees for attending or participating in meetings as well
as reimbursement for expenses incurred in attending meetings. Prior to March 5,
1998, each Trustee was entitled to receive for services as a trustee of the
Trust, VIP and Galaxy II an aggregate fee of $29,000 per annum plus certain
other fees for attending or participating in meetings as well as reimbursement
for expenses incurred in attending meetings. The Chairman of the Boards of
Trustees and the President and Treasurer of the Trust, VIP and Galaxy II are
also entitled to additional fees for their services in these capacities. These
fees are allocated among the funds of the Trust, VIP and Galaxy II, based on
their relative net assets.
Each Trustee is eligible to participate in The Galaxy Fund/VIP/Galaxy 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, 1998 include legal fees paid to
Drinker Biddle & Reath LLP. A partner of that firm is Secretary of the Trust.
4. Waiver of Fees and Reimbursement of Expenses
The Investment Advisor voluntarily agreed to waive a portion of its fees
and/or reimburse the Funds for certain expenses so that total expenses would not
exceed certain expense limitations established for each Fund. The
Investment Advisor, at its discretion, may revise or discontinue the voluntary
fee waivers and/or expense reimbursements at any time. For the year ended
October 31, 1998, the Investment Advisor waived fees and/or reimbursed expenses
with respect to the Funds in the following amounts:
<TABLE>
<CAPTION>
Fees waived by
Fund Investment Advisor
- ---- ------------------
<S> <C>
Money Market Fund............... $1,238,301
Government Fund................. 171,522
</TABLE>
<TABLE>
<CAPTION>
Expenses Reimbursed by
Fund Investment Advisor
- ---- ------------------
<S> <C>
Connecticut Municipal
Money Market Fund............. $ 54,320
Massachusetts Municipal
Money Market Fund............. 58,991
</TABLE>
49
<PAGE>
- ---------------
THE GALAXY FUND NOTES TO FINANCIAL STATEMENTS (continued)
- ---------------
5. Shares of Beneficial Interest
The Trust's Declaration of Trust authorizes the Trustees to issue an unlimited
number of shares of beneficial interest in the Funds, each with a par value of
$0.001. The Trust's shares are classified into thirty classes of shares, each
consisting of one or more series including: Class A Shares (Retail A Shares),
Class A - Special Series 1 Shares (Trust Shares) and Class A - Special Series 2
Shares (Retail B Shares) - Money Market Fund; Class B Shares (Retail A Shares)
and Class B - Special Series 1 Shares (Trust Shares) - Government Fund; Class E
Shares (Retail A Shares) and Class E - Special Series 1 Shares (Trust Shares) -
Tax-Exempt Fund; Class F Shares (Retail A Shares) and Class F - Special Series 1
Shares (Trust Shares) - U.S. Treasury Fund; Class V Shares - Connecticut
Municipal Money Market Fund; and Class W Shares - Massachusetts Municipal Money
Market Fund.
Each share represents an equal proportionate interest in the respective Fund,
bears the same fees and expenses (except that Retail A Shares bear the expense
of payments under the Services Plan, Retail B Shares bear the expense of
payments under the 12b-1 Plan and Retail A Shares, Retail B Shares and Trust
Shares each bear series specific transfer agent charges) and are entitled to
such dividends and distributions of income earned as are declared at the
discretion of the Trust's Board of Trustees.
Shareholders are entitled to one vote for each full share held and 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. Concentration of Credit
The Connecticut Municipal Money Market and Massachusetts Municipal Money
Market Funds invest primarily in debt obligations issued by the State of
Connecticut and the Commonwealth of Massachusetts, respectively, and their
respective political subdivisions, agencies and public authorities to obtain
funds for various public purposes. Such Funds are more susceptible to economic
and political factors adversely affecting issuers of each respective state's
specific municipal securities than are municipal funds that are not concentrated
in these issuers to the same extent.
7. Federal Tax Information
At October 31, 1998, the following Funds had capital loss carryforwards:
<TABLE>
<CAPTION>
Fund Amount Expiration
---- ------ ----------
<S> <C> <C>
Money Market Fund....... $ 1,293,766 2002
5,000 2003
43,235 2004
Government Fund......... 843,555 2002
Tax-Exempt Fund......... 120,301 2002
3,772 2003
7,498 2004
U.S. Treasury Fund...... 746,787 2002
Connecticut Municipal
Money Market Fund..... 6,619 2002
817 2004
Massachusetts Municipal
Money Market Fund..... 133 2001
31 2002
12,416 2004
</TABLE>
Tax Information (unaudited)
During the fiscal year ended October 31, 1998, the following Funds earned
income from direct obligations of the U.S. Government:
<TABLE>
<CAPTION>
U.S. Government
Fund Income
---- ---------------
<S> <C>
Money Market Fund 3.11%
Government Fund 31.53%
U.S. Treasury Fund 100.00%
</TABLE>
Appropriate tax information detailing U.S. government income percentages on a
calendar year basis will accompany each shareholder's year-end tax statement. As
each state's rules on the exemption of this income differ, please consult your
tax advisor regarding specific tax treatment. 100% of the income earned by the
Tax Exempt Fund, the Connecticut Municipal Money Market Fund, and the
Massachusetts Municipal Money Market Fund will generally qualify as exempt from
federal and state taxation.
50
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To Shareholders and the Board of Trustees of
The Galaxy Fund:
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Money Market
Fund, Government Fund, Tax-Exempt Fund, U.S. Treasury Fund, Connecticut
Municipal Money Market Fund, and Massachusetts Municipal Money Market Fund, (six
series of The Galaxy Fund, hereafter referred to as the "Funds") at October 31,
1998, the results of their operations, the changes in their net assets, and the
financial highlights for each of the periods indicated therein, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
Boston, Massachusetts PricewaterhouseCoopers LLP
December 23, 1998
<PAGE>
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<PAGE>
[back cover]
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P.O. Box 5108
Westborough, MA 01581-5108
ANMM (11/98) Date of first use: January 1, 1999
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